FCC awards CenturyLink $500M per year to expand rural broadband access

CenturyLink, the nation’s third-largest telecommunications company, will join a federal broadband fund to expand Internet service to 1.2 million new rural customers, the company said Thursday.

The company said in a statement that it will bring Internet speeds of at least 10 Mbps down and 1 Mbps up to these rural customers by joining the Connect America Fund (CAF). The FCC program, currently in its second phase, will give CenturyLink $500 million per year for six years to incentivize its broadband expansion.

“These are high-cost markets with many deployment challenges,” John Jones, CenturyLink’s senior vice president for public policy and government relations, said in the statement. “The Connect America Fund, along with our significant capital investments over the years, help make deploying rural broadband more cost effective.”

Under CAF rules, CenturyLink must meet a 40-percent rollout target by the end of 2017. In each subsequent year, it must add 20 percentage points to its rollout total, reaching 100 percent by the end of 2020.

FCC Chairman Tom Wheeler praised CenturyLink in a statement, saying, “This is the largest amount accepted by any company to date—and the opportunities that modern broadband will provide for the rural communities CenturyLink serves are priceless.”

CenturyLink was the first of the big three national broadband companies to announce its participation in CAF. Verizon and AT&T, its two larger competitors, are expected to announce their decisions later today.

The Federal Communications Commission’s decision to let CenturyLink meet speed targets of 10 Mbps down and 1 Mbps up is curious, given that the commission voted in January to redefine “broadband” as 25 Mbps down and 3 Mbps up. The commission’s 2015 Broadband Progress Report, released along with its redefinition, noted that 17 percent of Americans lacked access to Internet at those speeds. Among rural Americans, that number was 53 percent.

An FCC spokesman did not respond to a request for comment on the discrepancy.

The FCC created the Connect America Fund in 2011 as an extension of its Universal Service Fund, which was originally designed to encourage phone companies to wire the entire country for landline service. The agency said in a statement that the program will give telecom companies more than $10 billion in the next six years to expand broadband.

An FCC spokesman did not respond to a question about whether CenturyLink or other CAF participants could face punishments for failing to meet rollout targets.

Photo via Andrew Hart/Flickr (CC BY SA 2.0)

Eric Geller

Eric Geller

Eric Geller is a politics reporter who focuses on cybersecurity, surveillance, encryption, and privacy. A former staff writer at the Daily Dot, Geller joined Politico in June 2016, where he's focused on policymaking at the White House, the Justice Department, the State Department, and the Commerce Department.