The FCC on Tuesday will propose the first steps toward converting the $8 billion fund that subsidizes rural telephone service into one for helping pay to provide broadband to underserved areas, reports the NY Times. F.C.C. chairman, Julius Genachowski, is expected to outline the proposal in a speech on Monday.
The Universal Service Fund has grown from $2.3 billion in distributions in 1998 to $7.9 billion in 2010, according to federal records. Consumers fund the USF through a $1 to $2 monthly charge on their phone bills. The FCC envisions gradually transforming the high-cost program into a new Connect America fund that would underwrite the cost of building and operating broadband networks in underserved and unserved communities. Those networks would be able to handle data traffic as well as regular voice calls.
According to Genachowski (pdf): These immediate reforms would move us toward a fairer distribution of USF, targeted at the unserved areas where support is needed the most. They would allow more carriers an opportunity to expand their services through healthy publicprivate partnerships, including wireline, fixed wireless, mobile, and satellite providers.
We’ll fund broadband for unserved areas out of savings from existing programs, while constraining the size of the Fund. The plan the Commission will vote on tomorrow will include specific proposals to control costs and limit the Fund’s annual expenditures. The proposal includes performance goals and reporting requirements to increase the accountability of Universal Service Fund recipients and to better measure the performance of the Fund as a whole.
The F.C.C.’s proposed changes to the high-cost USF program, which subsidizes the high costs of providing service to rural areas, typically accounts for about 55 percent of the fund’s annual disbursements, which totaled an estimated $8 billion last year. USF is funded through fees tacked onto most consumers’ phone bills and distributed among telephone companies.
Genachowski will propose consolidating existing methods of paying for rural phone service into a new pool to be called the Connect America Fund, to be used for helping pay for making broadband available to underserved areas. USF funds have previously been used to subsidize (multiple) rural dial-up phone service and cellular services — but not broadband.
So far, the F.C.C. has outlined efforts to expand broadband availability only though wired connections. But commission officials say that they will look at wireless broadband to expand high-speed Internet access for underserved areas, reports the NY Times.
“Today, up to 24 million Americans in the rural areas served by USF are shut out of the broadband future — either fixed or mobile,” said FCC Chairman Julius Genachowski.
