In a Big Cable First, Charter Plans to Participate in RDOF Auction; Eyes Billions in Funding for Rural Broadband

Charter plans to participate in the Rural Digital Opportunity Fund (RDOF) auction. Depending how successful the company is in the auction, the build-out could involve multiple millions of locations and an investment of multiple billions of dollars, Charter said.  Major cable companies-turned-broadband providers such as Charter traditionally have not participated in government funding programs. They weren’t eligible for the traditional Universal Service Fund program and either didn’t participate in or didn’t win funding in the Connect America Fund CAF II auction, which was open to a broader range of service providers. But Charter sees opportunity in the RDOF.

Telecom and broadband financial analysts at MoffettNathanson Research applauded Charter’s news, noting that Charter already has been deploying fiber-to-the-home (FTTH) in some rural areas and “our understanding is that they have been pleased with the returns.”  FTTH can easily support gigabit speeds, which could give Charter a bidding advantage in the RDOF, which will use a weighting system to favor bids to provider higher-speed, lower latency service. “Bringing true gigabit speeds to previously unserved and/or underserved markets virtually guarantees both rapid uptake and high terminal market share,” wrote MoffettNathanson. “And if earning a return on even the first high capacity network to such markets requires a subsidy, then the risk that there will eventually be a second (competing) network in these markets is almost nil.”