Out of all of the telcos that applied for the U.S. Department of Agriculture's (USDA) Rural Utilities Service (RUS) grants as part of the ARRA broadband stimulus funding program in 2009 and 2010, TDS Telecom (NYSE: TDS) was the most aggressive. After applying for over 46 grants, it received a total of 42 in the second round.
In addition to the initial group of 39 grants it won, TDS Telecom secured funding for three additional projects in Colorado, Florida/Georgia, and Oklahoma. The projects for TDS' Delta County Tele-Comm, Quincy Telephone Company, and Oklahoma Communications subsidiaries, will serve 540, 430, and 900 residents, respectively.
During the first round of the broadband stimulus, it won $12.5 million in grants to construct and expand broadband networks in Michigan and Alabama. However, it made its biggest impact in the second round by receiving a total $105 million in grants. It complemented the government funds with $31 million of its own capital for each of the 42 projects. When combined with round 1, the total projects were projected at $136 million.
During the first round of the broadband stimulus, it won $12.5 million in grants to construct and expand broadband networks in Michigan and Alabama. However, it made its biggest impact in the second round by receiving a total $85.9 million in grants. It complemented the government funds with $31 million of its own capital for each of the 39 projects. When combined with round 1, the total projects were projected at $136 million.
Larry Boehm, director of network implementation and optimization for TDS, told FierceTelecom that it is making continual progress in completing the stimulus projects that will deliver service to a total of nearly 27,000 homes.
"We expect to have everyone enabled short of Arizona by the end of this first quarter," he said. "Arizona is taking a bit longer for us to get done because permitting takes a bit longer, but we should have it completed by the end of the year."
Since the broadband stimulus involves the federal government, there were some permitting processes that TDS had not encountered in the past. Typically, local permits are approved in 60 days.
"We're very used to dealing with state and local agencies for permitting because we do it every single day," Boehm said. "The fact that this was a federal government project brought in some federal permitting that was a bit new to us and also brought in some state historical preservation."
Boehm added that it also had to work within the lines of the different review schedules of other agencies. "There are set timelines that those people have to respond to your application so you have to work on that," he said. "The historical preservation agency may not have concerns, but they get 30 days to review it and tell you if you have concerns."
Being a traditional telco, TDS Telecom is using a mix of hybrid copper/fiber to the node (FTTN)-based VDSL2 and GPON-based fiber to the home (FTTH) technologies.
The majority of the customers will get a FTTN-based VDSL2 connection, while the remaining 2,500 will get a FTTH connection. Initially designed to deliver just broadband data, these network builds could support its burgeoning IPTV business.
"The method is just to leverage the technologies to the best abilities vs. the cost benefit," Boehm said. "When we looked at these designs, we asked how we can get fiber as deep as we can in the network, where we can reuse copper to deliver and keep it affordable for the government and for TDS Telecom."
While the initial focus is on serving residential customers, the network builds will have relevance to business and anchor tenant customers such as hospitals and schools.
Because TDS' network infrastructure is built with a mix of metro Ethernet transport to VDSL2 and GPON in the last mile, these network builds can also support nearby business customers.
"A bunch of this application only was residential, but also to make sure that you had the infrastructure to deliver service to what the government calls anchor tenants such as hospitals, schools, libraries, so putting in an infrastructure that supported commercial customers in the future was a big deal," he said.
Take a look at how TDS Telecom is allocating its broadband stimulus funds in the following chart.
Updated article on April 3 with total amount of grants received.