The End of ReConnect?

USDA has proposed a budget for the next fiscal year, starting October 1, which contains drastic cuts for broadband. Overall, the agency is proposing to cut its overall discretionary funding by $4.9 billion, a 19% reduction. The cuts align with the proposed White House budget recommendations for the next fiscal year, that includes the following language:

USDA’s Rural Development programs are streamlined to focus on programs that have demonstrated efficient results and are an appropriate Federal role. . . No new USDA funding is needed for broadband expansion, as existing balances and other Federal resources are meeting planned growth. The Budget would also eliminate programs that are duplicative, too small to have macro-economic impact, costly to deliver, in limited demand, available through the private sector, or conceived as temporary. These include rural business programs, single family housing direct loans, self-help housing grants, telecommunications loans, and rural housing vouchers. Rural Development salaries and expenses are reduced commensurately.

Probably the biggest headline in the proposed USDA budget is that it completely eliminates the ReConnect grant program. The agency argues that ReConnect funding would be duplicative since  BEAD and other grant programs have eliminated the need for additional rural broadband infrastructure spending.

There is still $230 million remaining in the proposed budget for rural broadband, including $200 million in new broadband loans and $30 million in rural telehealth grants. The new budget claws back $40 million in unused funds still sitting unclaimed in the ReConnect pilot program.

This may not be the end of the ReConnect story, since Congress has the ultimate say in the budget. The program is still very popular with politicians. There have been several occasions in the past when Congress added funding for Reconnect during the reconciliation of the annual agriculture budget. As recently as November 2025, Senators Roger Marshall (R-Kansas) and Peter Welch (D-Vermont) introduced a bill that would provide $650 million annually through 2030 for ReConnect. But unless something like that bill happens this summer, the ReConnect program would be officially dead in October.

If ReConnect dies, there will be almost no remaining federal broadband grant programs. There is still $500 million available to NTIA for Tribal grants, but that’s the only remaining funding I am aware of. It would be a shame to see broadband grants disappear. Everybody who understands rural broadband knows that there will still be plenty of broadband gaps after BEAD grants are finally awarded. Some of these gaps will come from grant defaults. I’m hearing rumblings of BEAD defaults where ISPs will walk away from BEAD rather than sign the BEAD contracts. There will likely be more defaults of RDOF. There are a lot of projects funded by ARPA and the Capital Project Fund that won’t finish construction before the funding dries up at the end of this calendar year.

Defaulted grants aren’t the only places that won’t have good broadband. Jim Stegean, the president and CEO of CostQuest, which manages the FCC broadband maps, recently estimated there will be 2.1 million unserved or underserved locations left after BEAD. I think that number is conservatively small due to ISPs that claim 100/20 Mbps or faster in the FCC maps, but are delivering something slower. Not included in this estimate are the many urban MDUs that don’t have adequate broadband – something that was theoretically addressable by BEAD.

We’ll have to wait out the Congressional budget cycle, but unless somebody in Congress works hard to resurrect BEAD, the last broadband infrastructure grant program will soon be dead.

Broadband Shorts April 2026

The following are topics I found to be interesting but which didn’t justify an entire blog:

Update on the Telecom Act? Congressman Brett Guthrie (KY-02), Chairman of the House Committee on Energy and Commerce, and Congressman Richard Hudson (NC-09), Chairman of the Subcommittee on Communications and Technology, announced a hearing titled The Telecommunications Act of 1996: 30 Years Later. The stated purpose of the hearing is to examine the lessons learned from an examination of the Act. The hearing announcement suggests that Congress will see “how Congress can build on those lessons to modernize our laws to promote innovation, strengthen competition, and drive investment in modern communications networks.”

It’s obvious to anybody who follows telecom regulations that a lot of the changes made in the Act were quickly obsolete when broadband products became the predominant products of the telecom industry. Every reform effort has to start somewhere, and maybe this is the first step towards real discussions on updating telecom regulation. But in an industry dominated by regulatory capture from carriers, it seems highly unlikely that Congress has the appetite to take a fresh look at regulating the large carriers.

Will Starlink Bail on BEAD? A group of twenty House Democrats wrote a letter to Arielle Roth, head of NTIA, expressing concern that Starlink will walk away from the BEAD grants. The concerns come because of requests made by Starlink to state broadband offices for waivers of some of the ongoing reporting requirements that apply to all grant winners. For example, Starlink asked to be excused from conducting speed tests or providing ongoing financial reporting. NTIA has already told state broadband offices that states don’t have the authority to relax any BEAD reporting requirements. Perhaps the House members are worried that NTIA will issue a nationwide waiver for Starlink.

Arielle Roth said recently that states would have to reconsider the awards to Starlink if the company defaults. This has the industry wondering if defaults could result in an invitation for ISPs who want to build fiber or fixed wireless networks to rebid to serve such areas. In most states, there is still a lot of unspent grant funds that could be used for this purpose.

Copper Thefts by Organized Crime? AT&T published a blog that speculates that the magnitude of the theft of telephone copper wires is a lot higher than what might be attributed to random acts of crime. Rahdeese Alcutt, the lead investigator for AT&T Global Security, speculates that thefts in places like Southern California are likely coming from organized crime. The blog points out that it’s not just telephone copper wires being stolen, but anything made of copper, like material in railroads and transit systems, power utilities, HVAC systems, and city lighting systems. He says there are now days with hundreds of thefts of copper. Alcutt thinks this is an organized effort because it involves the use of heavy equipment and a well-coordinated effort to avoid law enforcement.

Fear of the Kessler Syndrome? LeoLabs, a company that monitors satellites in low-earth orbit reported that a Starlink satellite suffered an “anomaly” and broke apart into space debris. LeoLabs believes the likely cause was an “internal energetic source” and not due to a collision with another satellite. This is a concern because of the Kessler Syndrome, which predicts that there is some level of space debris that will result in a spreading cloud of debris that will destroy other satellites and result in a circling cloud of debris around the Earth that would be a barrier to space travel.

This risk increases as the number of satellites in orbit increases. The announced plans of current satellite companies could result in hundreds of thousands of satellites in low-earth orbit within a decade. The more satellites, the higher the chance of having catastrophic collisions. LeoLabs is not predicting that this anomaly will be a problem, but nobody knows what it might take to initiate the cloud of debris.

FCC Suspends Lifeline Providers. The FCC has always investigated fraud in the Universal Service Fund. The agency recently blocked seven individuals from ever participating in USF again after they were convicted of fraud. All of the convictions involved E-Rate reimbursement for broadband at schools and libraries. The fraud covered a range of bad behavior. A few individuals embezzled money that was legitimately paid to school systems. A few submitted fraudulent invoices to the E-Rate program or hired unsavory E-Rate partners.

Spectrum Relocation Costs

The FCC has been directed by Congress to free up 800 MHz of mid-range spectrum that will then be auctioned off to commercial users. One of the important steps to repurpose spectrum is that existing users of spectrum must be relocated to other spectrum bands before the auction winner can use the spectrum.

Two decades ago, Congress formalized some of the spectrum relocation process with the Commercial Spectrum Enhancement Act (CSEA), which created the Spectrum Relocation Fund (SRF). This fund was created to pay for the cost of federal agencies that have to change to using a different spectrum band if the spectrum they had been using is sold in an auction. By statute, any auction of federal spectrum must raise at least 110% of the estimated relocation costs for the federal incumbent, ensuring the move does not cost taxpayers. The SRF fund covers the cost of planning, research and development, and hardware upgrades needed to change to a different spectrum. The process of a federal agency having to relocate its spectrum use is handled by the NTIA.

Any commercial customers that are disadvantaged by a spectrum move must coordinate with the FCC to be compensated for changing to a different spectrum. The FCC also hopes to cover these costs through auction proceeds. A good example of this in action was the 2016 incentive auction, where almost 1,000 television stations moved to a new over-the-air channel to free up spectrum for cellular purposes. Anybody bidding on this spectrum understood that the price they needed to pay had to be high enough to compensate television stations that were being displaced.

There have been a number of spectrum auctions that were profitable for the FCC and that raised a lot of money over and above the relocation costs. But not all spectrum auctions have gone as planned. For example, the 2012 Spectrum Act required the FCC to auction the T-Band spectrum (470-512 MHz). This spectrum was widely used by first responders and public safety, and it was determined by the GAO, after a lot of complaints from public safety agencies, that the cost to relocate the existing users was going to exceed $5.9 billion, which was more than what the auction was expected to raise. Congress eventually repealed the requirement for the auction.

There are a few auctions where the actual relocation costs were higher than had been estimated. In the AWS spectrum (1710-1755 MHz) auction in 2013, the actual federal relocation costs were $474 million higher than anticipated.

There are other spectrum auctions where it has taken the incumbents a lot longer to vacate the spectrum than expected, making the spectrum unusable for the new buyer. A good example is the 2016 incentive auction, when it took some television stations a long time to make the transition to a new spectrum band.

The relocation issue is relevant today due to the upcoming efforts that will be required by the FCC to auction 800 MHz of spectrum, including 200 MHz this year. These auctions were ordered by the One Big Beautiful Bill with the expectations that the auctions would raise $60 billion for the U.S. Treasury. However, that revenue number ignored the impact of paying existing users of spectrum to relocate. It’s impossible to know what relocation might cost since the specific spectrum bands haven’t yet been identified. But most of the mid-range spectrum bands are already heavily used by military, government, and commercial users. It seems likely that the net gain from the auctions could be less than $60 billion expectation

California’s Middle Mile Fiber Network

California initiated its Middle-Mile Broadband Initiative (MMBI) in July 2021 with $3.25 billion in funding authorized by Senate Bill 156. On April 2, Governor Newsom announced that the first portion of the network would be activated and ready to provide wholesale broadband access.

MMBI is an extensive fiber network that stretches across the state, as shown on the map below. What’s not obvious on this map is how the network reaches throughout cities like Los Angeles to reach underserved and low-income neighborhoods.

The first live customer on the network is the Bishop Paiute Tribe located at the base of the Sierra Nevada Mountains in Inyo County. The Tribe is the recipients of a grant to build last-mile fiber funded by an NTIA Tribal grant. The connection to the MMBI network brings the backbone bandwidth to support the local network, and the fast speeds on the fiber network were immediately activated by the live connection to MMBI.

The bill authorized various parts of the state government to coordinate the construction of MMBI:

  • CENIC Middle Mile Broadband Initiative, LLC was authorized to be a third-party administrator to manage the development, construction, maintenance, and operation of the network.
  • The California Public Utilities Commission (CPUC) works with CENIC to determine the routes and access points on the network.
  • Caltrans will manage construction along state highways.
  • The Middle-Mile Advisory Committee (MMAC) was created to oversee the project and to advise on issues like the rates charged for connections on the network.

MMBI differs from state-owned networks in many states in that its goal is to provide affordable affordable backbone connectivity to ISPs, municipalities, Tribes, and others who want to provide last-mile broadband or cellular service. Many statewide fiber networks were built to provide broadband to government buildings and anchor institutions, but don’t allow middle-mile to be used for commercial purposes. I hope that States might look at what California has one and will open up their State fiber networks to provide affordable backhaul.

The network shown on the map above is the first phase. The state is open to proposals for joint construction with other entities to continue to expand the network to additional communities.

The $3.25 billion of spending, just within California, shows the inadequacy of the $1 billion middle-mile grant program authorized by Congress as part of the Infrastructure Investment and Jobs Act. Lack of affordable fiber middle-mile is still a glaring issue throughout rural America, and California is to be lauded for starting to solve this issue in the state.

Leftover Copper Customers

I read that T-Mobile was thinking about buying the fiber assets of UNITI, which includes the fiber assets of Windstream. Regardless of whether that sale happens or not, it made me wonder about what happens to the customers served by copper who don’t go with a sale. Copper customers would be those served with telephone copper who are buying traditional TDM telephone service, DSL, and T1s and related products.

The concept of buying only fiber customers from an ISP seems to be a new industry theme. Lumen sold its fiber customers to AT&T but retained the copper customers. We know Lumen’s stated plans when it sold fiber customers to AT&T. The company publicly said it would retain and care for its copper-based consumer services since they continue to provide a strong ongoing financial contribution to the company.

But will they really? I have to think that a lot of Lumen markets were a mixture of copper and fiber, and that a lot of the technicians and much of the support apparatus for caring for these customers will leave with the fiber customers. I could be wrong, but I find it hard to imagine that Lumen will provide a robust maintenance crew to take care of the copper customers. This seems even less likely for a smaller company like Windstream. Will the remaining company really want to keep the entire company structure needed to take care of copper customers? That’s not only technicians in trucks, but it means somebody to man the central offices, somebody to field customer service calls, somebody to take technical service calls and dispatch repairmen.

I have a hard time picturing a telco willing to retain all of these functions to care for a fraction of their previous customers and for a shrinking customer base. This would also mean having to keep technicians who understand copper. I already know that all big telcos have lost most of their experienced copper technicians to retirement. I have a hard time envisioning technicians willing to go to work for a telco that only owns copper – there would be no upward mobility to learn newer technologies, and the job is guaranteed to end when the copper is eventually decommissioned. Does anybody really want to be a Lumen copper technician?

It seems buyers of fiber customers don’t want the hassle of buying the copper networks and then having to go through the process of disposing of the copper and disconnecting customers. It’s fully understandable that a company like T-Mobile wouldn’t want to take on that burden with UNITI. The FCC recently changed the rules to make it easier to dispose of copper customers, and as part of that order, the FCC overrode any state regulations related to disposing of copper customers. But the FCC did not eliminate all regulatory rules related to owning a regulated telephone company, and I’m sure that one of the  motivations for a company like T-Mobile not to take copper customers is to avoid getting dragged into that regulatory world.

Windstream and Lumen got some recent help from the FCC when it said that companies with copper networks can ‘grandfather’ their TDM products, meaning they don’t have to sell services to any new customers. While the FCC order didn’t use the term, this means the end of the carrier of last resort responsibilities for telcos.

I would not be surprised to see Lumen or other companies stuck with a copper-only network take the path of milking any remaining revenues from those customers, but doing nothing to retain or maintain the customers. For example, if a copper customer has a technical issue, they might be dropped instead of trying to fix the problem. This kind of approach would keep revenues for a while while eliminating most of the cost of keeping and operating a copper network.

The FCC’s Ability to Levy Fines

Today’s blog takes a deeper dive into the upcoming case at the Supreme Court concerning appeals by AT&T and Verizon over fines levied by the FCC. The original appeals followed an FCC finding that all three major U.S. cellular carriers were liable for violating customer privacy by selling access to customer location data. This data showed every place that a customer visited during the day, something that should make every cell customer uncomfortable. The FCC fined AT&T $50 million, T-Mobile  $80 million, and Verizon $47 million, with smaller fines against a few other carriers. The case at the Supreme Court looks specifically at the FCC’s ability to levy fines against the carriers for violating consumer privacy rights.

AT&T and Verizon appealed the FCC fines. Both companies were emboldened by two recent Supreme Court rulings that weakened the FCC’s authority. The first was Loper Bright Enterprises v Raimondo, which said that courts don’t have to defer to expertise at federal agencies when deciding lawsuits. The second case was SEC v. Jaresky, which said that federal agencies should give defendants a chance to have a trial by jury in a federal court rather than levying fines.

As usually happens with cases that make it to the Supreme Court, lower courts issued conflicting opinions about the FCC fines. The 5th U.S. Circuit Court of Appeals overturned the fines levied against AT&T, while the 2nd U.S. Circuit Court of Appeals upheld the FCC’s fines against Verizon.

One of the more interesting things about both appeals was that the carriers did not deny their bad actions – they had clearly allowed access to customer location data. Both appeals relied on the Supreme Court ruling in SEC v. Jaresky and argued that the FCC should have offered the carriers the chance to take the cases to court and hold a jury trial as an alternative to the FCC fines.

It’s clear that the carriers are trying to weaken or break the FCC’s ability to levy fines and are willing to go through this process as a way to avoid future fines. I find it unbelievable that the carriers would have chosen to take this specific case to a jury if they had been given that option. It’s impossible to seat a jury of people who don’t use cellphones, and I would wager that a jury would be unhappy that a carrier would sell the data to track them 24/7. It’s easy to imagine that a jury would assess damages much larger than the FCC fines if these cases had instead gone straight to court.

It will be interesting to see what the carriers do if they win this case. Winning doesn’t take them off the hook for selling customer data, and the cases would likely be remanded back to the FCC to give the carriers the option for a jury trial. As silly as it sounds, I’m dubious that, even with a second chance, the carriers would choose the jury trial. Again, the real goal of the carriers in this case is to weaken the FCC’s options in future disputes.

It will be unfortunate if the Supreme Court sides with the carriers and hobbles the FCC’s ability to levy fines. The FCC typically fines regulated companies for two reasons, for failing to comply with FCC rules or for abusing the general public. The first type of fines is generally relatively small and the big fines are saved for companies engaged in abuse and fraud of the public. In a recent action, the FCC fined Telnyx LLC for allowing foreign scam robocalls into the U.S. telephone network.

Protecting the public is one of the major roles of a regulatory agency. A policy shift that makes it difficult or impossible to hold large corporations accountable for abuses against the public would be a terrible outcome.

Hydrogen Generators

There is an interesting technology that is slowly edging into the telecom industry. There are a handful of places that are using hydrogen fuel cell generators instead of the more standard diesel generators for backup power. Everybody who works with a telecom network is aware of the wide use of diesel backup generators that kick in when commercial power fails. Diesel generators are permanently installed for critical hub sites, and telecom companies use portable generators that can be quickly driven to remote powered sites like huts and cabinets.

Diesel generators have a few drawbacks. Diesel fuel in notoriously challenging to use in very cold weather. Diesel generators also expel clouds of oily smoke. The biggest downside to diesel generators is that they are loud – the larger the generator, the louder. The largest diesel generators used for large sites like data centers can operate at 110 decibels, the same sound level as a rock concert. One of the biggest complaints about neighbors of data centers is the loud noise when generators are being tested.

Hydrogen fuel cells offer an alternative to the shortcomings of diesel generators. They are nearly silent in operation. The technology doesn’t generate any heat. Most impressively, hydrogen generators don’t generate any pollution since the waste product of a hydrogen fuel cell is water.

Hydrogen fuel cells operate by a simple chemical reaction. In a hydrogen fuel cell, pure hydrogen is passed by an anode that separates the hydrogen molecule into protons and electrons. The electrons are used to power the applicable application, such as the electricity from the backup generator. The protons are passed through an electrolytic membrane where they combine with oxygen to form water.

Hydrogen fuel cell technology has been used in practical applications for decades. An early version of a hydrogen fuel cell was used to provide the electricity for the Apollo spacecraft in the 1960s. The technology began to be practically used in the 1990s when cities created zero-emission bus fleets operated by hydrogen. There are now delivery trucks that use hydrogen technology. There have been successful tests using hydrogen fuel cells to power trains and airplanes. Most car companies have experimented with making hydrogen-fueled cars. Several countries are experimenting with hydrogen power in submarines because of the silent operation and the lack of heat.

Hydrogen fuel cells have a potential place in telecom. In 2020, Microsoft was able to operate a data center continuously for two days with hydrogen fuel cell generators. Tele2 and Telia are using hydrogen fuel cell generators for telecom sites in Estonia.

https://www.popularmechanics.com/science/a33499249/microsoft-hydrogen-generator-test/

There are practical downsides to using hydrogen on a commercial basis, although cities with fleets of hydrogen buses have solved the biggest problems. Hydrogen has a low volumetric energy density, which requires storing it in large quantities. Bus fleets have solved this issue by storing hydrogen in vehicles at high pressure, which carries a different set of risks. Hydrogen is flammable, but so are fossil fuels used for combustion generators. The solution to the widespread use of hydrogen as a fuel would be to develop hydrogen depots, which would be the equivalent of gas stations, where hydrogen canisters could be refilled or swapped.

For now, the biggest downside is probably the upfront cost of the generators and the infrastructure that is needed to store the gas to support them. However, cities say that ongoing costs compare favorably to diesel generators. The number one way to get costs down would be widespread adoption, which would bring economies of scale to manufacturing the units.

This seems like a technology that data center operators should be interested in. The public is increasingly pushing back against the noise and pollution created by data centers, and hydrogen generators would help to lessen the negative impacts on those living close to a data center.

The Regulatory Death Knell for Copper?

In March, the FCC issued an order in docket WC 25-209 and 25-208 that may signal the final regulatory death knell for telephone copper networks. The docket is titled Reducing Barriers to Network Improvements and Service Changes / Accelerating Network Modernization.

The stated purpose of the order is to speed up the transition from the TDM technology used in copper telephone networks to all IP-based networks used by fiber and other newer technologies. The secondary purpose of the docket is to override state regulations that are slowing down the transition away from copper networks.

The order comes in eight parts:

  1. Adopt one consolidated rule applicable to all efforts to discontinue services and applications, eliminating all prior rules.
  2. Give blanket authority to grandfather copper services, meaning telcos don’t have to accept new orders for these services.
  3. Allow ISPs to use technologies other than copper T1s to connect to 911 centers.
  4. Give carriers the right to discontinue wholesale products provisioned over copper.
  5. Create a 31-day automatic grant of a request to discontinue services.
  6. Clarify discontinuance requests to ensure they do not adversely affect the public.
  7. Revise the rules applicable to emergency discontinuance of services during and after disasters.
  8. Eliminate redundant rules and regulations related to discontinuing services.

In probably the most consequential part of the order, the FCC is preempting all state laws and processes that hinder telcos from decommissioning copper networks.

Taken as a whole, these new rules greatly reduce the paperwork involved with decommissioning copper networks and related services, which should speed up the stated intent of the big telcos to get out of the copper business.

There are instant impacts on the public. Telcos no longer have to sell telephone service or DSL provided over copper lines. Somebody moving into a rural home with no cell service will no longer be able to count on buying a traditional telephone line.While the FCC order didn’t explicitly state it, this new requirement just killed the carrier of last resort responsibility for copper-based telcos.

The new FCC rules still retain the requirement that customers must be provided an alternative when their copper services are discontinued. However, under the new rules, a telco doesn’t have to provide the services if they can point to alternative from a different provider. I’m envisioning telcos telling the FCC and customers that the alternative is satellite broadband for voice and data – eliminating the need for the telco to provide an alternative.

One of the biggest concerns of discontinuing rural copper is connectivity to 911. A lot of rural residents still buy landlines to have a sure way to connect to 911. Consider the many people who live in rural areas with little or no cellular coverage. If these households don’t have broadband, either by choice or because of affordability, they will lose the ability to call 911. Even customers buying broadband do not automatically have connectivity to 911 through their broadband connection. Rural broadband customers have to buy an online VoIP product to be able to safely guarantee they can register their home address for identification to 911 through the broadband connection.

We’ve known this was coming for a long time, and the FCC just took the steps to make it quick and painless for telcos to walk away from copper, including in states like California that have still been enforcing copper regulations. It’s going to take a few more years for telcos to abandon copper. For example, AT&T has a goal of being out of the copper business by 2030. But this order makes it clear that the end of copper is on the horizon.

Some Thoughts on Convergence

An article in Light Reading reported that the largest cable companies captured about one-third of the net cellular customer additions in the fourth quarter of 2025. This statistic combines the cellular sales of Charter, Comcast, and Optimum. The overall cable industry statistics would be even higher if it included sales from Cox and Mediacom, which are privately held.

Industry analysts are using the word convergence as shorthand for competition that bundles cell service with broadband. Convergence is the newest strategy that replaces the traditional bundling strategy of selling a package of broadband, cable TV, and voice.

Industry press over the last year is full of articles that wonder about the ultimate success of the strategy. Cable companies seem to have the upper hand in a convergence bundle since they collectively pass roughly 122 million homes. I’ve read a few analysts who argue that the big telcos like AT&T and Verizon are at a disadvantage since they pass a lot fewer homes with fiber.

But I think these analysts are missing something. There are three players in the convergence battle, and each is using a different tactic:

  • Cable companies are finding success with the convergence bundle by combining full-price broadband with inexpensive cellular service. The main goal of the cable companies is to reduce broadband churn, and a customer loses their cable company cell service if they drop broadband.
  • The fiber parts of the telcos don’t seem to be pushing the convergence package to the same extent. They are mostly still betting that people like fiber a lot more than cable broadband. However, AT&T just announced a fiber/cellular bundle with gigabit and one cellphone for $90 and two cellphones $120.
  • The third competitors are the FWA cellular companies. They are bundling full-price cell service with inexpensive broadband. At least for now, they seem to be winning the convergence battle. In the fourth quarter of last year, AT&T, T-Mobile, and Verizon added over 1 million net FWA customers while the rest of the industry barely grew.

I know it seems odd to be counting the FWA competitors as different than the fiber telcos, since they are largely the same companies. But anybody who follows these companies understands there is not a lot of bleed-over between the wireline and the cellular parts of the businesses. The FWA division of the telcos are willing to compete for a fiber customer from their own sister companies.

It’s becoming clear that affordability is a major issue for a huge number of households. As long as that stays in the forefront, it seems like many households will lean towards the convergence plan that gives them a significant discount. I doubt that customers care if the discount comes from a lower price for broadband or cellular.

I think the cable companies are on to something with their focus on reducing churn. I talked to a few people in the last year who wanted to leave Charter and move to fiber broadband but didn’t want to lose their cheap cell service – and didn’t want to go through the hassle of replacing both services at the same time. The cable companies were really good at the triple play bundle in the 2010s, and a huge number of households felt they were held captive by the bundle. Are we headed back to that same place, but this time with multiple bundle options that force customers to buy both services from the same company?

Perhaps led by the recent new plan from AT&T, perhaps the fiber telcos are ready to jump into the convergence battle. I have wondered for years why they didn’t lead the market in this effort, and I guess it was due to internal battles over which division swallowed the bundling discount.

A Peek Into the Latest Merger

The most recently announced merger is between GFiber and Astound. It’s an interesting merger that brings together a premium fiber overbuilder and a traditional cable company that also owns some fiber assets.

GFiber has been somewhat of a mystery in the industry since its splashy launch in 2021. Known then as Google Fiber, the company was the first to introduce the whole country to the idea of gigabit fiber. There had been a few municipalities, cooperatives, and small telcos that offered gigabit broadband before 2012, but Google Fiber made big national news when it said it was going to overbuild the Kansas City metropolitan area and offer symmetrical gigabit fiber as its only broadband product. Google Fiber believed in simplicity, and originally only offered broadband before eventually layering on Google Voice and YouTube video. The company has always guarded any discussion of customer counts, but we are learning through news of the merger that GFiber has over 2.6 million passings, which means it probably has more than 1 million fiber customers.

Astound Broadband is a conglomerate of three broadband businesses.

  • The original Astound started as a cable company in the San Francisco Bay area. The company purchased additional cable properties in Washington and Oregon and rebranded as Wave Broadband.
  • RCN was founded in 1993 and had the unique business plan of overbuilding existing cable companies using cable company technology. The company was concentrated in the northeast, with the most customers in Boston, New York City, Philadelphia, Allentown, and Washington DC.
  • Grande Communications was founded in San Marcos, Texas, in 1999. The company started by providing cable TV to campuses at Texas State University, the University of the Incarnate Word, Baylor University, and the University of Texas at Austin. The company grew to have over 1.1 million passings.

The merger announcement says that Astound covers around 4.6 million passings and has around 1 million broadband customers. The combined company would have 2 million customers and 7.1 million passings. This would make the company the seventh-largest ISP after Comcast, Charter, AT&T, Verizon, Altice, and T-Mobile. The seventh ranking recognizes the merger of Frontier with Verizon, the sale of Lumen fiber customers to AT&T, and the upcoming merger of Cox and Charter.

The merger has GFiber spinning off from Google’s Alphabet. The majority owner of the combined company will be Stonepeak, with the GFiber parent retaining a significant minority stake. The merger is supposed to close in the fourth quarter of this year. The GFiber executive team will lead the combined company.

This is an interesting merger that brings together companies using different technologies. I would have to think that the goal will be to upgrade to coaxial networks to fiber, or possibly to DOCSIS 4.0 to bring symmetrical gigabit speeds.

After this merger is completed, the only remaining large merger target is Altice, with over 4 million customers. There are no other ISPs left in the market that have more than a million broadband customers.