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.
Quite telling to me how Genachowski says this is the most significant effort ever undertaken to connect rural america to broadband. Seriously? Most significant ever Julius? I guess all the other small rural providers who have not ignored their customers (which probably number in the hundreds of thousands) to date like Frontier has and have already delivered broadband are irrelevant.
Like I said, quite telling. If you didn’t know before, you now know where the FCC’s true heart is. It all makes sense now.
This will go directly to undercutting small ISP operators in rural US. In many cases, the areas Frontier is planning to build in are already covered by Fixed-wireless operators which can often provide over 10Mb service, and receive little or no support from government.
If the FCC truly wanted to help, they'd free up more light-licensed spectrum for use by Wireless ISPs, and let rural communities solve this problem for themselves. We're doing just fine without this ham-handed interference.
Anytime Uncle Sam gets involved where they don't belong there are LOTS of unitended consequences. Undercutting other legitimate free enterprises is just one. The other is incenting these large caps to invest in areas where it may make no sense on its own merit to invest just because there is the lure of "free money" available. If they bite the bait and all the rural clientele don't jump on the bandwagon they will have millions in investments just sitting collecting dust. And guess where the SPs will go to pick up the tab? Either Uncle Sam again or we the SP ratepayers. Does this sound anything like the government incenting banks to make loans to homeowners……….?????
I enjoy reading how joyful everyone in the Telecommunications industry is for the hostile takeover the dying Telephone industry has done for the rapidly growing Broadband Industry, yes they are two different industries. Had a WISP $775 a household and I think the people who brought you the Internet would do back flips but of course the powerful Telco's have sold the FCC on the fact that all communications should be through them. I still remember my telco (Qwest) saying "Why are you wasting so much money on new phone lines for your dial-up, the Internet is just a fad anyway". Now their so far behind they need to have the Government be their not so silent financial partner. Every time the Government gives money to private sector (Corporate Welfare) they are ruining the investment that was made without their help by a local ISP. The media eats the partnership of the FCC and Telcos up because they are just as ga ga over anything a huge Corporation does and why are those pesky small businesses still trying to meddle in big things like communications. Shame!
@Bob, I suppose you would be just fine if rural americans did not have access to electricty or water either.
@Steve, I have nothing against WISPs, but you are comparing apples to oranges. If WISPs had the same regulatory obligations as telcos do (i.e carrier of last resort, which means we have to serve everyone, wherever they are, etc), there is no way you would survive either. I am not opposed to WISPs getting access to the CAF.
George,
I AM a rural American and who understands that no one gets something for nothing. I have electricity because I pay for it. I have water because I paid to have a well dug and the accessories to clean the water. I DON'T have telco broadband and would love to have it, but NOT at the expense of having everyone one else in America, especially my grandchildren, having to pay for it…or worse not having a country in which to enjoy it. That's where we are headed if we continue down the socialist road of government subsidization of the private sector marketplace.
If you do live in rural America, odds are your electricity is a reality thanks to the Rural Electrification Administration (REA), the predecessor to today's RUS program. These "socialist" programs as you call them helped electrify rural America, when the "private sector" decided it didn't make sense to do so. That's the same principle that the gov't is now doing with broadband, so your grandchildren, should they decide to live in rural America, have access to it. Much the same way, you now have access to electricity. You do pay for electricity today, but there would be no electricity to pay for, if it weren't for the "socialist" REA. Not so bad, if you really think about it.
Here's a little history lesson for you – http://www.rurdev.usda.gov/rd/70th/rea-history.pd…
Oh Please, if not for Universal Service Fund, lots of telephone lines would have never been built. Period. Make a competitive case for putting a line and poles up to a single farm on road that is two miles long? Good luck. Free market will not work when there is no market case. Idealogues
You're right Apples and Oranges, the phone companies wanted exclusive markets and the Government gave them money to go where density rate of return wasn't worth the phone company investing, mission accomplished. The Internet is a different creature, no exclusive providers, most owned by small business owners who don't have expensive union help who's density for service to achieve ROI is much smaller. The Internet is truly free market and not monopolistic by design, USF's mission is all but over except to subsidize in specific areas, sure WISP's aren't in the 1 person per square mile area so it makes sense that CAF serves that area whether ETC or not. This is about a private business being told government wants a big guy there so they will fund them to run you out. $775 per hook-up for telco, $350 would be the cost for a WISP to build-out there, truth is the Telco's want government to pay for their upgrades so their crappy DSL goes back into established WISP areas, that's why Century Link bought Qwest, their model is reliant on nearly 70% of there revenue being Corporate Welfare, uh I mean CAF/USF.
It will never happen. The money will vanish and those without broadband will continue on like always. Past history proves it.
They also partnered with various Native American groups as a marketing and charitable avenue. The part about empowering online classes in rural America appeals to me.