In January, President Trump spoke at the American Farm Bureau Federation convention in Nashville, where he laid out his plans for rural broadband expansion. This strategy is part of a proposed $1 trillion infrastructure plan that would cater to small towns and very rural areas, ultimately aimed at helping economies that are farm-based. Rural broadband efforts have been slow or stalled, despite farm lobbies continually saying that lower access to broadband is hurting the farming economy. According to the FCC, 53% of the rural communities in the US still cannot get access to broadband, and Trump has promised to include a rural broadband plan into any infrastructure initiative he will be carrying out. A majority of the Senate Broadband Caucus is behind the urge for rural broadband after reports that only 55% of rural residents have access to basic connectivity, compared to 94% in urban areas.
With the country calling so insistently for rural broadband and the president setting aside budget for it in a new infrastructure plan, a big opportunity is surfacing for the telecom provider community. Funding is being provided to carriers as part of phase two of the Connect America Fund, with an auction of $2 billion that will be held this July. Recently, FierceTelecom published an article on the top 9 providers who are taking the most advantage of their funding allocations for rural expansion. The list was based on funding amount and states served, and it was surprisingly varied.
Topping the list was AT&T, which accepts $427 million annually in CAF funding. This allowed them to reach 2.2 million rural locations in 18 of 21 states within its operating territory, which is an impressive reach. In addition to providing access to broadband, AT&T is also working to expand its fixed wireless offering in rural states. It launched first in Georgia in April of 2017, and has since made the service available across 160,000 rural locations in 18 states. Also making the list were Tier-1 companies Consolidated Communications and CenturyLink, who receive an equal amount of funding from CAF annually.
There were also a few on the list whose plans for expansion will be carried out through mergers and acquisitions. For example, #6 Consolidated Communications gained $37.4 million in CAF funding by acquiring FairPoint, as well as the ability to bring rural broadband to an extra 105,000 locations in 14 states. 2 companies that made the list separately will also be combining forces, as Hawaiian Telcom was acquired by Cincinnati Bell. Hawaii Telcom has plans to use its funding to focus on its 11,000 underserved rural locations, while Cincinnati bell will dedicate funding to expanding its service stateside. The combined funding for the 2 merging companies is $28.2 million, and will benefit up to 4 states.
Chart outlining the top 9 providers and their exact allocations from FierceTelecom:
As the CAF auction approaches and more plans are made by the President’s commissions on how to expand broadband access to rural areas, providers have the ability to capitalize on a unique opportunity. It will not be a surprise to find providers racing to come up with rural expansion plans in the coming months, especially to increase competition with the big name providers who have already fought for CAF funding for rural rollout plans. It is also likely to prompt providers to offer different services to rural locations, such as AT&T offering fixed point wireless as well as broadband access.
In the midst of the end of net neutrality leaving the industry a bit in the lurch in terms of what will come next, the plans for rural expansion offer a promising outlook in these uncertain times, especially for those living in underserved areas of the country. End-users in previously under-served areas should look forward to the flurry of activity amongst providers who are racing to use their funding to improve their rural networks.
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