Frontier Communications said today it is selling its broadband operations and assets in four rural-intensive states that have benefited greatly from the operator's participation in federal funding and grant programs.
While the operator faces criticism for not meeting some timelines associated with government monies, the condition of its rural deployments and the promise they hold for future return on investment most likely played a positive role in the deal.
As described in Light Reading, WaveDivision Capital and Searchlight Capital Partners have teamed to buy Frontier's broadband network and assets in Washington, Oregon, Idaho and Montana for $1.35 billion cash. Frontier's network passes 1.7 million residential and business sites, serving 350,000-plus customers, in this four-state region. Of these, about 500,000 are fiber-to-the-premises-capable, according to the service provider. At the close of its first quarter, Frontier's customer mix included 150,000 fiber broadband; 150,000 copper broadband and 35,000 video connections, the operator said.
Pinpointing Frontier's Federal Funds
This interactive map, created by USAC, shows Frontier's federal funding in Washington, Oregon, Idaho and Montana -- the four-state area covered in the acquisition deal with WaveDivision Capital.
(Source: CAF II map, Universal Service Administrative Co.)
Frontier is one of the nation's most active participants in Federal Communications Commission rural-broadband deployment programs. In January 2019, Frontier told the FCC it had met agency milestone in 27 states, but not CAF II's 60% interim deployment milestone in Nebraska and New Mexico, Benton Foundation reported. Frontier plans to bring coverage to more than 774,000 sites across 29 states, the FCC said.
Advancing on that goal, albeit slowly, the operator added approximately 10,000 locations in the first quarter, bringing the total to 406,000 locations, said Sheldon Bruha, senior vice president and interim CFO at Frontier, during the company's Q1 earnings call, according to a Seeking Alpha transcript. That slow rate was due to weather, Bruha added.
"Connect America Fund buildouts remain an important focus this year," said Bruha said. "We expect the pace will increase, now that we're into spring. We're also building fiber-to-the-home in certain rural markets to a total of 19,000 locations. We were leveraging state funding programs for these builds. Also, we continue to utilize fixed wireless broadband to fulfill some of our CAF requirements."
WaveDivision Capital's goal is to "bring better Internet connections to more homes and businesses throughout North America. We do this by providing investment and expertise to help companies enhance their infrastructure and deliver next generation broadband products," according to its website. Founder Steve Weed sold his prior business, Wave Broadband, last year to TPG Capital for more than $2 billion.
The number and power of Britain's so-called altnets is growing, increasing access to fiber-based gigabit broadband for residents and businesses where incumbents such as BT, Virgin and Openreach did not deliver.
After NTIA asked for public comments on map improvements in October 2018, the FCC decommissioned the agency's broadband map in early December but did not say whether it will use any of the public's great ideas on its own (largely panned) map.
In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.
The MDU market continues to face fierce competition among service providers due to tech-savvy residents (i.e., millennials), demand from building owners and management companies, plus the favorable economics of bulk contracts. However, no MDUs are the same, so service providers must use multiple technologies and inconsistent deployment models, increasing operational complexity and rollout costs.
The MDU market itself is evolving as residents adopt smart-home technologies, generating rising demand for smart apartments with built-in connected thermostats, keyless entryways and doors, and video doorbells. This evolution presents both new challenges and opportunities. In other words, service providers must consider innovative service-delivery strategies to compete and win.
In this Broadband World News and ADTRAN webinar, Kurt Raaflaub, Head of Strategic Solutions Marketing, will highlight emerging MDU broadband Internet trends and challenges. In addition, Kurt will outline the next-generation service creation and delivery platform, built on open standards, that allows service providers to connect millions of underserved MDUs, enables creation of user-driven services, and reduces operational complexity and costs.
Plus, special guest, Alice Lawson, Broadband and Cable Program Manager for the City of Seattle, will discuss Seattleís B4B-Build For Broadband initiative that addresses best practices in planning for MDU telecommunication infrastructure.