CenturyLink will accept $54 million from the Federal Communications Commission’s Connect America Fund (CAF) this year to bring broadband to more than 92,000 rural homes and businesses in unserved high-cost areas. The incumbent provider is breaking type to accept the funds which have previously been rejected by other incumbents like AT&T and Verizon. The move follows remarks made late last week by Stewart Ewing, CFO and EVP of CenturyLink that the company plans to bring more fiber to citizens.
During the second quarter, the company brought fiber to over 1000 of its towers, as paying subscribers move to high speed broadband and CenturyLink loses wireless interest. Incumbents have long argued that despite ready demand from rural Americans, it is not “economical” to build out to rural areas. In their absence providers like Frontier Communications have taken on some of those markets and other technologies like TV White Space Broadband are seeking to fill that gap. Incumbents have largely responded with legislative action designed to prohibit local communities from building their own networks, even where the incumbents have no plan to build. Ewing noted that the company is experiencing some “revenue compression” as subscribers transition to faster services. They expect to be back on par early next year, although new rural markets shouldn’t expect much from the services they are getting from CenturyLink with the support of Connect America.
When combined with its copayment, CenturyLink will invest more than $108 million over the next three years to bring broadband speeds of 4 Mbps downstream and 1 Mbps upstream to rural households and businesses in 33 of the 37 states where it offers residential broadband service.
The company’s investment of its own capital will exceed the amount of CAF phase I, round 2 funding it accepts. The $54 million is in addition to $35 million in CAF phase I, round 1 money that CenturyLink accepted in 2012 to deploy broadband service to 45,000 homes and businesses in unserved rural areas.
“We commend the FCC for its collective commitment to bringing the many benefits of high-speed Internet service to unserved high-cost areas of rural America,” said Steve Davis, CenturyLink executive vice president for public policy and government relations. “CenturyLink is investing millions of dollars to deploy broadband to thousands of Americans who live in areas that would be cost prohibitive to serve without programs like the FCC’s Connect America Fund.”