CenturyLink's Patel: Broadband expansion will focus on higher speeds, dense areas

As CenturyLink advances higher speed broadband into more areas via copper and FTTH, the service provider will focus on a multiuse deployment mentality where it will leverage assets that can serve not only consumers, but also wholesale and business customers.

Sunit Patel, CFO of CenturyLink, told investors during the Citi 2018 Global TMT West Conference that the service provider’s approach will allow it to stay within its broader capital budget.

Sunit Patel, Level 3
Sunit Patel

“As we look at the capital allocation for the residential business, we think there are more returns to be had with the same amount of capital,” Patel said.

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Specifically, the service provider will focus on more densely populated areas located near its fiber network to address higher speed needs.

“Instead of focusing capital on getting broadband speeds up to 10-20 Mbps, you would focus your money more surgically on areas that have higher population densities and better socioeconomic demographics that are in coexistence with businesses and where wireless infrastructure might be needed to get a better return on capital,” Patel said. “You would focus your capital on providing much higher broadband speeds than just offering 10-20 Mbps.”

Patel added that “once we find areas where we can get a good return opportunities, we don’t mind ramping up investments.”

But serving large cities’ broadband needs is only one part of CenturyLink’s broadband plan. CenturyLink will also leverage federal funds to enhance rural broadband availability.

In 2015, CenturyLink accepted $500 million in the second phase of the FCC's Connect America Fund (CAF II), enabling it to deliver broadband services to about 1.2 million rural households and businesses in 33 states over the next six years.

By accepting the 33 CAF II statewide offers, CenturyLink will be able to deliver up to 10/1 Mbps to locations in FCC-designated, high-cost census blocks that today can get at best between 1.5 to 3 Mbps speeds.

“The other area of broadband expansion would be in rural markets where federal funding is available for you to be able to utilize and offer more speeds,” Patel said.

In the near-term, CenturyLink has plenty of work cut out for itself to overcome a series of quarterly broadband subscriber declines.

While the telco has not revealed its fourth-quarter earnings date yet, CenturyLink lost another 101,000 customers during the third quarter. The service provider ended the quarter with a total of 5.76 million customers.

For its part, the service provider previously said that it will continue to enhance various speed profiles by the year 2020. It said it will provide 90% of homes passed with 40 Mbps, 70% of homes and businesses passed with 100 Mbps and over 20% with 1 Gbps or higher speeds.