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Windstream accepts $60.4M in CAF I funds for rural broadband extension

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Following similar moves by AT&T (NYSE: T) and Frontier (Nasdaq: FTR) after an FCC rule change, Windstream Communications (Nasdaq: WIN) said it will take the $60.4 million in incremental Phase I funding from the Connect America Fund (CAF). The telco has also agreed to use $63.5 million above its initial allocation for a total of over $123.9 million.

"As intended, CAF Phase I funding will provide an immediate boost to broadband deployment and will bring robust speeds to consumers who do not currently have it," wrote Eric N. Einhorn, senior vice president, Government Affairs and Strategy for Windstream, in a letter to the FCC.

By using these public funds, Windstream said it will be able to deploy broadband based on the FCC's 4 Mbps standard to 217,638 locations in its serving territories. Out of this group, 18,855 locations are today not served by another wireline provider "with minimum speeds of 768 kbps downstream and 200 kbps upstream, and 198,783 locations that lack 3 Mbps/768 kbps Internet access."

When the funds initially became available last year, Windstream only accepted $653,000 of the $60.4 million it was offered, citing the limitations of the CAF I rules.

At that time, Windstream said that there were not many areas in its territory that could be served for $775 or less.

"In round one, Windstream was only able to take less than 1 percent because they had already invested in broadband to a lot of communities above that low level the commission had said, which was just barely broadband," Einhorn said in an interview with FierceTelecom. "Effectively, if you had not deployed broadband in an area you were eligible, but if you had deployed broadband and it was not at the 4/1 Mbps standard that community was not eligible."

However, the change in rules allows service providers like Windstream to deploy higher speed broadband services in areas that today can only get up to 768 Kbps. Windstream was able to accept a higher portion of the second round of FCC CAF Phase I funds.

A key focus will be on extending fiber to remote terminal sites that house necessary broadband loop carrier (BLC) equipment to deliver DSL services to customers.

"Communities that were served by a copper feeder or a remote terminal served by a copper feeder ... are limited in the bandwidth to that group of homes because of the copper," Einhorn said. "What will happen in this round is companies will use the funding to deploy fiber to the remote terminal to these locations, and from the remote terminal to the home it will still be copper."

The end result of these upgrades will be higher speeds for consumers.  

While meeting the 4/1 Mbps FCC standard is the initial goal, Einhorn said that some customers could get even higher speeds.

"It's important to note that 4/1 Mbps is the floor, but there's a lot of folks once these remote terminals get fiber served who could order speeds far in excess of 4/1 Mbps," Einhorn said.

It has been a busy week for CAF Phase I funding.

AT&T, which declined to take any FCC CAF Phase I funding last year, agreed to accept $100 million to bring broadband to about 129,000 locations. Meanwhile, Frontier Communications announced this week it would ask the commission for $71.5 million to expand broadband to 119,000 rural locations. And CenturyLink (NYSE: CTL) accepted $54 million to bring faster speeds to 92,000 locations.

For more:
- see Windstream's FCC filing (.pdf)

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