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AT&T, Verizon Say No Thanks to Broadband Rollout Funds

Telecom giants AT&T and Verizon have respectfully
declined the FCC's invitation to accept phase I Connect America funding to
extend broadband service in rural areas.

The FCC, which is migrating phone subsidies in the Universal
Service Fund from telecom to broadband, announced the launch of the first phase
of funding July 25, saying that $115 million would be invested by companies in
37 states.

But AT&T was not one of them. The deadline for participation
was July 24. "AT&T is in the midst of evaluating its options for
further rural broadband deployment," said Robert Quinn, senior VP of regulatory
affairs for AT&T, in a letter to the commission. "As our chairman
stated last month, we are optimistic about AT&T's ability to get more
broadband into rural areas, particularly as the technology continues to
advance. However, until AT&T finalizes that strategy, it cannot commit to
participating in the incremental support program, as it must by today's date.

"Verizon carefully evaluated participation in this stage of
the new FCC program, and we decided not to participate in order to focus
resources and capital on our own wireline and wireless broadband deployment
plans," said the company.  "Verizon's prior deployment and additional
plans for private investment in broadband complement the FCC's universal
service goals and the Connect America Fund.  We invest billions each year
to deliver world-class wireline and mobile broadband services, and regardless
of whether or not Verizon is a direct recipient of FCC funding we will continue
to work with the FCC to help deliver the promise of broadband to all Americans,
wherever they live."

Verizon was only eligible for $19.7 million, according to
the company, one of the reasons it passed. It gave a shout-out in its brief
letter to the FCC declining to participate. "Verizon fully supports the
landmark reforms of the Federal Universal Service Fund that the Commission
adopted in the USF-ICC Transformation Order last November. These reforms
will modernize the program and ensure that USF support will now be used to
offset the cost of broadband deployment in rural America.

Those that did accept included Frontier Communications,
which took $71.9 million, and CenturyLink, which said last week it would accept
$35 million from the fund to deploy service to 45,000 homes. The company was
actually eligible for $90 million, but said restrictions on the funds made
further deployment "uneconomical," though it has filed a waiver of
those restrictions, and said it would roll out service if granted. The National Cable & Telecommunications Association opposes the merger, saying CenturyLink should not be able to use the money to overbuild existing service.

FairPoint Communications in Burlington, Vt., is using $2
million to expand broadband in the state.