What will Frontier and CenturyLink do with new broadband money?

As reporter Tom Robertson in Bemidji pointed out a week or so ago, small phone companies that have aggressively built out fiber optic networks and expanded their high-speed Internet access are worrying that a federal funding shift may force them to slow these expansions.

Paul Bunyan Communications was the case in point. Officials with the cooperative are concerned about a Federal Communications Commission change in how money gets allocated to extend broadband in rural areas.

But if there are losers in that shift, there might also be winners. Next month, we should get a glimpse of who they might be in Minnesota. Outstate Minnesota customers of Frontier and CenturyLink should be paying attention. Here’s why:

The FCC rule change involves what has been called the Universal Service Fund, a pile of money originally aimed at providing phone service to remote areas of the country. Companies like Paul Bunyan have used it to build out their fiber networks and offer high-speed Internet access to customers.

The fund is being turned into the Connect America Fund and will be aimed more directly at rural Internet access. The change is going to take six years but the first step will be providing $300 million to companies that have not been eligible for funding in the past but which offer phone service in areas whose broadband needs are underserved.

More than half that money is going to Frontier and CenturyLink, which have until July 24 to tell the FCC what they would do with the money. CenturyLink (which absorbed Qwest last year) is eligible for $90 million and Frontier for $72 million. To get the money, providers have to offer speeds of at least 4 megabits per second for downloads and 1 megabit per second for uploads. (Some would argue this isn’t very fast these days, but it is the FCC’s basic definition of broadband.)

Both companies say it’s too soon to be specific about where they would apply the money. Both, of course, provide phone service to huge chunks of the United States from coast to coast and border to border. So Minnesota isn’t their only concern. Neither, in fact, is based here.

But both do have significant swaths of outstate Minnesota in their service areas. And both, of course, have received criticism for moving too slowly to serve those areas with good quality broadband access.

Frontier service area:

CAF - Frontier service area 2.jpg

CenturyLink service area (including former Qwest territory):

CAF - CenturyLink service area.jpg

I talked about the shift to JoAnne Johnson, former state broadband task force chairwoman and Frontier exec who now works for the consultant U-reka Broadband Ventures. She said it’s totally understandable that small providers like Paul Bunyan, which have been aggressive in their use of Universal Service Fund money, would get more cautious as the FCC shifts.

But she also pointed out that 83 percent of the nation’s underserved households live in the service areas of those big carriers like Frontier and CenturyLink that are eligible to share in the new money.

In case you’re trying to keep track of all the broadband dollars, Johnson also pointed out that CenturyLink promised to spend $50 million of its own money on rural Internet access in Minnesota when it merged with Qwest a year ago. Any use of the federal Connect America Fund money would have to be above and beyond that.

The company says it has either deployed broadband service or upgraded it in 120 communities since then. It filed a report with the state last month providing details but invoked a claim of trade secrets to prevent them from becoming public.

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