CenturyLink takes $54M in CAF funds to expand rural broadband reach

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CenturyLink (NYSE: CTL) is accepting $54 million from the FCC's Connect America Fund (CAF) Phase I fund in order to extend broadband services to over 92,000 homes and businesses in hard to reach areas of its service footprint.

Complemented by its own capital investment, CenturyLink will invest over $108 million through 2016 to offer up to 4/1 Mbps speeds to residential and business customers in 33 of the 37 states where it currently offers service.

The telco said that its own capital investments will exceed the amount of CAF Phase I funding it accepts from the FCC.

"These are not areas we can build out with the amount of funding either that the FCC has authorized, but with the FCC's support we can begin to build out broadband," said Steve Davis, CenturyLink executive vice president for public policy and government, in an interview with FierceTelecom.

This latest award follows the $35 million in CAF Phase I funding it accepted last year to bring broadband to 45,000 rural homes and businesses. By using the FCC's program, CenturyLink is supplying broadband to almost 140,000 consumers.

Although CenturyLink was eligible for $90 million, it only accepted $35 million last year because it said that the FCC's rules made it uneconomic to bring broadband to other areas.

Davis said an earlier interview with FierceTelecom that "One of the difficulties is that the FCC decided they'd support $775 per household."

Under the new FCC CAF Phase I spending rules was that they now are permitting funding to deploy broadband in areas that have some service today.  

"One of the biggest changes they made was to allow companies to use smaller parts of funding to deploy broadband in some areas where there's some service from the incumbents," Davis said. "This would be in an area where we offer 768 Kbps today to upgrade that to 4 Mbps, which the FCC considers to be the minimum broadband service."

Although CenturyLink could not provide an exact timeline as to when it would begin rolling out broadband in these remote areas, they specified where it would spend money and that there are no other providers offering service today.

"As you get in and start engineering and finding out what's possible and what isn't that could fluctuate somewhat, but at the end of the day we've been very specific about where these monies would be deployed and ensured the deployments will be in areas where there's an unsubsidized competitor providing service," Davis said.  

Similarly, Windstream only accepted $653,000 of the $60.4 million it was offered, citing the limitations of the FCC's rules on how to spend the money.

Other telcos, including FairPoint Communications (Nasdaq: FRP) and Frontier Communications (Nasdaq: FTR) also received CAF Phase I funding. FairPoint got a $2 million CAF grant to expand broadband service to rural areas in Vermont, while Frontier will use the $72 million CAF grant it got from the FCC to expand broadband throughout its respective service territories.

For more:
- see the release

Related articles:
UPDATED: CenturyLink gets $35M in FCC CAF funding for broadband expansion
FCC opens $300M fund to boost rural broadband access

Updated article on August 21 with new quotes from Steve Davis, CenturyLink's executive vice president for public policy and government