FCC Aims to Blanket Rural America With High-Speed Internet

The Federal Communications Commission unveiled plans on Thursday to help bring broadband service to the more than 18 million Americans who are currently unable to access it.

FCC chairman Julius Genachowski said that the plan would call for a makeover of the Universal Service Fund, which is a 14-year old $8 billion government fund that provides low income, rural areas with telecom services. The fund would now include broadband as well.

“If we want the United States to be the world's leading market for the innovative new products and services that drive economic growth, job creation and opportunity, we need to embrace the essential goal of universal broadband, and reform outdated programs so that we are investing in 21st century communications infrastructure all over our country,” he said.

The fund and its inter-carrier compensation system will be reformed to increase accountability and efficiency and encourage targeted investment in broadband infrastructure, Genachowski said. The modernization plan, which has been more than a year in the making, will be voted on by the FCC at the end of October.

If adopted, the fund would spur broadband adoption in hundreds of thousands of homes and businesses starting in 2012 through a spin-off fund dubbed Connect America. The program would essentially transfer money previously used for phone services to the broadband fund, according to the chairman.

The modernization of the fund would cut the number of Americans without access to high-speed Internet by up to one half over the following five years, on a path to achieve universal broad by the end of the decade, according to Genachowski.

Connecting those millions of Americans would bring benefits to not just consumers but to the economy and the nation’s global competitiveness as a whole, he said.

“It will spur billions of dollars in private investment and very significant job creation, starting with construction workers who would build out this new infrastructure, and it would do so soon,” he said.

Wireless customers, who contribute to the fund each month through their phone bill, would see more than $1 billion in annual benefits from the reform through cuts in wasteful spending and constraints on the growth of the fund, the FCC said.

The fund currently spends $4 billion a year, with much of that wasted due to lack of oversight. The FCC chairman admitted that the fund pays some companies nearly $2,000 each month, or more than $20,000 a year, for just a single home phone line.

The newly revamped fund would also provide a necessary platform for entrepreneurs and small businesses in rural America, while, for the first time, providing support to increase access to mobile broadband.

The Mobility Fund, which will be started with the plan, will help accelerate the deployment of 4G networks, Genachowski said.

Providers such as Sprint (NYSE:S) and AT&T (NYSE:T) have backed the FCC changes for the most part, encouraging the adoption of a new plan that will modernize the fund and increase broadband access.