Possible merger of internet providers could be broadband boon for North Carolina | Beaufort County Now | As the federal government — and leaders in North Carolina — look to plow millions of taxpayer dollars into broadband growth, a possible merger between two internet providers with strong footprints in the state could help facilitate high-speed infrastructure development.

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    Publisher's Note: This post appears here courtesy of the Carolina Journal. The author of this post is Johnny Kampis.

    As the federal government - and leaders in North Carolina - look to plow millions of taxpayer dollars into broadband growth, a possible merger between two internet providers with strong footprints in the state could help facilitate high-speed infrastructure development.

    Zayou Group LLC of Boulder, Colorado is looking to buy the Little Rock, Arkansas companies of Windstream Holdings and Uniti Group, Inc., according to The Wall Street Journal. Talks began in June, according to the newspaper, but not much progress has been made on the possible $3.5 billion acquisition recently.

    Arkansas Online noted that Uniti was once part of Windstream, spinning off into a separate company in 2015. Uniti principally engages in buying and building communications industry infrastructure, and Windstream has paid Uniti for access to some of that infrastructure, according to the outlet.

    WSJ reported that the owners of Zayo believe that bringing Windstream and Uniti back together could accelerate the construction of broadband infrastructure to a million more households by redirecting the $700 million that Windstream spends annually on lease payments.

    The two companies haven't been without their quarrels. Arkansas Online reported that Windstream sued Uniti in 2020, a year after emerging from a voluntary Chapter 11 bankruptcy filing, alleging the lease agreement it had with Uniti was overpriced and financially burdensome. The companies settled and agreed to a new long-term lease agreement.

    Uniti has been tight-lipped about the possible acquisition, but Windstream has commented on the possible benefits of such a deal.

    "Without commenting on any specific potential transactions, any plan that will allow us to accelerate and deepen our fiber build will be a positive for Windstream and its customers," Windstream president and CEO Tony Thomas told Arkansas Online.

    Scott Morris, spokesman for Windstream, told Carolina Journal that Kinect by Windstream, the business arm of Windstream Holdings that serves residents and businesses in 43 mostly rural communities in the state, is deploying fiber to an additional 39,000 locations in North Carolina by the end of 2022 with a $15 million investment. Additional fiber is planned for 2023 through 2025, but plans haven't been finalized, Morris said.

    Windstream will also use money from the Federal Communication Commission's Rural Digital Opportunity Fund to serve another 2,000 locations in the coming years. That will cost about $8 million with half of the funding coming from taxpayers and half from Windstream. Similar arrangements are taking place across the country, as the FCC works with private providers to help close the digital divide.

    "We collectively have a once-in-a-generation opportunity to build fiber broadband networks to the highest cost areas that are unserved or underserved, and it is important that we move expeditiously," Morris said.

    "Without public-private partnerships in which governments and private companies share deployment costs, high-speed broadband networks simply won't be built in rural areas where there is no economically feasible business case to support the investment of private capital," he added.

    This potential unification of Windstream and Uniti comes as the state budget calls for spending more than $700 million in federal and state taxpayer money to help facilitate broadband expansion.

    Jordan Roberts, government affairs associate for the John Locke Foundation, told CJ that finding innovative methods to increase access to high-speed internet is critical for the future growth of the state.

    "We've seen plenty of investment and action from public sources, but the case with Uniti and Windstream proves that there is a robust private market for expanding broadband," he said. "Governments need to make sure their investments in or policies towards broadband won't hinder any progress by companies such as these that are operating right in our backyard."
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