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FCC Wants Money Spent on Phone Subsidies to Be Redirected to Internet Service

TMCnews Featured Article


March 15, 2011

FCC Wants Money Spent on Phone Subsidies to Be Redirected to Internet Service

By Ed Silverstein, TMCnet Contributor


The Federal Communications Commission says $8 billion now spent on phone subsidies should be redirected to high-speed Internet service.

FCC (News - Alert) officials said the broadband lines could also be used to provide Internet phone service, according to a report from The Wall Street Journal.


The fund has mostly subsidized phone service in rural areas in the United States.

"We see some money, frankly, being wasted right in sight of the need for funds in unserved areas," FCC Commissioner Michael Copps (News - Alert) said in a statement quoted by The Journal.

"As a 21st century program, the universal service fund should evolve away from subsidizing inefficient 20th century systems and support the efficiencies of current technologies as brought about by competitive pressures," FCC Commissioner Robert McDowell (News - Alert) said in a statement.

“The Universal Service Fund (USF), which helped connect rural America to telephone service, fails to effectively and efficiently target support for broadband in rural areas,” the FCC explains in a statement released to the public. “USF has also become wasteful and inefficient in some situations, paying over $20,000 a year – nearly $2,000 per month – in support per line for some households, while providing little or no support in other communities that lack broadband.”

Among the steps the FCC wants to take are:

· Provide support where it needed the most.

· Identify unserved areas.

· Create the Connect America Fund so unserved areas can quickly get service.

· Reduce the per-minute Intercarrier Compensation charges. 

· Develop performance goals and metrics for the Connect America Fund.

• Make broadband affordable and available to all Americans, and speed up transition from circuit-switched to IP networks, with voice being one of many apps running over fixed and mobile broadband networks.

• Stop waste and inefficiency.

· Require accountability from companies receiving support. Government should be accountable, too.

· Transition to market-driven and incentive-based policies.

The FCC will hold several workshops on issues related to the proposals. Written comments can also be submitted to the FCC.

In another FCC matter, TMCnet reports that the commission revealed the nine companies that the commissioners selected to manage databases that will contain information about the availability of “white spaces.” These white spaces, according to TMCnet, are unused TV frequencies that can be used to carry wireless broadband traffic. The companies include: Comsearch, Frequency Finder Inc., Google (News - Alert), KB Enterprises LLC, LS Telcom, Key Bridge Global LLC, Neustar Inc., Spectrum Bridge Inc., Telcordia Technologies and WSdb LLC.


Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Chris DiMarco


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