CenturyLink Adds Gigabit Builds in Six States

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By Tim McElgunn

Sept. 15 — CenturyLink has expanded residential gigabit service availability to six more states, in the face of increased competition for high-speed data services.

The company has added the service in Anthem, Chandler, Gilbert, Mesa, Peoria, Phoenix and Scottsdale, Arizona; in the Boise, Idaho metro area; Des Moines and Cedar Rapids, Iowa; Fayetteville and Raleigh-Durham area, North Carolina; Albuquerque, New Mexico and Sioux Falls, South Dakota.

CenturyLink's gigabit service is now available in part of at least one community in 17 states. In addition to the 6 new states, the company has deployed in Denver; Orlando; Minneapolis-St. Paul; Jefferson City, Missouri; Omaha, Nebraska; Las Vegas; Portland, Oregon; Salt Lake City; Seattle; Madison, Wisconsin and in at least one market in Ohio since 2013.

CenturyLink says it is on track to connect more than 700,000 homes and small and midsized businesses (SMBs) to its 1 Gbps-capable fiber-to-the-premises network by the end of this year. In May, the company said it could deliver 1 Gbps to approximately 490,000 SMBs located near the company's fiber backbone or in fiber-fed multi-tenant unit office buildings. Those SMB locations are in the cities listed above, along with six cities where CenturyLink only offers gigabit services to business customers.

“Consumers and small businesses are ready for a broadband service that is capable of keeping up with today's bandwidth demands,” Shirish Lal, CenturyLink's chief marketing officer said in a statement. “With the proliferation of the Internet of Things and the connection of everyday objects to the Internet and to one another, we are pleased to deliver speeds that can support these new technologies.”

Competitive Pressure Increasing

CenturyLink has seen a significant increase in the level of high-speed data competition across much of its territory as cable operators have leveraged DOCSIS 3.0 infrastructure upgrades to deploy speed ranging from 100 Mbps to a full gigabit per second. The company competes with Cox Communications, Charter Communications, Inc or Suddenlink across much of its territory. All three companies have deployed at least 100 Mbps data tiers, with Suddenlink thus far the most aggressive in raising speeds, including pushing to 1 Gbps in Texas, Missouri and North Carolina. Cox has promised to deploy gigabit service across its footprint beginning next year and is working with the cities of Phoenix and Tempe, Arizona to obtain waivers needed to start upgrading infrastructure in those cities. Charter's proposed acquisition of Time Warner Cable and Bright House Networks includes pledges to rapidly expand Internet access speeds and availability.

Beginning in 2016, competition is likely to get even more widespread as equipment based on the new DOCSIS 3.1 standard comes to market, further expanding cable data network capacity, improving operational efficiency, and reducing operating costs to deliver gigabit services.

While CenturyLink's FTTH technology provides the company with massive capacity where deployed, its gigabit footprint remains limited within the various markets in which it has launched. By contrast, cable speed increases, whether to 300 Mbps or all the way to a gig, are usually available to all homes passed in a given market.

CenturyLink has generally matched competitor pricing, with 1 Gbps service in the most competitive markets starting at about $79.95 per month in a double- or triple-play bundle. Residential customers can bundle the 1 Gbps service—and lower-speed tiers—with other qualifying CenturyLink services including Smart Home, Prism TV, DirecTV or Verizon Wireless service, depending on market. A bundle with CenturyLink's Prism TV starts at $114.94 per month. The standalone list price is $153.95 per month, however, significantly higher than prices in a number of gigabit cities, where Google Fiber, AT&T and others offer sub-$100 standalone gig services.

Subsidies Helping Buildout in Higher-Cost Markets

CenturyLink is looking to the federal Connect America Fund subsidy program to help it extend fiber and gigabit services into less competitive markets as well. In August, the company announced that it had accepted $500 million in funding from the second phase of the FCC's Connect America Fund (CAF II). CenturyLink says that the subsidy will let it deploy at least 10 Mbps downstream speeds to approximately 1.2 million rural households and businesses in 33 states, with construction beginning in 2016

CAF II funding is scheduled to be disbursed over six years, giving CenturyLink about $83 million per year to spend on upgrades reaching residents and businesses in FCC-designated, high-cost areas. Support is limited to areas where no unsubsidized incumbent operator is currently offering what the FCC defines as broadband services.

The company accepted $75 million in CAF Phase 1 (CAF I) support in 2014 to bring 4 Mbps broadband to 114,000 unserved rural locations. That funding was not spread over multiple years, however, instead replacing incremental funding that was eliminated when the FCC froze the predecessor Universal Service Fund.

To contact the reporter on this story: Tim McElgunn in Cherry Hill, NJ at tmcelgunn@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com