Feds May Divert Subsidies To Pay For Rural Broadband

The Federal Communications Commission (FCC) has taken the first steps to fund an expansion of broadband Internet service to rural America, proposing an overhaul of the Universal Service Fund, set up decades ago to expand rural telephone service.

FCC Chairman Julius Genachowski outlined the proposal in a speech in Washington, suggesting that the $8 billion subsidy be directed to making broadband Internet as common as landline telephone service.

“Broadband has gone from being a luxury to a necessity for full participation in our economy and society,” Genachowski said. “If we want the United States to be the world's leading market” for innovation, “we need to embrace the essential goal of universal broadband, and reform outdated programs.”

New objectives

Prior to the Telecommunications Act of 1996, the Universal Service Fund operated as a mechanism by which interstate long distance carriers were assessed to subsidize telephone service to low-income households and high-cost areas. The Communications Act of 1934 stated that all people in the United States shall have access to “rapid, efficient, nationwide … communications service with adequate facilities at reasonable charges.”

The Telecommunications Act of 1996 expanded the traditional definition of universal service - affordable, nationwide telephone service – to include among other things rural health care providers and eligible schools and libraries.

The revamped Universal Service Fund would be renamed the Connect America Fund. It would pay for expanded broadband infrastructure in under-served areas and improve wireless coverage.

Rural options are limited

Currently, rural areas are served by two principal satellite Internet providers – HughesNet and Wild Blue – both of which have issues with latency. Some consumers also use the mobile broadband services offered by Verizon Wireless and AT&T. However, these services are at 3G speed in most areas and the more affordable plans are limited to 5 gigabytes of data per month.

"If adopted by the Commission, the plan will spur broadband build-out to hundreds of thousands of homes and businesses beginning in 2012,” Genachowski said. “It will help cut the number of Americans bypassed by broadband by up to one half over the following five years, and it will put us on the path to universal broadband by the end of the decade. By connecting millions of unserved Americans who are being left out of the broadband revolution, this plan will bring enormous benefits to individual consumers, our national economy, and our global competitiveness."