Federal Board Recommends Broadband Fund

In a proposal designed to increase broadband in rural and high-cost areas, the $7 billion Universal Service Fund would be split into three new pools with $300 million annually dedicated to high-speed networks. The other two pools would be used for wireless services and traditional telephone service.

The proposal by the Federal-State Joint Board, which oversees the fund financed by surcharges on consumer telephone bills, would replace the current USF funding structure that primarily focuses on telephone service and Internet connections for schools and libraries. The Federal Communications Commission has one year to approve to the plan, which was released Nov. 20.

The plan received the immediate endorsement of FCC Chairman Kevin Martin.

“It is essential that we take actions that preserve and advance the benefits of the universal service program,” Martin said in a statement. “I believe our [USF] program must continue to promote investment in rural Americas infrastructure and ensure access to communications services that are comparable to those available in urban areas today, as well as provide a platform for delivery of advanced services.”

To read about the FCC granting AT&T broadband relief, click here.

Under the proposal, the broadband fund would be allocated to the states for distribution. In turn, the states would designate agencies to finance network construction or the operations of broadband providers. The panel also proposed capping total USF payments from the three pools at $4.5 billion a year, about the current annual funding distributed by the USF.

FCC Commissioner Michael Copps, who recommended five years ago that the USF be used for broadband deployment, praised the boards decision but slammed the proposed funding levels.

“I am enormously pleased to approve of this historic finding by the Joint Board because it establishes for the first time the right mission for Universal Service in the 21st Century,” Copps said in a statement. “I must express disappointment, however, that once the initial decision to include broadband was made, councils of caution found their way to the fore.”

Copps noted the funding does not include any new money, but a “mere reshuffling of dollars among different pots. Thats like fighting a bear with a fly swatter.”

Commissioner Deborah Taylor Tate also supports the overall initiative, but she questioned the need for three separate funds.

“Is it prudent to create three new government-administered funds instead of reforming the existing high cost fund?” she asked in her statement. “Most citizens know that when the government starts creating new funds, more often than not it ends up impacting their pocketbooks. Moreover, does it make economic sense to provide ongoing support for three services that ultimately compete for the same customers?”

While the broadband fund would have limited resources, Martin said additional support could be made available by requiring telecommunications providers to demonstrate their own costs and to meet support thresholds.

“Deployment of these telecommunications and information technologies support and disseminate an ever increasing amount of services essential to education, public health and safety,” Martin said. “A modern and high-quality communications infrastructure is essential to ensure that all Americans, including those residing in rural communities, have access to the economic, educational, and healthcare opportunities available on the network.”

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