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Saturday, March 2, 2024

NC trend: High Point company’s strategy for high-speed internet in less populated areas

Lumos CEO Brian Stading wants to put high-speed internet in rural areas.

Expanding high-speed fiber networks into rural areas is a national priority that has lots of upside for North Carolina. Corning, CommScope and other companies make massive amounts of fiber at several
Tar Heel locations.

Now, High Point-based Lumos is accelerating its goal to install fiber for a major network that serves less-dense areas where Spectrum, Comcast, Google and others won’t enter. The company has a goal of passing 1 million homes and businesses by 2026, or nearly four times the current total. It has the backing of Sweden’s largest private-equity group, EQT, which manages more than $220 billion in assets.

Lumos is spending hundreds of millions of dollars in places like Burlington, Lexington, Mebane and Wilmington, working with county governments and state mandates to expand internet service. While mainly focused on North Carolina and Virginia, CEO Brian Stading looks for much of its growth to occur in South Carolina. He’s also mulling expansions in other mid-Atlantic and Southeast states.

The expansion is buoyed by the federal government’s $42.5 billion Broadband Equity, Access and Deployment (BEAD) program. A key goal is to help rural areas remain competitive as a location for promising companies.

Lumos is the successor of the old High Point Telephone Exchange,
which local businessmen had formed in 1895. It became North State Telephone in 1905 and was led by the Hayden and Tucker families for most of the next century. It primarily served retail and commercial customers around High Point and Thomasville, and parts of Greensboro and Kernersville. 

EQT expanded in the telecom sector service by buying Lumos Networks of Waynesboro, Virginia, in 2013 and North State in 2020. It later created the Segra brand, then sold North State’s regional fiber network to Atlanta’s Cox Communications last year.

Stading joined Lumos in August 2022 after nearly three years as chief operating officer of Ziply Fiber in Washington state. He says he was attracted by the chance to launch the Lumos brand and create a new culture. “When you develop a new brand, it takes time,” he says. “The good news is we had a great foundation. We’re not screwing up what was done in the past. We’re a fiber optic builder. We’re not a historical telephone provider.”

His basic pitch is that businesses and consumers should switch from old, somewhat unreliable copper cable-provided internet service to new fiber options. A detailed market study by Lumos asked, “What are the communities that are underserved or unserved? It was really assessing what we think is a reasonable and aggressive undertaking,” he says.

While gobs of money is backing rural broadband, Lumos’ timing may be risky.

In November, Gov. Roy Cooper signed a letter with 25 other
governors
urging Congress to reauthorize the Affordable Connectivity Program. The program, administered  by the Federal Communications, provides qualified low-income households $30 per month off the cost of internet  service or $100 off the cost of a router. Without action, the program could run out of funds as early as next April, affecting more than 861,000 North Carolinians.

Lumos has competitors. Indiana-based Metronet expanded its fiber-optic service into Havelock in September, for example. It’s also entering Fayetteville, Greenville and Rocky Mount, among other eastern North Carolina cities.

But Lumos appears to be among the state’s most active broadband investors, having restructured nearly $1.1 billion debt this summer and adding a line of credit to fund expansion.

In September 2022, Lumos  said it would spend $50 million to lay 600 miles of cable in Durham and Orange counties. The same month, it received franchise approvals for 900 miles of cable in Chesapeake, Portsmouth and Virginia Beach in Virginia.

Its biggest announcement came in January, with plans for 1,200 miles of cable in South Carolina’s Richland and Lexington counties at a cost of $100 million. Two months later, it began adding 706 miles of cable in Spartanburg County, and it has received franchise approval to go into the Columbia, South Carolina, market.

Back in North Carolina, the company is spending $56 million in New Hanover County and $50 million in Johnston County, east of Raleigh. In Alamance and Orange counties, Lumos is building infrastructure that will pass nearly 70,000 homes across Burlington, Elon, Gibsonville, and Mebane. 

In June, the N.C. Department of Information Technology, a state agency, announced that its challenges to the FCC’s National Broadband Map found an additional 115,000 homes and businesses, primarily in rural areas, without access to high-speed internet. The FCC says there are more than 250,000 locations that are unserved by broadband internet, with download speeds of less than 25 megabytes per second. About 300,000 sites have speeds of less than 100 megabytes per second. The basic Lumos service for a home is 500 megabytes per second download and upload speed.

“The reason you want fiber is that you want the best,” says Stading. “Your upload and download feeds are synced. Having that video capability is paramount, and fiber is a lot more stable and more reliable than traditional copper technology.”

For consumers, Lumos charges start at $50 a month and reach $100 for faster speeds. By comparison, Google Fiber starts at $70 a month in the Triangle. That’s a deal that Stading hopes will attract customers to Lumos. “We want to provide a fair price for a fair service and distinguish ourselves on service,” he says. “Our goal is to provide great value.”

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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