Windstream Signs Another Government Deal, Accepts $175 Million Award To Provide Broadband In Rural Areas

Windstream Holdings Inc. signed another government deal on Wednesday announcing a seven-year $175 million contract to expand and support FCC-sponsored broadband service to nearly 400,000 rural locations in 17 states.

On Tuesday, Windstream announced it scored a five-year, $475 million deal to provide services to the Veterans Administration.

The Little Rock telecom said it had accepted the FCC multi-million dollar award from Phase II of the Connection American Fund, a Federal Communications Commission program aimed at enhancing rural broadband networks. The fund has largely replaced the controversial Universal Service Fund that was established with the 1996 Telecom Act to provide telecom services in low-income and high-cost rural areas.

“Windstream is committed to providing robust and reliable voice and broadband services to our customers,” said Tony Thomas, Windstream’s President and CEO. “This ongoing support supplements Windstream’s substantial network investments, enabling us to continue service in many high-cost areas and to offer new service to many others.”

Thomas said the company has made significant strides in expanding and improving its broadband capabilities in its rural service areas, through its own investments and universal service and stimulus funds.

Under the rules for Connect America Fund Phase II, state-by-state support levels were generated using a new FCC cost model. Companies may accept the funding and related service obligations for its service area in each state. If a company declines an offer for a state, funding will be subject to a competitive process in which any eligible provider can bid to serve all or part of the area.

Windstream has declined the statewide offer for New Mexico, which is one of the 18 states where the Arkansas-based telecom offers residential broadband and phone services.

“We remain focused on providing affordable broadband service to consumers throughout our New Mexico service area,” Thomas said. “But the statewide offer would not enable us to meet the program’s obligations.” The company will instead participate in the upcoming bidding process to compete for support in the state.”

The FCC created the Connect America Fund in 2011 to speed up broadband deployment in high-cost, rural areas. This program replaces the previous universal service program that helped Windstream predecessor Alltel Corp. expand telephone networks to high-cost, rural areas.

Under that program, Windstream received approximately $100 million in annual support in 2014, which will be replaced by the Connect America Fund Phase II receipts of $175 million each year starting in 2015.