FCC to overhaul $4.5B in subsidies

The Federal Communications Commission’s plans to revamp a program with nearly $4.5 billion in annual telephone subsidies could bring some changes to phone bills — and consumer advocates and lawmakers are watching closely. In a speech on Oct 6, FCC Chairman Julius Genachowski plans to cast his vision for overhauling the complicated system, after months of heavy lobbying from all sides of the telecom industry.

The plan is expected to revamp the Universal Service Fund, which consumers support as part of their monthly phone bills to help offset the costs of bringing phone networks to hard-to-reach areas. But the outdated program only supports basic phone service and the FCC wants that money to go toward building new broadband and wireless networks to meet the demands of developing technologies. It’s part of the FCC’s larger plan to phase out the traditional public-switched network. The regulator also plans to streamline the rates that phone companies pay each other to exchange calls — an arcane system known as intercarrier compensation — in an effort to encourage companies to upgrade their networks to broadband. But consumer groups worry the changes could leave some people behind, and some Web-powered services like Skype say they may have to boost prices as a result.