Second Round of CAF Phase I Money Sees More Interest from Telcos
This year’s dole-out of Connect America Fund money for broadband buildout has a much higher acceptance rate by ILECs. AT&T, which accepted nothing last year, this year has requested up to $100 million to help fund broadband buildout. Verizon once again declined to accept any Phase I money.
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CenturyLink accepted $54 million of the $90 million offered, which it will use to connect more than 92,000 rural homes and businesses in unserved high-cost areas. Matching funds pledged by the ILEC will double its total investment to more than $108 million over the next three years, in 33 of the 37 states where it offers residential broadband service, a company spokeswoman said.
"We knew that no matter how the deployment would occur, it was going to require that we match,” said Steve Davis, executive vice president-public policy and government relations. That’s why CenturyLink promised the commission it would match whatever FCC funds it accepted, he said. “There’s no question that this is going to require substantial private investment as well as public investment,” Davis said. “The economic reality is the amount of funding being authorized by the government for these locations was not going to be sufficient.” CenturyLink’s broadband buildout will begin “immediately,” he said.
AT&T, which in 2012 accepted none of the $48 million offered, this year accepted all of it and asked for more. “Last year, AT&T declined the CAF support that was available to it, due largely to uncertainty about the company’s overall strategy for rural areas, as well as uncertainty about some of the obligations associated with acceptance of CAF money,” said Vice President Hank Hultquist in a blog entry (http://bit.ly/14YHvSC). “In both cases that uncertainty has been resolved such that acceptance of this funding, and the associated obligations, now makes sense for AT&T,” he said.
AT&T has requested an additional $52 million, which would bring its total allotment to $100 million. That would help connect about 129,000 locations that lack fixed broadband service of at least 768 kbps/200 kbps. The FCC, “to its credit,” also addressed uncertainties that had concerned AT&T, Hultquist said, such as whether Phase I recipients would be subject to later-adopted broadband measurement or reporting requirements, and whether obligations would really end in three years. “CAF Phase 1 is now a model of what universal service must be in the 21st century,” he said. “It entails clearly-defined obligations that are limited in time and geographic scope, and to which providers voluntarily agree in exchange for funding."
As it did last year, Verizon declined to accept the $20 million it was offered. “Verizon has carefully considered the option of accepting the support available to the Verizon incumbent local exchange carriers under this program,” the telco said (http://bit.ly/14YIrGk). “However, we have determined that Verizon will decline 2013 funding.” In 2012, the telco officials said they decided not to participate in order to focus resources and capital on its own wireline and wireless broadband deployment plans. “Our rationale hasn’t changed,” a spokesman said Tuesday.
The Virgin Islands Telephone Corp. said it was “committed” to deploying broadband in the U.S. Virgin Islands, and believes the FCC’s incremental support of $255,000 would help. “However, VITELCO is unable at present to provide the requisite certifications necessary to take advantage of these funds,” it said (http://bit.ly/1f0ttyo). The telco declined for similar reasons last year, explaining it couldn’t certify that deployment funded through the CAF subsidy would occur in areas shown as unserved by any other carrier on the National Broadband Map. The map “overstates the availability of fixed broadband, and areas that the map reflects as served are in fact unserved,” the telco said in 2012.
Frontier agreed to accept almost all of the nearly $72 million it was allotted. This should bring broadband to 119,000 households, a spokeswoman said. Frontier’s proposal to bring broadband to additional new locations would be on top of the $2.2 billion of its own capital the company has invested over the past three years to increase broadband access and improve network infrastructure across Frontier’s territory, she said. “CAF support is an important component of Frontier’s continued strategy to expand broadband to high-cost, low-density areas across rural America,” said Executive Vice President-External Affairs Kathleen Abernathy.
A commission spokesman declined to comment until the agency had completed its final tally of the money that had been accepted. Telcos had through the end of Tuesday to accept funding.