CenturyLink has accepted more than a half-billion dollars in federal funds to extend broadband connections to 2.3 million rural customers over the next five years, the FCC said today.
With a major local service footprint across the Western US and multiple other rural territories as well, CenturyLink Inc. (NYSE: CTL) is probably more challenged than any top tier US carrier to deliver broadband to rural areas that are currently unserved or underserved. While the parent company's roots are as a small telco that grew from humble beginnings in Monroe, La., the reality is that its acquisition of Qwest Communications and the former US West local service territory brought CenturyLink to some of the less densely populated parts of the country. Overall, it will be upgraded rural areas in 33 states, most of any carrier.
UPDATE: AT&T is accepting $428 million a year for six years, second only to CenturyLink in total Connect America Fund II money, to upgrade its rural broadband in 11 states.
By accepting the Connect America Fund money -- described as $505,703,762 in annual ongoing support -- AT&T and CenturyLink commit to reaching 40% of the customers served in the areas covered by 2017. That number goes up to 60% a year later, 80% by the end of 2019 and 100% by the end of 2020.
The single largest outlay for CenturyLink is more than $77 million for rural Missouri, but there are also significant amounts for Wisconsin ($55 million), Minnesota ($54 million), Colorado ($26 million) and Washington ($24 million). For a look at the total funding breakdown, go here.
All this spending on broadband access networks is good news for vendors such as Adtran Inc. (Nasdaq: ADTN), Calix Inc. (NYSE: CALX) and more, which stand to reap new contracts for this significant work.
The pressure to build out local broadband networks could also lead to new partnerships. This summer, at regional meetings of the NTCA - The Rural Broadband Association membership, its president, Shirley Bloomfield, said her organization has been in discussions with CenturyLink. One possibility is for NTCA members who have adjacent service territories to partner with CenturyLink in building out broadband access networks more rapidly, to meet federal deadlines.
In the past, independent telcos have often feasted on adjacent service territories served by large incumbents, creating competitive carrier arms to bring broadband to businesses and sometimes residential customers that are often ignored by their Tier 1 service providers.
— Carol Wilson, Editor-at-Large, Light Reading