FairPoint won't see benefits of broadband sub adds from CAF II program until end of 2016

FairPoint is moving ahead with its CAF-II planning and buildout schedule, but it will take time to actually see how the program will impact the provider's broadband subscriber base.

In August 2015, FairPoint accepted $37.4 million in CAF-II funding, an amount that will enable the telco to build network infrastructure to deliver 10/1 Mbps broadband services to nearly 105,000 locations in 14 states. At that time the service provider declined offers for its service areas in Colorado and Kansas. In those two states, FairPoint said it will continue to make investments in its network while evaluating the FCC's competitive bidding process for funds.

Speaking to investors during the first quarter earnings call, Paul Sunu, CEO of FairPoint said that the impact will likely be seen by the end of this year.

"We probably will not see the benefits of the subscriber additions until the last part of this year," Sunu said during the first quarter earnings call. "On these things here's a lot of infrastructure building that needs to occur first before you can start to turn these things up and to see some accretion."

An additional benefit of the CAF-II builds, which includes laying new fiber and upgrading central office and remote terminal electronics to deliver service, is that it could potentially improve speeds for other residential and business customers along the route.

"As we are doing this we do expect some ancillary benefits to come along the way because we are going to be making certain routes less congested," Sunu said. "We're going to make certain routes little more robust so we think that there is going to be an overall left to the network architecture as we continue to progress through our CAF-II builds."

A key focus for FairPoint in the coming quarters will be in making sure it can achieve the FCC's requirement to have 40 percent of the CAF-II location builds completed.

"We have 105,000 locations or so that we need to kind of get to," Sunu said. "...We have visibility to that and we feel pretty confident that we can meet and most likely exceed that target point."

Any help it can get from CAF-II will be welcome for FairPoint's broadband subscriber base. In the first quarter, FairPoint saw broadband grow slightly with the addition of 193 new subscribers to end the period with a total of 311,323 subscribers. However, overall broadband subscribers were down year-over-year from 316,640 in the same period a year ago.

For more:
- see the Seeking Alpha earnings transcript

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