Some States May Be Vulnerable In Phone Fund Overhaul

An attempt by the Federal Communications Commission (FCC) to overhaul a major telecom fund could yank cash away from various states, and while the winners and losers are still hard to call, the reform effort already has state officials worrying.

The Universal Service Fund, an $8 billion fund that subsidizes phone service in rural and low-income areas, is being redesigned this year as the FCC attempts to shift the money from traditional voice service. Certain companies, including rural phone firms, may wind up getting less cash than before, while others could make out like bandits. That also means a change in how much government-collected cash flows to certain states. Gov. Haley Barbour (R-Mississippi) -- whose state received the largest cut of the rural section of the fund -- is already trying to slow the overhaul. Gov Barbour wrote to the FCC this week urging officials not to rush the reform process and praising the current configuration of the fund. The reforms under consideration by the FCC “threaten to undermine competition, stifle access and slow broadband adoption (wireless or otherwise) in Mississippi and other rural parts of the United States,” Gov Barbour wrote.

(Aug 25)