Leading rural telecom carrier Frontier Communications (FTR) has applauded the Federal Communications Commission’s (FCC) National Broadband Plan (NBP), which the agency submitted to the Congress on March 16, 2010. In its statement, the carrier appreciated FCC’s initiatives to expand broadband accessibility for all Americans.
Frontier also commended the FCC for the overhaul of the Universal Service Fund (USF), which subsidizes phone services in rural areas. The FCC has recommended a shift of funding from traditional wired phone services to broadband in high-cost areas.
The regulator’s long-term plan is to shift about $16 billion over 10 years to exclusively support broadband networks. This would facilitate the rapid expansion of broadband services in rural regions. Approximately 14 million US homes currently do not have access to high-speed Internet, mostly in rural/underprivileged areas.
Moreover, the FCC’s proposal also called for a revamp of inter-carrier compensation (“ICC”), the fee operators pay each other to initiate, transmit and/or terminate voice calls. The agency’s long-term plan has provided a roadmap to shift ICC over a 10-year period from the existing per-minute rates to the cheaper flat-rate. This would offer adequate cost-recovery for smaller carriers that depend on ICC.
Subscription levels continue to increase for Frontier’s digital subscriber lines (DSL) broadband service. More than 91% of the households in its service areas currently have access to high-speed Internet. Frontier is expanding its broadband network in rural/underprivileged markets in West Virginia and has applied for federal funding to deploy and connect fiber-optic cable from its central office to key public facilities.
This network deployment will allow broadband speeds of up to 100 Meg. As a result of low customer acquisition costs and declining capital expenses, broadband remains more profitable than its traditional local and long-distance services.
Frontier is set to acquire the rural fixed-line business of Verizon (VZ) in 14 states. The company has already received approvals from California, Nevada, South Carolina, Ohio, Arizona and Oregon for this transaction. The acquisition, if successfully consummated (expected in second-quarter 2010), will make the company the largest pure-play rural telecom operator.
Additionally, this will offer opportunities for revenue growth through expanded broadband penetration, attractive bundled service offerings and improved customer retention.
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