By EDWARD WYATT
WASHINGTON — The Federal Communications Commission on Tuesday will propose the first steps toward converting the $8 billion fund that subsidizes rural telephone service into one for helping pay to provide broadband Internet service to underserved areas, according to commission officials.
Julius Genachowski, chairman of the F.C.C., is expected to call for a consolidation of existing methods of supporting rural phone service into a new pool of funds.
The F.C.C. chairman, Julius Genachowski, is expected to outline the proposal in a speech on Monday, the officials said.
Most of the money under discussion involves a longstanding subsidy known as the Universal Service Fund, which is paid for through fees tacked onto most consumers’ phone bills and distributed among telephone companies to subsidize the high costs of providing service to rural areas.
Mr. Genachowski will propose phasing out the payments between phone companies, which he says create “inefficiencies and perverse incentives” that result in waste in the fund. The F.C.C. will also propose consolidating existing methods of paying for rural phone service into a new pool to be called the Connect America Fund, to be used for helping pay for making broadband available to underserved areas.
The current Universal Service Fund and its spending methods are “unsustainable,” according to a draft of Mr. Genachowski’s remarks prepared for Monday. “It was designed for a world with separate local and long-distance telephone companies, a world of traditional landline telephones before cellphones or Skype, a world without the Internet — a world that no longer exists.”
Let’s hope that the Connect America Fund will allow for municipalities and other government organizations to receive funding to build infrastructure. Instead of figuring out how to divvy the money up among incumbent carriers, the money should be used to build open-access last-mile infrastructure that the incumbents and new entrants can utilize. Perhaps some legislative action is needed to determine how funds are disbursed.
- FCC Chairman proposes changes to subsity program (news.cnet.com)
- FCC To Reshape Phone Subsidy Program to Help Boost Rural Broadband (readwriteweb.com)
- F.C.C. Plan for Internet Gets Mixed Reaction (nytimes.com)