Phone fund overhaul has companies scrambling for money

Go into any home in the American countryside -- not matter how remote -- and you are able to make a landline phone call at an affordable price. It's easy to forget that wouldn't be the case without the U.S. government.

An $8 billion subsidy fund helps make landline phone service more affordable for low-income and rural households. Congress created the so-called Universal Service Fund (USF) in the 1996 update to the Communications Act for this purpose. Consumers pay into the fund through a line item on their landline telephone bills. Part of the fund is up for a major overhaul this month. The section in question is known as the "high cost fund" - a slice devoted to lowering rural phone rates. This $4.5 billion chunk subsidizes the operating costs of telecom carriers who provide service in rural areas, where the dearth of customers over vast geographic regions makes it expensive to build out lines and connect customers. Telecom carriers in Mississippi, Alaska, and Texas--which have large rural areas--received the most funding last year when calculated by state. The largest corporate recipients of funding over the last three years have been Verizon, AT&T, and CenturyLink. Now the FCC wants to change the system. The idea is that in a world where high-speed Internet access is as essential as landline phone calls once were, the subsidy system should now pay to bring broadband to the 18 million rural customers who do not have it.