US Government to Expand Rural Broadband

Dennis Faas's picture

A government agency intends to extend a rural phone subsidy program to cover high-speed Internet. It comes as the agency's chairman warns that as many as 24 million Americans may have no access to broadband whatsoever.

The debate involves the Universal Service Fund, a scheme set up in 1997 to provide every home in the country with telephone service. Phone operators forward a portion of their revenue to the fund, which is used to subsidize phone service in areas where operators couldn't otherwise charge reasonable rates and still make a profit. (Source:

The fund also contributes towards discount on installation and service fees for people on low incomes, telemedicine in rural hospitals, and subsidized Internet in schools and libraries.

FCC Overhaul Expected

Now the Federal Communications Commission (FCC), which oversees the fund, wants to make two changes: 1) to take more central control of how the money is spent and simplify the administration, and 2) to expand the subsidies to cover the creation of broadband networks in areas currently without provision.

At a recent FCC meeting, all five commissioners are expected to back the formal publication of a plan for a public consultation. That would be the last step in the administrative process before the commission issues a final order, which would make the changes official.

US Slower to Expand Communications

FCC chief Julius Genachowski noted that the US had been ranked sixth out of 40 industrialized nations in a measure of information technology availability and competition.

But in what he called a "truly scary" statistic, the same study ranked the US in last place when it came to the rate of improvement. That led Genachowski to say that "Moving forward slowly is moving backwards when other countries are moving faster." (Source:

He also warned that there are dangerous inefficiencies in the way the fund currently operates. In some cases, subsidies are paid to two different companies to provide phone services in the same area. Such loopholes mean some companies may be able to disguise the way long distance calls are routed, which affects how much they pay into the fund.

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