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FCC Moves To Fund Rural Broadband

The FCC has approved a plan to reform the Universal Service Fund that could lead to new subsidies for broadband services to rural areas.

The plan, when turned into new regulations, will also reform to the way subsidies are paid out to telecommunication providers and put a cap on the rapidly growing USF, which is funded by taxes on consumer's phone bills.

The commission's Recommended Decision on High-Cost Universal Service Support comes amid mounting pressure from consumer advocates to cap the amount of subsidies paid out of the USF for infrastructure and more effectively use the fund to provide services.

The decision, which is a framework for the creation of more specific FCC regulations, adopts a detailed recommendation by the Federal-State Joint Board on Universal Service and recommends the creation of separate funds for broadband and mobility within the high-cost subsidy fund. The FCC is also seeking to place a cap on the high-cost funding provided by the USF at $4.5 billion—the estimated amount of subsidies the fund will pay out in 2007.

The Broadband fund would be limited to $300 million per year and disbursed to the states to administer. The FCC is exploring ways of reassigning existing funds from other programs within the USF for broadband and is considering a matching-fund requirement from the states that receive the subsidy.

"Congress did not envision that services supported by universal service would remain static," said FCC chairman Kevin J. Martin in his statement on the decision "Instead, it views universal service as an evolving level of communications services. A modern and high-quality communications infrastructure is essential to ensure that all Americans, including those residing in rural communities, have access to the economic, educational and healthcare opportunities available on the network."

The decision received initial approval from both rural telecommunications providers and consumer advocates.

“The [decision] recognizes communications networks are evolving at a feverish pace and therefore suggests the federal universal service definition be expanded to include broadband as a ‘supported service,'" said David A. Wittwer, President and Chief Executive Officer for TDS Telecommunications Corporation, based in Madison, Wis. "While funding and program details of the new broadband fund are still being reviewed, this is an excellent step toward ensuring the U.S. moves toward ubiquitous broadband availability at affordable prices for all."

"If they've limited it to reimbursements to a single provider and let the rest compete, that's a good first step," said Mac Haddow, chairman of the policy advisory council for the Seniors Coalition, one of the founding activist groups behind the Cap The Fund campaign. "But what really needs to happen is that they need to decide, from the top down, where are the critically underserved areas and then provide one class of service that's the cheapest, not necessarily reimbursing for anybody that shows up. Some of these areas, they could give everyone a satellite phone and they'd be better off."

In a separate move, the FCC announced the creation of a pilot program to promote the use of broadband for rural health services. The Rural Health Care Pilot Program will provide $417 million for the construction of 69 statewide and regional broadband telehealth networks across the U.S. and in three U.S. territories.

"[That's] on the premise that these rural facilities can improve the quality of care if they can exchange the data to a remote location where a specialist could be sitting and looking at the X-ray or MRI or other [data]," said Haddow. "That technology is fantastic, and could certainly offer some cost savings within the healthcare system, but it's probably more appropriately addressed there than by the FCC. "