Charter shares $5 billion broadband plan and pole concerns

Charter Communications has outlined plans to spend US$5 billion on the rollout of gigabit broadband to 1 million or more customers in unserved areas, with a quarter of the funding coming from the government.

The US cable operator was one of the big winners in the FCC’s Rural Digital Opportunity Fund (RDOF) auction, which concluded in early December with the award of $9.2 billion in broadband funding grants to myriad successful bidders, including some big names in the telecoms and technology spaces.

Charter was assigned the most locations in the auction, picking up support for 1.06 million areas across 24 states, and at $1.22 billion it also secured the second-largest amount of funding; only wireless broadband provider LTD Broadband received more funding.

That government financing will form part of Charter’s $5 billion plan to expand its network to lower-density, mostly rural communities that do not at present have access to broadband service of at least 25 Mbps in the downlink and 3 Mbps uplink. The operator said it will build out network in all these rural areas capable of providing 1 Gbps broadband, but consumers will be offered plans starting at 200 Mbps.

“As we continue to help provide more Americans with reliable access to the internet ecosystem, our hope is that federal, state and local authorities, other private companies, pole owners and broadband providers will work together and play a pivotal role in expanding networks to unserved areas,” said Charter Communications chief executive Tom Rutledge, in a statement.

There is a hint of a veiled threat in his words. Or perhaps more accurately, a hint of ‘if we can’t do exactly what we are setting out to do, it might not be our fault.’ Making excuses in advance, if you like.

Charter has made it clear that the success, and probably more to the point, timing of its multi-billion-dollar network initiative will hinge on “a variety of external factors,” access to utility poles being key amongst them. If it can’t gain access to the poles it needs, it can’t roll out network. And in sparsely populated areas, it will need access to a lot of poles.

“With fewer homes and businesses in these areas, broadband providers need to access multiple poles for every new home served, as opposed to multiple homes per pole in higher-density settings,” the company explained. “As a result, pole applications, pole replacement rules and their affiliated issue resolution processes are all factors that can have a significant impact on the length of time it takes to build into these rural areas,” it said.

Rutledge hammered home the point by noting that more cooperation with pole and utility companies means faster rollout.

“We look forward to working with local municipalities, electric cooperatives, and investor-owned utilities to ensure that permits are obtained in a timely, fair and cost-effective fashion,” he said.

Not that Charter has actually shared a timeframe for the project. The terms of the RDOF funding provide for certain incentives for companies to build out network as quickly as possible, but the requirements state that they must have covered all of their assigned areas within six years.

Charter describes the $5 billion initiative as “an attractive long-term investment opportunity,” because the expanded footprint will drive customer growth.

The company had 28.9 million Internet customers, mainly in the residential sector but with some small businesses in there too, at the end of 2020, up by more than 2 million over the course of 12 months, although net adds were down in Q4 at 246,000.

Smaller rival Windstream is also keen to build up its high-speed Internet customer base and on Monday announced that it has applied to the FCC to receive the funding it won at the RDOF auction.

The operator successfully bid for $523 million over 10 years that will enable it to extend FTTH services to 200,000 locations in 18 states.

“This is an exciting expansion of our long-term fiber build plans, enabling us to bring gigabit-speed broadband to rural communities that would have been too expensive to serve without a public-private partnership,” said Jeff Small, president of Windstream’s Kinetic high-speed Internet business unit.

Other big names on the winners list in phase one of the RDOF auction included Cox Communications, Cincinnati Bell, Frontier Communications, and CenturyLink. We can expect to see some sizeable network expansion announcements in the coming months, and then there’s phase two of the process to look forward to, which could see as much as $11.2 billion allocated to companies keen to expand high-speed broadband – including, but not limited to, FTTH – in partially-served areas.