Months after obtaining several franchise agreements in New Hampshire and West Virginia that allowed it to overbuild Comcast markets in those states, Atlantic Broadband said Tuesday that it will invest $82 million to extend its fiber network into communities and businesses in those areas it doesn’t currently serve.

The effort will affect about 70,000 homes and businesses in several communities  throughout New Hampshire and West Virginia already served by Comcast. In a press release, ABB said it has obtained or is in the process of obtaining franchise agreements in Concord, Dover, Somersworth, Durham and Madbury, New Hampshire; and in Westover, Morgantown, Granville and Star City, West Virginia.   

Overbuilding cable systems is nothing new, and several small operators have obtained franchises to compete with large and medium-sized cable  companies over the years. Comcast obtained a franchise to provide service in nearby Rochester, New Hampshire in 2017, a market that was already served by ABB’s MetroCast Cable, and both companies have appeared to flourish. 

Also: Greener Pastures

“We are grateful to the communities that have received our franchise applications with such enthusiasm, as consumers in these locations will soon have a new choice in providers,” ABB president Frank van der Post said in a press release.  “We look forward to serving these communities by delivering superfast internet, cloud-based TV, and a phenomenal customer experience as we pursue our high-growth plans.”

ABB said the first customer activations are expected in early 2022 and that it will notify local residents as construction is completed throughout the year in each area. The company said once the fiber builds are complete, residential and business customers will receive ultra-high speed internet service, a “WiFi Your Way” managed WiFi service that expands coverage throughout the home; an IPTV video service; unlimited wireline phone service, and business class communications with internet speeds of up to 10 Gigabits per second, hosted voice, 4G Backup, and advanced fiber services.

In the city of Somersworth, which approved ABB’s franchise in June, city economic development manager Robin Comstock said the “community benefits when there are good choices of providers and services. The state-of-the-art fiber infrastructure will provide a new option for residential and business members of our community, help drive economic vitality and keep us ahead of the technological curve.”

Atlantic Broadband is part of Canadian telecom service provider Cogeco Communications, and in September snapped up WideOpenWest properties in Cleveland and Columbus, Ohio that added about 690,000 homes-passed to its footprint for about $1.125 billion. ■

The head of the Universal Service Administrative Co., which administers broadband subsidies under the Universal Service Fund, said that E-Rate fund recipients can indeed overbuild existing fiber plant if it is the most cost-effective use of the subsidy to get advanced communications so schools and libraries.

That came in a letter to FCC commissioner Michael O'Rielly from USAC CEO Radha Sekar in response to an inquiry from O'Rielly.

O'Rielly last month had written Sekar seeking some answers on whether government broadband subsidies should be used to subsidize wide area networks (WANS) where government subsidies have already been used to lay fiber as well as how many of those were being subsidized. Sekar did not have an answer for the latter, saying USAC did not track whether the money was going to WANS or whether the money for WANS or other special projects was overbuilding.

"USAC does not have sufficient data to determine if approved special construction funding partially or fully overbuilds existing fiber networks," Sekar said.

But as to whether "the E-rate rules permit funding for special construction projects, whether self-provisioned networks or networks owned by a commercial provider, that would duplicate, in whole or in part, fiber networks that have been built using federal funds?" The answer was yes.

"If the cost of applicant ownership over the life of the network is less expensive than the cost of using an existing network, the applicant can be approved for fiber construction funding of their own network," the USAC CEO said.

And if a consortium builds a WAN, O'Rielly asked--there have been 43 consortia seeking funding since 2014, says USAC--can it get money for a WAN even if individual consortium members can get service from an existing provider, Sekar said yes, again so long as the WAN as that is the most cost-effective option.

USAC could not tell O'Rielly how much money had been given out for WANS--since USAC does not track that--but it did have a figure for special projects, of which WANS are a subset*: $202,399,488.79.

“USAC’s purported inability to identify and prevent the overbuilding problem previously described exposes the inadequacy of the Commission’s current E-Rate rules, as well as the dire need for better coordination among the USF programs," said a spokesperson for O'Rielly. "Given the low threshold for satisfying the so-called “cost-effectiveness” standard, it’s unsurprising that certain special construction applicants were able to game the rules and configure their applications to achieve a specific outcome. This is unacceptable and needs to change: funding overbuilding in areas served by an existing fiber-based provider—when millions of Americans don’t have any broadband service at all—is a waste of ratepayer money and the epitome of bad government.”

In a speech this week to NTCA – The Rural Broadband Association’s legislative and policy conference in D.C. O'Rielly said he would continue to fight the use of government broadband subsidy money to overbuild existing broadband service deployed with private capital, including from high-profile funds with laudable goals, like E-Rate.

He suggested that some were trying to hijack the E-rate and Rural Health Care Universal Service Fund (USF) programs to "cannibalize your service areas, steal the biggest and most lucrative clients around, and jeopardize your ability to serve remaining consumers." O'Rielly favors capping the USF fund. 

*The balance of "special projects" are last-mile buildouts from existing providers' networks.  

The American Cable Association has filed a letter with the FCC on behalf of 38 small and mid-sized ISPs asking the FCC remove the overbuild condition in the Charter-Time Warner Cable merger.

"[W]e all have plans to invest in improved network technologies to offer greater performance or to expand our networks into unserved areas. Unfortunately, the merger condition requiring Charter to overbuild other providers has undermined those plans to provide improved services and reach new customers," the ISPs told the FCC. "We write to encourage the Commission to act in the best interests of millions of unserved and underserved customers by eliminating the overbuild condition."

The letter went to all three commissioners, but ACA is definitely preaching to the choir when it comes to FCC Chairman Ajit Pai and likely commissioner Michael O'Rielly, which would be a majority of the commission at the moment.

FCC sources have told Multichannel News that Pai circulated an item last month to adjust the Charter-Time Warner Cable deal buildout condition so that it would no longer require Charter to overbuild where a million homes were already getting broadband service.

The 2 million buildout requirement remains, but according to the item that could now all be buildouts to currently unserved homes, with no overbuilding, though Charter could still choose to overbuild those one million. They are just no longer required to do so. (Charter last year said it intended to focus its overbuild activity on telco broadband providers, not other cable companies.)

What was being circulated was, in fact, the granting of a petition for reconsideration of the deal condition by the ACA, which had asked that the overbuild requirement be removed.

ACA members serve 7 million subscribers that could theoretically be targets for overbuilds.

An FCC source said Pai's motivation for scrapping the overbuild condition is that it is more important to build to unserved houses to close the digital divide than to provide high-speed service where there is already high-speed service. He does not want the overbuild condition to be a disincentive for Charter to serve those unserved homes.

FCC officials were not available at press time to comment on the status of the chairman's grant of the petition.

If all three voted it, then the two Republicans could make it happen. But if Democrat Mignon Clyburn does not vote, it the majority would need to schedule the item for a public meeting and vote it there.

Last May, when the Charter-Time Warner Cable order was released, then-commissioner Pai blasted the overbuilld condition, and the buildout condition as well. "Charter’s increased broadband market share will come at the expense of smaller competitors," he said, adding that the order moved the FCC "one more step down the path of micromanaging where, when, and how ISPs deploy infrastructure."

Pai actually dissented from the order, but not because he thought the deal was not in the public interest, but because he thought the conditions the FCC majority extracted from the companies in what he signaled was an effort to micromanage the wider Internet economy, were not.