Frontier may be a supporter of the FCC's Connect America Fund phase II, but like others, it's concerned that the regulator's proposal to raise the broadband speed obligations from 4 to 10 Mbps is not a realistic proposition unless it alters the funding model.
"Any proposal to raise the CAF Phase II minimum speed obligations of broadband used for CAF Phase II from 4 Mbps download/1 Mbps upload (4/1/) to 10 Mbps download without any increase in funding or other change in terms is not economically feasible," wrote Kathleen Abernathy, executive vice president of External Affairs for Frontier, in a recent FCC filing. "The FCC's own USF budget does not provide adequate funding for a 10 Mbps ubiquitous deployment."
Instead of requiring 10 Mbps, Frontier said the FCC could enable service providers to extend broadband services to rural markets without having to deliver 10 Mbps to every location. It added that while a large percentage could get 10 Mbps, others could get at least 6 Mbps, and the most remote customers could get up to 4 Mbps.
However, if the FCC insists on the 10 Mbps requirement, Frontier added that it should increase the length of the funding program.
"If the FCC is committed to 10 Mbps for even the most rural locations it should extend the funding term to 10 years for the ROFR to ensure funding support to justify this kind of expense," wrote Abernathy. "A 10 year term would provide parity with the competitive process."
Despite the issues it raised, Frontier is relatively upbeat about the prospects of the CAF-II program. By using these funds it said would be able to triple what it has already built by being able to deploy broadband to an additional 593,000 customers.
Frontier is hardly alone in citing concerns of the 10 Mbps requirement. CenturyLink (NYSE: CTL) cited similar concerns when the FCC issued its proposal last week.
While it is not opposed to offer faster speeds, providing them in remote areas is an expensive proposition.
"Our core point is higher speeds are great but they're going to require other commensurate changes to get broadband to consumers in high cost areas where the market would not provide broadband otherwise," said Jeff Lanning, VP of federal regulatory affairs for CenturyLink, in an interview with FierceTelecom. "What some of those changes are is a longer funding period because 10 Meg instead of 4 Meg costs more. The other point is that the people that don't have 10 Meg need and are in these high cost areas identified by the FCC and need to be supported, but we can't jump over people and fund other people."
- see this FCC filing
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