updated 04:10 pm EST, Tue February 8, 2011
FCC proposes moving USF from phone to broadband
The FCC on Tuesday put out a formal proposal that would start subsidizing Internet access for rural areas. The move would convert the Universal Service Fund from its original goal of subsidizing phones to encouraging the rollout of Internet access to areas which are either too far or too expensive to normally reach. The gesture would put as much as $8 billion towards both landline and wireless broadband.
A transition would not only increase the likelihood of reaching the roughly 24 million Americans that don't have access to significantly more than dial-up access but could eliminate waste, FCC chair Julius Genachowski said. The USF was originally designed for a phone environment where distance mattered and reportedly isn't relevant to cellphones or broadband. Many loopholes also exist and often don't hold companies accountable to make sure the money is spent as it should be.
In one example, the FCC noted that some homes were getting as much as $20,000 a year for every line, well in excess of anything they would need, while others were getting virtually no help in the same conditions.
The new switch would theoretically close the loopholes and prevent tricks such as hiding traffic so it can't be properly billed or else deliberately pumping up the traffic in some areas to rack up extra cash from the fund. The intercarrier compensation charges once used to help connect calls would gradually go down to discourage carriers from holding on to old networks just to get the extra fees.
Genachowski planned a gradual transitino that would start by eliminating waste and rolling the savings into a broadband-focused Connect America Fund, eventually moving to a full-scale shift of the fund itself.
The FCC has set out the goal of connecting as many as 100 million homes to 100Mbps or better Internet access by 2020 and has also had informal proposals to help it grow through other directions, such as a mobility fund that would pay for 3G and more likely 4G as a way to get fast Internet access to the countryside.
All of the five FCC commissioners agreed to the proposal, although the Republican commissioners Baker and McDowell were worried that the fund might have net neutrality conditions attached.