Frontier Communications may go down in history as the first communications service provider to receive support from the new broadband-focused Connect America Fund. The company today became the first large price cap carrier to agree to bring broadband to customers in its service territory that currently cannot get broadband service, in exchange for receiving $775 per line in support from the new Connect America Fund to help cover a portion of total deployment costs. Importantly, Frontier agreed to accept the total amount of funding it was offered – a decision some other price cap carriers have hinted they may not make.
Back in April, the FCC said it would target $71,979,104 to Frontier if the carrier agreed to bring broadband to unserved areas within its territory by certain target dates. The carrier said today it plans to accept the full amount, which will bring service to 92,876 new households.
In today’s announcement, Frontier Executive Vice President of External Affairs Kathleen Quinn Abernathy said the CAF support would “supplement the more than $1.5 billion of private investment made by Frontier over the last two years.” She also noted that Frontier already has deployed broadband to 80% of its customers.
Customers that cannot yet get broadband tend to be in areas that are the most costly to serve. And some price cap carriers had expressed concerns about whether they could make a business case out of bringing broadband to all of these high-cost areas at a support level of $775 per line, hinting that they might opt to reject a portion of the funding.
FCC Chairman Julius Genachowski undoubtedly is thrilled that at least one price cap carrier not only has agreed to participate in the program, but has not rejected any portion of the support. Not surprisingly, he made a point of issuing a press release applauding Frontier’s decision – and giving the FCC a pat on the back as well.
“This is the most significant effort ever undertaken to connect rural America to broadband,” said Genachowski.
The chairman noted that approximately 200,000 rural Americans will get broadband for the first time as a result of Frontier’s decision – a reasonable estimate that apparently assumes an average of about two people per household.
Carriers and policymakers have debated the possibility of using either high-speed DSL or 4G LTE technology in order to meet target broadband speeds of 4 Mbps downstream and 1 Mbps upstream at the targeted level of support. Frontier apparently has not yet decided what technology it plans to use.
“We are in the process of determining all of our engineering requirements,” a spokeswoman said in an email to Telecompetitor.
Back in April, the FCC said it would target a total of $300 million in Connect America funding to price cap carriers who agreed to bring broadband to unserved areas. Although Frontier is the first to raise its hand, other carriers in line to potentially receive funding include Alaska Communications Systems, AT&T, CenturyLink, Consolidated Communications, Fairpoint Communications, Hawaiian Telecom, Virgin Islands Telephone Co., Verizon and Windstream.
Those other carriers have until later this month to indicate whether they will agree to build-out commitments in exchange for $775 per new broadband line.
Eventually the FCC also plans to create a Connect America Fund program for smaller rate of return carriers, who also have unserved households within their territories. But how that program might be structured is a matter of considerable controversy and no decision has yet been made about how the program would be structured.