FCC Cap on Rural Phone Service Subsidy Upheld

The U.S. Court of Appeals in Washington ruled that the Federal Communications Commission acted reasonably in limiting Universal Service Fund support for rural wireless phone companies. The court decision upheld FCC rules and is also seen as a win for Verizon and AT&T. AT&T and Verizon, the two biggest U.S. phone companies, pay the most into the program, with the wireless portion of the subsidies going primarily to smaller carriers such as U.S. Cellular and Centennial Communications. AT&T and Verizon told the FCC temporary spending limits would help stabilize the Universal Service Fund. Rural wireless providers said it's unfair to cap their subsidies without imposing similar limits on land-line providers. Consumers pay the cost of the subsidy in their telephone bills, the court said. It said it would defer to "the Commission's policy decision to place a limit on the extraction of funds from ordinary people for an unnecessary subsidy."