AT&T has struck a deal with the US government to get nearly $428 million per year to bring 10Mbps Internet service to parts of rural America after protesting that it shouldn’t have to provide speeds that fast. The money comes from the Connect America Fund, which draws from surcharges on Americans’ phone bills to pay for rural Internet service. AT&T accepted the money even though it  argued last year that rural customers don’t need Internet service better than the old standard of 4Mbps downstream and 1Mbps upstream. The FCC ignored AT&T’s protests  in December, raising the Connect America Fund download standard to 10Mbps while leaving the 1Mbps requirement unchanged. Eight months later, AT&T is now willing to provide at least 10Mbps/1Mbps service to 1.1 million rural homes and businesses in 18 states in exchange for “$427,706,650 in annual, ongoing support from the Connect America Fund,” yesterday’s FCC announcement said . The FCC said this will bring broadband to 2.2 million customers, apparently assuming an average of two people for each home and business. AT&T will get the money over six years with an option for a seventh, potentially bringing the total to about $3 billion, according to Multichannel News . AT&T and other carriers getting Connect America funding have to deploy Internet service to 40 percent of funded locations by the end of 2017, 60 percent by the end of 2018, 80 percent by the end of 2019, and to 100 percent of locations by the end of 2020, the article said. “This is one of the largest amounts accepted by any company,” FCC Chairman Tom Wheeler said. “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.” 10Mbps/1Mbps is still lower than the definition of broadband, which the FCC raised to 25Mbps down and 3Mbps up. 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. AT&T has had wireline operations in 22 states since it bought BellSouth in 2006. In exchange for getting that merger approved, AT&T promised home Internet service of at least 200kbps (meeting the definition of broadband at the time) to 100 percent of residences by the end of 2007. AT&T claimed it met the requirement but has let its network fall into disrepair in the years since, leaving millions with slow Internet service or none at all. AT&T promised to expand broadband deployment in exchange for the FCC’s recent approval of its purchase of DirecTV, but not in the areas where it will use Connect America funding. The Connect America funding is for “rural service areas where the cost of broadband deployment might otherwise be prohibitive,” the FCC said. AT&T wasn’t the only company to get Connect America Fund money yesterday. CenturyLink accepted $506 million  annually to get 10Mbps Internet to nearly 1.2 million rural homes and businesses in 33 states. Overall, ten carriers accepted $1.5 billion in annual support to serve 3.6 million homes and businesses under the latest Connect America Fund awards, another FCC announcement said . The others include Cincinnati Bell, Consolidated Telecom, Fairpoint, Frontier, Hawaiian Telcom, Micronesian Telecom, and Windstream. The tenth carrier is Verizon, though that case is a bit complicated. Verizon conditionally accepted $48.6 million a year to serve rural areas in Texas and California, subject to regulatory approval of a sale that will transfer Verizon’s systems in those states to Frontier. Verizon, which also objected to the new 10Mbps requirement, did not accept any funding in states where it’s keeping its wireline facilities. There’s still $175 million left to be doled out, due to carriers not accepting the entire amount. “In states where carriers have declined support, the subsidies will be awarded by a competitive bidding process,” the FCC said.

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AT&T grudgingly accepts $428 million in annual government funding