UPDATED: CenturyLink gets $35M in FCC CAF funding for broadband expansion

CenturyLink is accepting a $35 million grant from the FCC's Connect America Fund (CAF) to deploy broadband service to 45,000 homes in rural areas that are deemed "unserved."

Although the telco said it was eligible for almost $90 million in CAF Phase I funding, restrictions on the initial round made "further deployment uneconomic."

"One of the difficulties is that the FCC decided they'd support $775 per household," said Steve Davis, CenturyLink executive vice president for public policy and government in an interview with FierceTelecom. "Given that restriction there's only so many households in America that still even with significant company payment towards the cost of investment there's only so many houses you can get to for a cost even in that ballpark."

Davis added that "the FCC excluded a lot of areas where I and probably most consumers would consider not to be served by a meaningful broadband service."

Waiver filing
The service provider has also filed a waiver application which, if granted, would enable it deploy broadband to an additional 60,000 homes in hard to reach areas that require more capital to build out network facilities to deliver service.

A number of state agencies, including the Washington Public Service Commission, the Minnesota Department of Commerce, support the waiver.

"In the areas where we're we filed our waiver there are some fixed wireless companies using unlicensed spectrum—the same spectrum you might use for garage door openers or cordless phones in your house," Davis said. "Often as those covered in our waiver request, the prices can be extremely high, the limitations on capacity can be extremely low, and line of site obstructions (i.e. trees and mountains) have the tendency to disrupt service."

He added that "we should not deny people that live in these areas the benefits of real, meaningful, and reliable broadband service."

While CenturyLink does provide basic landline phone service in these areas, Davis said that financial assistance is necessary because "extending fiber into these areas to put in the equipment necessary to provide broadband service can be very expensive on a per-household basis."

Windstream (Nasdaq: WIN), like CenturyLink only accepted $653,000 of the $60.4 million it was offered, citing the limitations of the CAF I rules.

In an e-mail to FierceTelecom, Windstream said that it "has aggressively invested its own capital in its broadband network over the past 10 years, there are very few areas in its territory that can be served for $775 or less in government support, as required by the CAF-1 rules."

Besides CenturyLink and Windstream, other telcos that have received CAF 1 funding include both FairPoint Communications (Nasdaq: FRP) and Frontier Communications (Nasdaq: FTR). FairPoint got a $2 million CAF grant to expand broadband service to rural areas in Vermont, while Frontier will use the $72 million CAF grant it got from the FCC to expand broadband throughout its respective service territories.

WISPs sound off
Not everyone agrees with CenturyLink's assertion, however.

The Wireless Internet Service Providers Association (WISPA), an industry trade group that represents many of the WISPs in the areas CenturyLink is trying to target with the waiver, for one, thinks there's no need for the government to help fund the telco's build out plans.

In a recent statement, the industry group said that WISPs are already delivering broadband data service in "unserved" and "underserved" communities seen on the National Broadband Map for lower prices and higher speeds than what CenturyLink can offer.

"CenturyLink is doing this so they can get subsidies in areas where there is already service -- areas where they know there is a market because WISPs built it without federal support," said WISPA President Elizabeth Bowles, in a statement about the telco's waiver request. "They do this rather than build at their own expense. Any government funds for broadband should be used as they were intended, which is to build in areas that are truly unserved."

For more:
- see the release

Related articles:
CenturyLink gets green light to offer IPTV in Colorado Springs, Colo.
CenturyLink's legacy services drag earnings down 5.2% amidst gains in broadband, business, IPTV 
CenturyLink's Colorado video franchise gets El Paso County approval
CenturyLink's NEMC obtains TL 9000 certification

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