The FCC has voted to adopt a new US$4.5bn-a-year public subsidy programme, the “Connect America Fund”, in order to spread broadband access to underserved parts of the US.
The Commission voted unanimously to reform two current subsidy programmes, the…
The FCC has voted to adopt a new US$4.5bn-a-year public subsidy programme, the “Connect America Fund”, in order to spread broadband access to underserved parts of the US.
The Commission voted unanimously to reform two current subsidy programmes, the Universal Service Fund (USF) and InterCarrier Compensation (ICC), which it said “have been widely viewed as broken, and long overdue for reform”.
Under the planned reform, the FCC will overhaul one part of the USF, the “High Cost” programme, which is currently focussed on providing telephone service to areas where the cost of providing that service was high. This High Cost plan currently accounts for US$4.2bn of the US$8bn-a-year USF.
The High Cost plan will now be transformed into the Connect America Fund, with the focus of the subsidy programme shifting from providing telephone services to broadband.
According to the FCC, 18m Americans are currently without broadband access. The regulator estimates that the Connect America Fund will provide broadband access to seven million people in rural areas over the next six years. It will also “put the country on the path” to universal broadband within a decade.
The second major reform will affect ICC, a system of charges between carriers. According to the FCC, this involves one carrier paying another “to originate, transport and/or terminate” telecoms traffic.
The FCC plans gradually to reduce these charges to zero and move towards a “bill and keep” system for all telecoms traffic, under which carriers will “look first to their subscribers to cover the costs of the network, then to explicit universal service support where necessary”.
The CTIA, a trade association for the US wireless industry, criticised some aspects of the FCC’s reforms.
CTIA president and CEO Steve Largent said that the FCC’s efforts to reform the High Cost part of the universal service plan did not take into account the significant consumer migration to mobile broadband services.
“While the FCC is to be commended for its establishment of a dedicated Mobility Fund and making significant funds potentially available through 2014, the decision to set the long-term funding level for mobile services at only 11 per cent of the High Cost fund is troubling,” Largent said.
