The two biggest incumbent telephone companies in California will be taking federal subsidies to upgrade rural broadband service. Yesterday was the deadline for AT&T and Verizon to claim the money, and both more or less said yes.
AT&T’s acceptance was unambiguous. It’s taking the Federal Communication Commission’s offer of $60 million a year in Connect America Fund (CAF) subsidies to boost Internet service speeds to 10 Mbps down/1 Mbps up for 106,000 homes and businesses in rural California. Interestingly though, AT&T turned down $3.7 million to upgrade 7,000 customers in Nevada.
Verizon, on the other hand, doesn’t want anything to do with CAF money. It turned down subsidies everywhere it operates except California and Texas, where it put a marker down on behalf of Frontier Communications, which is in the process of buying Verizon’s wireline systems in those states. Verizon said no to the money offered for Florida, where it is also selling out to Frontier – no reason given as yet. Adding Verizon’s $32 million annual CAF allocation to the $6.1 million it claimed for systems it already owns gives Frontier a total of $228 million in subsidies over six years to upgrade 58,000 Californian customers.
Consolidated Telecom – formerly known as SureWest – picked up $15,000 a year to upgrade 17 subscribers in the Roseville area, while CenturyLink turned down $55,000 for 45 homes and/or businesses just this side of the Oregon border in Modoc County.
All together, the subsidies claimed by the big carriers in California are worth $98 million over six years, for a total of $590 million. The companies are required to hit construction benchmarks, which amount to upgrading at least 20% of subsidised locations every year for five years, with full completion by the end of 2020.