AT&T accepts $100M from FCC's Connect America Fund to expand rural broadband

In an about-face, AT&T (NYSE: T) told the FCC that it would accept up to $100 million from the FCC's Connect America Fund (CAF) Phase I to bring broadband to about 129,000 locations that today don't have access to at least a 768/200 Kbps connection.

This marks a big change for the telco. Like fellow ILEC Verizon (NYSE: VZ), which decided to pursue its own rural broadband strategy, AT&T was one of the largest incumbent service providers to turn down the funding when the FCC made it available.  

"Last year, AT&T declined the CAF support that was available to it, due largely to uncertainty about the company's overall strategy for rural areas, as well as uncertainty about some of the obligations associated with acceptance of CAF money," said Hank Hultquist, vice president-Federal Regulatory for AT&T, in a blog post. "In both cases that uncertainty has been resolved such that acceptance of this funding, and the associated obligations, now makes sense for AT&T."

After months of speculation about what it would do with its rural properties, AT&T unveiled its Project VIP program under which it would make upgrades to both its wireline and wireless broadband network infrastructure. A large portion of the Project VIP wireline investment included the deployment of new IP-based DSLAM equipment and expanding the U-verse data and video service to more locations in its operating footprint.  

"Acceptance of CAF funding will permit a further expansion of the U-verse/IPDSL footprint to additional locations that stand to benefit greatly, as they currently have no fixed broadband service of at least 768 kbps/200 kbps," Hultquist wrote.

Similar to CenturyLink, which also announced today that it is taking $54 million in CAF Phase I funds, AT&T accepted the money after the FCC realigned the rules telcos have to follow to participate in the program.

Among the changes: Recipients would be subject to rules that Hultquist said are limited in time and geographic scope.

Other service providers such as Windstream (Nasdaq: WIN), which only took part of the funding it was eligible for last year, have not yet announced if they would accept new CAF Phase I funding.

For more:
- see this blog post

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