FCC to create $4.6B broadband subsidy

The Federal Communications Commission will propose creating a $4.6 billion Connect America fund to support the deployment and adoption of high-speed Internet service in low-income and rural areas as part of a 10-year overhaul of an existing telecommunications subsidy program.

The initiative would replace a similarly sized program contained within the $8 billion federal Universal Service Fund, which reduces the costs of phone service for eligible Americans and subsidizes wiring of schools, libraries and rural hospitals with high-speed connectivity. During a news briefing Friday, agency officials outlined a three-stage strategy over the next decade to migrate the USF away from traditional phone subsidies and toward exclusively supporting broadband. The proposal will be a centerpiece of the agency's national broadband plan. Commission officials said the changes detailed today can be accomplished without expanding the fund's size and without congressional action. Nevertheless, the broadband plan will recommend that Congress consider approving a one-time, $9 billion appropriation -- to be doled out over three years -- that would enable the FCC to accelerate the fund's transition.

"It always turns out that there's more than one way to achieve an objective," said Blair Levin, executive director of the FCC's Omnibus Broadband Initiative. "We're not requiring [Congress] to act. We think there are benefits if they act." Levin said the universal service program would help bring broadband to regions where it isn't available. Some carriers have balked at serving rural areas because of prohibitive costs. The fund also would provide eligible Americans with subsidies to lower monthly broadband bills.

In 2020, the FCC envisions that the USF would no longer support phone-related service. Since there may be pockets of the country that would need financial assistance with phone connections, agency officials vowed that the commission would find a way to help those affected citizens pay their phone bills. In concert with the universal service overhaul, the FCC plans to tackle another long-standing challenge: revamping Byzantine rules governing intercarrier compensation, the fees phone companies charge to carry telecom traffic from other providers.