Carriers Accept More Than $1.5 Billion in FCC Grants for Rural Broadband Buildout

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WASHINGTON — Several telecommunications carriers have accepted $1.5 billion in annual support for rural broadband deployment from the Connect America Fund, which, together with the carrier’s own investment, will expand broadband to nearly 7.3 million rural consumers in 45 states nationwide and one U.S. territory over the next few years.

August 27, 2015, was the final day for these carriers to decide whether to accept the offer of support from Phase II of the Connect America Fund, a key Federal Communications Commission program to expand rural broadband. Most of the 10 carriers are major national carriers, and their acceptance will infuse over $9 billion from the Connect America Fund into rural broadband over the next six years.

“Today we are taking a significant step forward in narrowing the rural-urban digital divide,” said FCC Chairman Tom Wheeler. “Access to modern broadband is critical to life in today’s society. The financial support provided by American ratepayers through the Connect America program is an investment in the future of our rural communities that will pay dividends for all Americans for years to come.”

By design, the Connect America Fund incentivizes significant further private investment by carriers receiving these funds for their rural networks. The Connect America Fund sparks this private investment though subsidies that reduce the prohibitively high cost of deploying networks in remote rural areas, with the balance of the investment borne by the carrier.

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In April, these ten carriers were offered $1,675,810,041 in support on a state-wide basis from the Connect America Fund, and have now accepted all but $174,914,534. In states where carriers have declined support, the subsidies will be awarded by a competitive bidding process.

According to the FCC’s latest Broadband Progress Report, nearly one in three rural Americans lack access to 10/1 broadband, compared to only one in 100 urban Americans. Carriers receiving Connect America Fund support must build out broadband to 40 percent of funded locations by the end 2017, 60 percent by the end of 2018, 80 percent by the end of 2019, and 100 percent by the end of 2020.

AT&T and CenturyLink received the two largest grants. Following is a chart of Connect America Fund offers accepted by carrier:

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* Verizon conditionally accepted Phase II support in Texas and California, subject to the issuance and acceptance of regulatory approvals for Frontier’s proposed acquisition of all the ownership interests of certain Verizon subsidiaries, including Verizon California Inc. and GTE Southwest Incorporated d/b/a Verizon Southwest (Verizon Texas) by December 31, 2015.