XO Seeks Stimulus Funds for Northern States Route

April 8th, 2010 by · 7 Comments

Competitive service provider XO Holdings (news, filings) has filed an application for round 2 stimulus funding that is very ambitious to say the least.  The company is proposing to build an intercity and middle mile network extending from Washington to Illinois, connecting underserved areas along the way through Idaho, Montana, North Dakota, Minnesota, Iowa, and Wisconsin.  I can’t wait to see the map, but right now we’re limited to the executive summary found here.  At each of 46 network access points, they would leverage their spectrum assets via a wireless tower to extend coverage into the surrounding communities.  They are also working with a selection of Indian tribes along the route that are seeking better and more cost effective connectivity.

In total, the new build would cover 2,277 miles of 144 count cable, and would cost some $290M of which the government would provide $206M – XO would be putting up the other $84M.  That’s a hefty price, an order of magnitude larger than what its peers at Zayo and Level 3 sought and received in Round 1 and more in the neighborhood of what Qwest and Windstream are seeking. The northern route has long had few fiber choices, since the more recent builds during the dot-com boom usually chose to go through Denver.   The sparse population across the high plains and upper Rockies makes it hard to justify the expense.

If XO’s application is successful, they would be able to add a quite unique footprint to their current intercity network, which is mostly made up of fiber IRUs from Level 3.  Of course, this plan also assumes that the company manages to raise capital, given that they will probably pay off their Class A preferred stock in cash and have only $150M or so on hand.  But it will be a while yet before the NTIA makes any decisions and even longer before they parcel out the money if this application even succeeds.  Who knows, by then the whole Icahn situation might be resolved, hah.

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Categories: CLEC · Government Regulations · Internet Backbones

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7 Comments So Far

  • p. merch says:

    Let Uncle Sam foot 70% of the bill BEFORE LVLT takes them out….good plan, Stan….if it flies.

  • fluids_only says:

    If the Broadband Stimulus funds are for depressed under-served communities, I would strongly support a 200M allocation for XO – the depressed under-served community in question being its stockholders 🙂

    • Anonymous says:

      Carl offers his minority shareholders less than $70 million for their 86 million shares and now Uncle Same is going to subsidize XO $200 million. Bravo Carl, Bravo. You are one sly bastard.

  • the_wanderer says:

    Does anyone actually think that this boondoggle will get funded? It looks like a sacrificial lamb of sorts.

  • Anon says:

    It is interesting what this does in combination with their PC-1 assets they took from NTT almost a year ago…if this succeeded they would have the lowest latency route from Tokyo to Chicago to market to financial customers. From what i know no carrier that has the northern route currently offers wavelengths services over it.

  • worm says:

    um… I do not think XO “took” any PC-1 assets from NTT.

  • anon says:

    a 2002 bankruptcy, tax losses as key asset, federal “stimulous” dollars etc… sounds very 2010…. maybe they should be deemed a bank and borrow at the fed reserve window?? meanwhile, do they sell services, at a profit, that customers with money can and do buy ????

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