Telecom Companies Propose Overhaul to $8B Federal Rural Broadband Plan

By Erin Harrison August 01, 2011

The country’s leading telecom companies – including Verizon Communications and AT&T – have put forth a proposal to revise the $8 billion federal telecom subsidy program that would help extend broadband access to rural and “underserved” areas of the US.

According to an Associated Press report, the proposal filed with the Federal Communications Commission Friday would bring broadband service to nearly all Americans within five years.

The Federal Communications Commission’s Universal Service Fund program – or USF – has helped bring basic telephone service to places where there was no economic case for service, as well as extending mobile phone service to rural and underserved areas.

“The proposal is one of dozens that the FCC will likely receive as it seeks to bring the federal program, called the Universal Service Fund, into the digital age. The agency voted unanimously in February to begin drafting a blueprint to modernize the fund,” the AP said.

The FCC now wants to use the rural program – the High Cost Fund – to pay for broadband. The Universal Service High-Cost program is designed to help give consumers in rural, insular and so-called high-cost areas access to telecommunications services at rates that are affordable and reasonably comparable to those in urban areas.

The program implements this service by allowing eligible carriers who serve these areas to recover some of their operating costs from the federal Universal Service Fund, according to the FCC.

In addition to the nation’s two largest phone companies, the telecom plan is also backed by CenturyLink Inc., Fairpoint Communications Inc., Frontier Communications Corp. and Windstream Corp.

Federal communications officials welcomed the companies’ proposal and the industry’s efforts to tackle Universal Service reform.

“We’re pleased that many have taken up that challenge, and we will consider those proposals as we finalize reforms,” the agency said in a statement.

The FCC is also overhauling its intercarrier compensation system to provide “the right incentives for companies to invest in advanced, efficient Internet Protocol networks capable of delivering voice, data, and video,” according to a recent FCC blog post by Sharon Gillett, chief of the FCC’s Wireline Competition Bureau.

On Aug. 2, FCC Chairman Julius Genachowski will unveil the results of the first nationwide test of residential wireline broadband service in a report, “Measuring Broadband America.” The FCC will also unveil new consumer resources to help Americans take the confusion and mystery out of choosing the speed they need, including tip sheets and a step-by-step guide.


Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Rich Steeves

Executive Editor, Strategic Initiatives

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