End Telephone Subsidies, FCC Chairman Says

The overhaul of an "outdated" U.S. Federal Communications Commission program that subsidizes telephone service in rural areas will lead to universally available broadband service in the U.S. by the end of the decade, FCC Chairman Julius Genachowski says.

The issue will remain contentious, as rural telcos likely won't be happy no matter what the ultimate outcome. It is fair to note that USF reform has been a problem for decades, and hasn 't been "fixed" yet, since every change creates new revenue winners and losers.

Genachowski's proposal to revamp the Universal Service Fund (USF), unveiled Thursday, would transition the fund away from subsidies for traditional telephone service and toward broadband. The fund, with an annual budget of about US$8 billion, would start paying for broadband deployment to areas now unserved in 2012.

Genachowski called the current USF system "unfair" and "broken" and scheduled a vote on his proposal for later this month. In some cases, USF is paying telephone carriers $20,000 a year to provide service to a single customer, and the system pays subsidies to multiple carriers in some areas, he said.

End Telephone Subsidies, Build Broadband