CenturyLink scored billions in CAF II funds, eyes the next giveaway: RDOF

CenturyLink has benefited the most from the Connect America Fund (CAF) II, a Federal Communications Commission program that has awarded Universal Service Funds to telecommunication operators to build broadband in unserved and underserved areas of the US, especially rural areas. CenturyLink has received $506 million per year since 2015 in CAF II awards, which will total more than $3 billion over the six-year period from 2015 to 2020. Now, the FCC has proposed a follow-on program to CAF. This program is named the Rural Digital Opportunity Fund (RDOF) and the FCC is all but certain to approve RDOF Jan 30. For CenturyLink and other incumbents, RDOF will extend their CAF II funding for one additional year, through 2021. But in the longer term, RDOF is likely to be less a boon for incumbent telecommunication companies than CAF II has been.

RDOF will provide about 24% more money than the CAF II program, but the FCC has designed the program to help independent broadband providers, not just the incumbents. Small fixed wireless broadband provider Intelliwave Broadband CEO Chris Cooper said the FCC wants to make sure the widest number of rural providers participate in RDOF, not just the traditional local exchange carriers. “In rural America it’s really the independent providers stepping into that underserved niche,” said Cooper. “We compete with Charter, Frontier, CenturyLink and AT&T —  either where they’re not providing or where the plant has been neglected for so long. We love to compete against the ILECS.” The FCC is setting up RDOF differently than CAF II: It will set up a reverse auction in which participants compete to underbid each other, there will be one winner awarded per geographic area, and winners will be based not just on cost but also on speed and latency requirements. Also, the incumbents will not have the right of first refusal, which they had with CAF II, showing that the FCC is interested in introducing competition from independent broadband players.