One of the leading integrated telecommunications service
) has been announced eligible to receive a minimum of $90
million from the Federal Communications Commission's (FCC)
Connect America Fund (CAF) this year. These funds provide
broadband service to suburban households in high cost regions.
This sum remains the second tranche of funds that the company is
being granted under FCC's CAF 1 phase. Currently, CenturyLink is
under an evaluation process to estimate the utilization of these
funds and the amount that is to be eventually accepted by the
company. In addition, CenturyLink, in its press release,
also stated that it will deploy an equal amount of its own
capital to support the FCC cause.
Financial grants from CAF represent an important source of
CenturyLink's network access revenue. The company has already
received $35 million in CAF phase I, which was utilized to deploy
broadband service to 45,000 households in underserved areas.
CenturyLink expects to benefit from the $1.8 million in funds
that FCC is planning to disburse annually under CAF phase 2.
The company continues to experience a decline in subsidy payments
received under the FCC's Federal Universal Service Fund or USF,
which now converted into CAF. On Nov 23, 2011, the FCC reformed
its USF and intercarrier compensation (fees that carriers pay
each other when they connect telephone calls) rules.
The FCC highlighted its efforts to expand high-speed Internet
services to rural areas over the next six years (2012-2018). It
will reduce access and compensation rates charged by CenturyLink
over the next six years, resulting in significant decline in the
company's access revenues.
CLEARWIRE CORP (CLWR): Free Stock Analysis
CENTURYLINK INC (CTL): Free Stock Analysis
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LEAP WIRELESS (LEAP): Free Stock Analysis
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CenturyLink, which operates with other market players like
Leap Wireless International Inc.
Frontier Communications Corporation
) has a Zacks Rank #3 (Hold).