Frontier takes $283M in Connect America Funding to bring broadband to 650,000 unserved sites

Frontier has agreed to accept $283 million in annual Connect America Fund (CAF) Phase II support from the FCC that it says will enable it to build out broadband service to over 650,000 rural locations that it could not economically reach before.

Dan McCarthy, CEO and president of Frontier, said in a release that the telco is moving ahead with its CAF-II plans now because it wants to get a head start on building out necessary facilities to serve these high cost areas.

"We have decided to accept the CAF Phase II funding more than two months before the formal August 27 deadline because we are eager to start building the infrastructure necessary to provide service to these markets as soon as possible," McCarthy said in a release.

This is the second time around for Frontier Communications and the Connect America Fund. Previously, Frontier joined fellow telcos CenturyLink (NYSE: CTL), Fairpoint Communications and Windstream when it accepted $133 million of CAF Phase I funding that was complemented by its own capital to deploy or upgrade broadband service to nearly 200,000 locations.

Frontier said that getting the additional $283 million in CAF II funding will enable it to continue accelerating broadband deployment across its footprint. Since 2011, the service provider has invested capital to bring broadband service to over 1.1 million new households throughout its 28-state service area.

The telco currently provides speeds that range from as low as 6 Mbps to 25 and 40 Mbps on the traditional DSL side in various markets. In a number of select markets such as Beaverton, Ore., and Durham, N.C., it is also offering 500 Mbps and 1 Gbps over its fiber-to-the-premises (FTTP) networks. 

Broadband continues to be a major factor in Frontier's overall revenue profile. In the first quarter, it added 17,100 net broadband customers, ending the period with a total of 2.4 million broadband customers.

During Frontier's first quarter earnings call, McCarthy said that a key part of his strategy for the company is to grow broadband market share, including in the rural areas it serves. The CAF II funds will be helpful in reaching those goals.

"We do believe that [in] the vast majority of the states we do, we will take those funds and move forward," McCarthy said, according to a Seeking Alpha transcript. "And we think that will be very helpful for us in improving the experience for customers as well as expanding to unserved areas."

For more:
- see the release

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