CenturyLink says CAF-II builds could raise broadband speeds along buildout path

CenturyLink (NYSE: CTL) is working through the planning phase of its CAF-II build out for 2016, but the side benefit it could see from the build it that additional communities that are passed by the fiber roll out could get higher speeds than they could get today.

Speaking to investors during the Raymond James & Associates 37th Annual Institutional Investors Conference, Stewart Ewing, CFO of CenturyLink, said that it could potentially provide speeds of 20 and 40 Mbps to existing copper-based customers that reside near the CAF-II builds.  

"With CAF-II, which will serve less dense areas, there won't be as much of a benefit to businesses," Ewing said. "It will benefit other homes that we pass along the way where from a residential standpoint maybe they can get 10/1 Mbps today, but by getting network closer to them we can offer them a 20 or a 40 Mbps service."

However, extending more broadband services to businesses will be a bit more challenging in the CAF-II areas given that they are more rural in nature.

"We'll try to pick up any businesses we can along the way, but because of the nature of the areas that we'll be serving there is less dense and we'd have a lower business customer base there," Ewing said.  

Although he could not specify what percentage of the markets it will build out first in 2016, Ewing said that the initial focus for CenturyLink will be on building out service to areas that are denser in nature.  

"We're hitting the more dense areas that are easier to construct and lower cost areas up front to try to try to get the revenue streams going, which would help us on the back end from a revenue standpoint," Ewing said.

Outside of the CAF-II areas, the service provider is finding that its ongoing FTTH 1 Gbps roll out for residential customers in markets like Las Vegas and Salt Lake City is giving it a foundation to extend fiber to bring fiber to more business customers.

"As we have built more and more fiber into the network, we have picked up as part of these residential builds a number of businesses," Ewing said. "We pass about 500,000 businesses today with fiber and a lot of that is associated with getting fiber out to the neighborhoods."

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