FCC plans to shift rural phone subsidies to support broadband instead

Posted by Emma Woollacott

FCC chairman Julius Genachowski has outlined a plan to improve rural broadband services by overhauling the Universal Service Fund.

The $8 billion fund is currently used to subsidize basic telephone services in rural areas, but Genachowski says he wants to switch it to supporting broadband instead.

"Approximately 18 million Americans live in areas with no access to broadband. And harm from not having broadband - the costs of digital exclusion - already high, are growing every day," he says in a statement.

"The costs of this broadband gap are measured in jobs not created, existing job openings not filled, and our nation's competitiveness not advanced. The broadband divide means economic opportunities denied for ordinary consumers who lack broadband access; educational opportunities diminished; health care access reduced; and public safety compromised."

The aim of the reorganisation is to help phone companies bring high-speed internet to half of the US households that currently lack the service within the next five years. The money would go to a new Connect America Fund, which would provide access to individuals as well as businesses, libraries and other public institutions.

Genachowski also proposed changes to the Intercarrier Compensation program, which currently offers subsidies to phone companies using traditional telephone technology.

The plan would also increase the range of mobile broadband services.

The fund is kept topped up through a monthly levy on users' phone bills, which has risen steadily over the last ten years. However, Genachowski said the new plan wouldn't increase the amount consumers might have to pay.

"Accelerated broadband buildout and upgrades to networks mean that millions more consumers of all ages will be able to enjoy the economic and social benefits of broadband. And consumers overall will be treated more fairly, thanks to the elimination of deep inequalities ingrained in the current system, cuts in wasteful spending, and constraints on the growth of a fund that is paid for by consumers," he says.

"We estimate that wireless consumers will see more than $1 billion in annual benefits from ICC reform alone."

The FCC will vote on the plan at the end of this month.