FCC approves broadband subsidy plan

Posted by Emma Woollacott

The Federal Communications Commission has given the go-ahead to plans to create a $4.5 billion internet fund aimed at improving the provision of broadband in rural areas.

Commission members voted 4-0 yesterday to approve the plan, which switches funds from rural telephone service to broadband. They also voted to cut the rates that companies can charge to connect calls.

"Over the next year, the Connect America Fund will bring broadband to more than 600,000 Americans who wouldn’t have it otherwise. Over the following five years, millions more rural families will be connected," says hairman Julius Genachowski.

"And today’s Order puts us on the path to get broadband to every American by the end of the decade – to close the broadband deployment gap which now stands at close to twenty million Americans."

The changeover will start next year. It will cost US residents who currently pay less than $30 a month for telephone service an extra 10-15 cents per month, says the FCC, but this figure should start to fall after six years.

The FCC approved a proposal in the plan to give existing service providers first crack at the subsidies, as AT&T and Verizon had asked.

This decision isn't popular with the National Cable & Telecommunications Association (NCTA), although it says it welcomes the broad thrust of the plan.

"While we are disappointed in the Commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support, we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring needed accountability and greater efficiency to the existing subsidy system," says president and CEO Michael Powell. 

"We are particularly heartened by the Commission’s efforts to ensure that carriers are fairly compensated for completing VoIP calls during the transition to bill and keep arrangements."