Ahead of a new federal funding program for broadband, Windstream announced on Wednesday that it met its 2019 Connect America Fund II broadband deployments mark set by the Federal Communications Commission (FCC.)
The FCC's Connect America Fund (CAF) II program started in 2015 as a means to build out broadband services in underserved and unserved areas of the U.S., which largely include rural locations.
Windstream committed to deliver broadband to over 404,000 homes and businesses when it accepted CAF II support in 2015. Little Rock, Arkansas-based Windstream deployed broadband to at least 80% of the CAF II locations in each of the 17 states where it accepted funding from the FCC by the Dec. 31, 2019 deadline. Windstream said it would complete deployment to 100% of its CAF II locations by the program’s Dec. 31, 2020, deadline.
According to a report from MoffettNathanson Research, Windstream has received $175 million per year since 2015 in CAF II awards. Other top beneficiaries of CAF II awards, according to MoffettNathanson, include AT&T, which has received $428 million per year since 2015; Frontier, which has received $332 million per year during the same time frame; and CenturyLink, which has received $506 million per year.
While Windstream hasn't raked in as much funding as AT&T and CenturyLink, CAF II has been a boon it its bottom line over the years, especially as it works its way through Chapter 11 bankruptcy proceedings.
In its third quarter earnings call in November, Windstream CEO Tony Thomas said his company had asked the FCC to add a full year of additional CAF II support in 2021 to bridge the gap to the next funding program, which is called the Rural Digital Opportunity Fund (RDOF).
The FCC is expected to sign off on RDOF this week. RDOF will extend Windstream and other incumbents' CAF II funding for one additional year, through 2021, but won't be as profitable over the long term as CAF II.
The RDOF fund could provide a total of $20.4 billion in funding over 10 years, but the FCC has designed the program to also include independent broadband providers and not just the incumbent telcos in order to spur competition between them. The FCC will set up a reverse auction for RDOF in which participants compete to underbid each other. There will be one winner awarded per geographic area, and the winners will be based not just on cost but also on speed and latency requirements.