When the Internet came along, there was lots of talk about how it would rejuvenate rural America, making it possible for more people to open online businesses work from home, even if home was miles from the nearest Starbucks.

After all, electricity and telephone service had been extended to nearly 100 percent of the population through the effort of government agencies that imposed small fees on urban customers to help finance expansion of service into the hinterlands. Everyone sort of thought that something similar would happen again.

So small communities sat back and waited for the boom that never came.

That may be about to change. Federal Communications Commission (FCC) Chairman Julius Genachowski is proposing to convert the $8 billion fund that subsidizes rural telephone service into one that brings Internet service into rural and other under-served areas.

Genachowski outlined his plan in a speech today and the FCC is expected to take up the proposal tomorrow (Tuesday).

Genachowski has dubbed his proposal the Connect America Fund. It would replace the Universal Service Fund, a virtual fossil that Genachowski says was “designed for a world with separate local and long-distance telephone companies, a world of traditional landline telephones before cellphones or Skype, a world without the Internet – a world that no longer exists.”

Just how the Connect America Fund would be funded is open to discussion. The Universal Service Fund is supported by fees levied on long-distance companies, who pass them on to their customers. Because long-distance rates have fallen sharply, the rate imposed on long-distance companies has risen rapidly and currently stands at 15.5 percent, double what it was in 2003.