Bipartisan Infrastructure Deal May Harm AT&T, Lumen Technologies, and Frontier Communications

Strategic Insights -

The recent bipartisan infrastructure deal is set to allocate $65 billion for broadband infrastructure, aimed at achieving universal broadband access and reducing costs for consumers. The deal also includes the passage of the Digital Equity Act, ending digital redlining and creating a permanent program to help low-income households access the internet. However, New Street Research warns that provisions targeting digital redlining could negatively impact AT&T, Frontier Communications, Lumen Technologies, and rural operators. The bill is now awaiting passage by Congress and a signature from President Biden to become law.

Key Takeaways:

  • The bipartisan infrastructure deal includes $65 billion for broadband infrastructure, with $40 billion for infrastructure deployments and $11.75 billion for the Federal Communications Commission's (FCC) Emergency Broadband Benefit program.
  • The Digital Equity Act aims to end digital redlining and create a permanent program to help low-income households access the internet, with the FCC tasked with creating rules to combat digital redlining within two years.
  • New Street Research analyst Blair Levin warns that AT&T, Frontier Communications, Lumen Technologies, and rural operators could be negatively impacted by the digital redlining provisions.
  • Recent campaigns accusing AT&T and Lumen of contributing to the digital divide have led Levin to believe that these companies would be targeted by the FCC in implementing the legislation.
  • Lumen and other rural providers may face mandates to extend coverage beyond their current expansion plans, which could significantly harm their businesses.
  • Frontier Communications, in particular, may struggle to afford deploying fiber to all 11 million homes within its footprint, a prospect that has been deemed "zero" by analyst Jonathan Chaplin.
  • The bill must be passed by Congress and signed by President Biden before it becomes law.

Statistics:

  • $65 billion: The total funding allocated for broadband infrastructure in the bipartisan infrastructure deal.
  • $40 billion: The amount budgeted for infrastructure deployments in the bipartisan infrastructure deal.
  • $11.75 billion: The amount allocated for the FCC's Emergency Broadband Benefit program in the bipartisan infrastructure deal.
  • 2 years: The time frame within which the FCC must create rules to combat digital redlining and promote equal broadband access.
  • 21st Century: The century in which the United States is racing with China and the rest of the world for global economic dominance.
  • 11 million: The number of homes within Frontier Communications' footprint.

Sources:

  • New Street Research: "Bipartisan Infrastructure Deal Negatively Impacts AT&T, Frontier Communications, Lumen Technologies"
  • White House: "Fact Sheet: Historic Bipartisan Infrastructure Deal" (retrieved from https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/28/fact-sheet-historic-bipartisan-infrastructure-deal/)
  • NATE: The Communications Infrastructure Contractors Association: "NATE Statement on Bipartisan Infrastructure Agreement" (retrieved from https://natehome.com/2021/07/28/nate-statement-on-bipartisan-infrastructure-agreement/)
  • CWA Union: "Lumen's Failure to Invest Worsening Digital Divide" (retrieved from https://cwa-union.org/news/lumens-failure-invest-worsening-digital-divide)
  • Federal Communications Commission: "Emergency Broadband Benefit Program" (retrieved from https://www.fiercetelecom.com/financial/here-s-where-funding-from-fcc-s-emergency-broad-benefit-going)