States hung up on broadband plan

States are squaring off with the feds over the best way to expand high-speed Internet. The Federal Communications Commission says its efforts to reform an outdated subsidy system will help stretch broadband to rural areas. But many state regulators argue it will have the opposite effect — and some are threatening to take the agency to court if it moves forward with the proposed plan.

“This is outrageous,” said Jim Cawley, commissioner on the Pennsylvania Public Utility Commission. “It’s profoundly anti-rural, anti-state and anti-consumer.” At issue are the complex rules that govern how phone carriers pay each other to exchange traffic on their networks -- a system known as intercarrier compensation. As consumers continue to ditch their traditional landline services for broadband-based communications, the FCC wants to streamline the rates carriers pay each other to incentivize them to expand their broadband facilities. At the same time, the FCC is trying to reform the 14-year-old Universal Service Fund, which subsidizes the build-out of phone networks to rural and remote areas -- such as mountainous regions -- where it’s too expensive for private companies to justify the investment. The agency wants the fund’s $4.5 billion spent on broadband networks instead of old-fashioned copper phone lines.