Telcos Accept Less Than Half of Available FCC Connect America Funds
Telcos are accepting about $115 million of the $300 million the FCC had allocated for broadband buildout to unserved areas. Companies had until Tuesday to accept the funding, which came with conditions: The locations had to be completely unserved, and not already slated for development. Of the 10 companies offered support, four were expected to accept the funding in its entirety, three accepted partial funding, and Verizon and AT&T planned to decline altogether, an FCC official said.
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"To date, this is the largest direct investment of FCC funding for broadband build-out in unserved rural communities,” said FCC Director of Communications Tammy Sun. “We are pleased that more than half a dozen companies have elected to accept more than $100 million in public funding, which will unlock tens of millions more in private investment, serving 36 states with unserved rural communities. And this is just the beginning."
The commission never expected that all the money would be accepted, and this was just a first step, a way to get funding out quickly, an FCC official said. The official said 36 states will now see an injection of funding from the carriers who took the funding offered as Phase 1 of the Connect America Fund (CAF). “We look at this as 400,000 Americans who had no prospect of getting connected under the old system,” the official said.
CenturyLink accepted $35 million of the nearly $90 million it was eligible for, the telco said. The company said it will use the money to deploy broadband service to 45,000 homes in unserved rural areas. “We are disappointed that restrictions on the use of these funds will not allow us to deploy rural broadband services to the extent we had originally anticipated,” said Steve Davis, CenturyLink executive vice president-public policy and government relations. “However, we share the FCC’s overall goal of deploying needed facilities in high-cost areas where reliable and affordable broadband service is not available. Therefore, we will continue working with the FCC to find ways to efficiently and effectively use additional CAF 1 funds to provide broadband services to our rural customers.” CenturyLink has filed a waiver application to let it use the additional funds in underserved areas.
Windstream said it accepted 1 percent of the $60.4 million the FCC had allocated to it for broadband buildout to unserved areas. Windstream took just $653,325, explaining it could find only 843 locations that would be eligible under the CAF rules. “Because Windstream has aggressively invested its own capital in its broadband network over the past 10 years, there are very few areas in its territory that can be served for $775 or less in government support, as required by CAF-1 rules,” a spokesman said.
The telco submitted a waiver petition Tuesday asking to utilize the remaining $59.8 million of its allotment to deliver first-time broadband to the lowest-cost remaining areas in the company’s service areas (http://xrl.us/bnh3dd). “Unfortunately, the CAF Phase I rules as written incongruously permit the use of the funding only in relatively low-cost areas,” Windstream wrote. “The rules cap support for broadband deployment to $775 per unserved location, an amount that is insufficient to make deployment economic in a truly high-cost area. Thus, absent a waiver, Windstream is only able to accept a small fraction of its funding allocation."
The 843 eligible locations represent less than one half of 1 percent of the company’s non-addressable access lines, it said. Remaining unserved consumers reside in areas where deployment costs are high and subscriber density is low, and only with government support will these “otherwise uneconomic areas” become feasible to serve, the telco said. Windstream promised to pledge to provide $12.2 million matching funds if granted the waiver, bringing the total potential investment in the rural areas to $72.6 million.
"With each passing year, those consumers in rural America who remain unserved have grown more frustrated and more vocal in telling Windstream, the FCC, and their members of Congress that they feel forgotten and that they have waited long enough for a broadband connection,” said Eric Einhorn, senior vice president-government affairs and strategy. “These areas are costly to serve on a per-household basis and there is no reasonable business plan to serve them without FCC support. This is exactly the work described in the National Broadband Plan and just what universal service reform was intended to address."
Frontier was the first carrier to accept, taking all $72 million the FCC offered it from CAF (CD July 10 p5). Hawaiian Telcom said Tuesday it would accept the full $402,000 allocated to it (http://xrl.us/bnh3ep). An FCC official said Alaska Communications and Consolidated Communications were expected to accept the entire $4 million and $421,000 subsidy, respectively.