Connect America II could push telecom revenues millions higher

Phase two of the Connect America Fund (CAF II) will go into effect soon - transforming the existing Universal Service Fund (USF) into a subsidy program promoting broadband deployment in high-cost rural areas. According to telecom financial analysts at Bernstein Research, CAF II will offer up to about $1.7 billion annually through 2020 to AT&T, CenturyLink, Frontier, Windstream, and Verizon for rural broadband deployment. “... Although carriers will no longer receive traditional Universal Service funding, CAF II will provide more money than under the previous program— in most areas at least,” wrote tech blog telecompetitor.

Bernstein reports that AT&T and CenturyLink will be eligible annually for $530 million and $500 million, respectively -- $170 and $160 million more respectiverly than they receive presently. According to telecompetitor, "Frontier is expected to be offered about $300 million annually – about $155 million more than it gets in USF, while Windstream and Verizon are likely to be offered about $190 million and $150 million, respectively. Those numbers represent about $90 million and $20 million more, respectively, than each carrier currently gets in USF money."

Providers that choose to receive the Connect America funding must agree to provide broadband at 10 Mbps downstream to all  eligible areas in the state in which they have accepted the subsidy. Windstream and Frontier have indicated interest in accepting CAF funding and obligations throughout their territories, and AT&T and CenturyLink have indicated that they will participate in those states where the subsidy makes deployment economically viable. Verizon has not indicated any interest in the CAF rural broadband subsidies.

Speed Matters hopes all five carriers will participate fully in the CAF program to expand broadband in rural areas.

Bernstein: Connect America Fund Could Boost Five Carriers’ Annual Revenues by $717 Million by 2020 (Telecompetitor, Mar. 24, 2015)