Last week, the FCC announced it was ready to authorize RDOF funds for Charter to help fund the operator’s announced rural expansion strategy. Earlier in the same day of that announcement, Charter executives said that funding might just be the start.
During the company’s 4Q21 earnings conference call last Friday, executives highlighted the operator’s intention to pursue other funding programs for Charter rural expansion, including the American Rescue Plan Act and the Infrastructure Investment Act and Jobs Act.
“We’ll continue to build in other rural areas as well, and we will pursue opportunities to receive broadband stimulus funds, including the American Rescue Plan Act funds and funds from Infrastructure Investment Act and Jobs Act,” said Tom Rutledge, Charter chairman and CEO, according to a Seeking Alpha transcript of the earnings call.
Funds from the American Rescue Plan Act are already flowing. The Infrastructure Investment Act and Jobs Act allocates $65 billion for broadband programs, of which $42 billion is earmarked to support broadband network construction.
Charter rural expansion has already begun, with the operator announcing two rural broadband projects last week. Rutledge said RDOF funding alone will help add 100K miles of new network infrastructure to Charter’s existing 800K miles of infrastructure. Charter is also adding 2K employees and contractors for this rural expansion initiative.
The pursuit of additional funding could only increase that reach. Charter makes it clear that this rural expansion includes markets outside of the territories earmarked for direct funding.
“We’ll also extend our network passed homes in areas adjacent to our subsidized builds that our network does not currently reach today,” said Rutledge.
It’s a significant investment for the company and Charter CFO Jessica Fischer equated it to Charter acquiring a major rural operator.
“As Tom [Rutledge] mentioned, the expansion of our footprint into rural areas will help us drive additional customer growth and financial returns,” said Fischer. “And we view our rural construction initiative as similar to or equivalent to acquiring a rural cable operator.”
The RDOF-funded project will help build to over 1 million new locations in rural markets. But Charter intends to also target adjacent territory and fill-in markets, so the actual build should be higher. Additionally, if Charter is successful in gaining funding through these other programs, the rural expansion will increase even more.
Fischer says that Charter will begin reporting these rural builds in much more detail during 2022 and beyond.
