Jureller: Frontier Expects to Accept Broadband CAF II Funding

Frontier hopes to “avail ourselves” of broadband funding in phase two of the Connect America Fund program targeted for this year, said Frontier Chief Operating Officer John Jureller at the Morgan Stanley Technology, Media & Telecom Conference yesterday. In a question-and-answer session, Jureller also was optimistic about the progress on its plans to acquire Verizon lines in California, Texas and Florida.

Broadband CAF II Funding
Jureller estimated the funding that Frontier will gain through the CAF program at about $300 million annually – approximately double what the company collects today from the voice-focused Universal Service fund that is transitioning to a broadband program. The CAF program deliberately shifted funding toward the larger price cap carriers because, according to FCC data, the majority of homes that cannot get broadband today are in price cap territories.

Frontier already has collected considerable funding in phase 1 of the CAF program, which offered between $550 and $775 per line to carriers to bring broadband to unserved customers in their local service territories. Frontier expects to “get the shape of” phase two of the CAF program, which will award funding based on a cost model, by the second half of 2015, Jureller said.

At least one other price cap carrier – Windstream – previously said it hopes to accept most of the CAF money it will be offered in phase two of the program. Carriers will be required to accept or reject funding on a state-by-state basis and funding for rejected areas will be opened up to other carriers and awarded through a competitive bidding process.

Verizon Line Acquisition on Track
Frontier’s plans to acquire Verizon lines are on track for a completion date in early 2016, Jureller said. He noted that the company has already been speaking with state public utility commissions and has also begun work on how to integrate the acquired business.

Frontier had better broadband subscriber results in the fourth quarter of 2014 than some other telcos. Although some companies lost market share, Frontier is taking share in 80% of its markets, Jureller said. He attributes that, in part, to the fact that more than 80% of the company’s service area has fiber-to-the-node or fiber-to-the-home – a number that will increase after the Verizon acquisition.

He also noted that in the states where Frontier will acquire Verizon lines, Verizon is growing its FiOS business enough to “more than offset copper headwinds.”