Telecom Regulator To Propose Major Change To Aid Broadband (updated)

Telecommunications companies that serve rural America could see a new push to reshape funds that often support infrastructure investments to underserved communities.

The New York Times reports that FCC Chairman Julius Genachowski plans to announce a major policy shift in the Universal Service Fund, a long-standing fee that helps subsidize rural telecom build-out. Companies like Windstream, CenturyLink and other firms receive substantial funding from the USF.

From the New York Times:

Most of the money under discussion involves a longstanding subsidy known as the Universal Service Fund, which is paid for through fees tacked onto most consumers’ phone bills and distributed among telephone companies to subsidize the high costs of providing service to rural areas.

Mr. Genachowski will propose phasing out the payments between phone companies, which he says create “inefficiencies and perverse incentives” that result in waste in the fund. The F.C.C. will also propose consolidating existing methods of paying for rural phone service into a new pool to be called the Connect America Fund, to be used for helping pay for making broadband available to underserved areas.

The current Universal Service Fund and its spending methods are “unsustainable,” according to a draft of Mr. Genachowski’s remarks prepared for Monday. “It was designed for a world with separate local and long-distance telephone companies, a world of traditional landline telephones before cellphones or Skype, a world without the Internet — a world that no longer exists.”

“At the end of this transition, we would no longer subsidize telephone networks; instead we would support broadband,” which then could be used for phone service, Mr. Genachowski plans to say.

You can read more at this link.

UPDATE: A joint statement was issued this afternoon by CenturyLink, Frontier, Qwest and Windstream regarding FCC Chairman Genachowski’s remarks today at the Information and Innovation Foundation on modernizing and streamlining the Universal Service Fund. The four telecom’s have substantial assets and investments in the rural terrorities that they serve across the U.S.

“CenturyLink, Inc., Frontier Communications, Windstream Communications and Qwest Communications are committed to broadband deployment and providing top-quality communications capabilities to the largely-rural territories we serve. We applaud Chairman Genachowski’s call for comprehensive and rational reform of the nation’s intercarrier compensation regime and Universal Service Fund. We agree that such reform should encompass the pursuit of modernization, fiscal responsibility, accountability, market-driven and/or incentive-based outcomes, and sensible transitions.  While there are many important details yet to be worked out, we are eager to participate in the Commission’s process moving forward. It is imperative that any of the proposed changes are focused on true consumer benefit and will facilitate long-term network investment, job creation, and improved broadband and voice services.
 
The National Broadband Plan highlighted the importance of rural broadband, echoing the priority that FCC Chairman Genachowski has repeatedly given to rural broadband deployment for all providers. We agree that the digital divide within rural America cannot be allowed to persist. We, therefore, look forward to a sensible reform process that creates effective and predictable mechanisms that will serve the public interest by promoting consumer choice through support of existing networks and bringing affordable broadband services to all Americans in high-cost rural areas.”