AT&T Accepts $428 Million In Annual Government Spending

AT&T has been given a $428 million-a-year contract to provide 10mbps internet service to rural America. As Ars Technica reported, AT&T was less than happy about the 10mbps requirement, saying that the company shouldn’t have to provide speeds that fast.

The money is coming from the Connect America Fund which gets its funds from surcharges on phone bills. The main mission of the Connect America Fund is to bring high-speed internet to Americans living in rural areas.

“AT&T’s acceptance of close to one-half billion dollars annually from the Connect America Fund represents a huge investment in broadband for its rural customers,”

FCC Chairman Tom Wheeler said in the FCC’s announcement that this deal is one of the largest amounts ever accepted by a company.

“This is one of the largest amounts accepted by any company. The financial support provided by American ratepayers will bring significant benefits to AT&T’s rural communities, and we urge state and local leaders to help communities realize these benefits by facilitating the broadband buildout.”

The company is willing to provide 1.1 million rural homes and businesses in 18 states with broadband internet connections. The required speed is 10mbps download with 1mbps upload. Even though 10mbps may not be very fast compared to connections in the city, it’s a vast improvement for many rural Americans.

Many Americans still rely on slow connections that are much lower than the required 10mbps. In rural areas, many times only satellite connections are available. Not only are satellite connections slow, but they have very low data caps which severely limit what a consumer can do. Most wired internet connections provide consumers with large data allowances or, better yet, unlimited data.

It’s unclear if rural consumers that otherwise can’t have a cable internet connection will have the option made available through this deal. Existing infrastructure may just be upgraded rather than extended.

“Like telephone service in the 20th Century, broadband has become essential to life in the 21st Century. But, according to the FCC’s latest Broadband Progress Report, nearly one in three rural Americans lack access to 10/1 broadband, compared to only one in 100 urban Americans. The Connect America Fund is designed to close that rural-urban digital divide.”

As Ars noted, here are the 18 states that will see improved internet connections.

“The 18 states where AT&T will use the money are Alabama, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Wisconsin.”

The deal mandates that AT&T provides the upgraded broadband connection to the entire targeted area by 2020.

[Photo by Tim Boyle / Getty Images]