FCC proposes revamp of Universal Services Fund

The U.S. Federal Communications Commission (FCC) has proposed a plan to revamp two key telecommunications funding programs in order to direct more financial resources to the rollout of broadband Internet services.

Announced in early October, 2011 by FCC Chairman Julius Genachowski, the Commission’s proposal would redirect the majority of $4.5 billion in annual fees currently paid by consumers into the Universal Services Fund (USF) into a new “Connect America Fund” that would build out the infrastructure required to bring broadband Internet services to unserved and underserved areas. The Commission estimates that as many as 18 million additional U.S. consumers, mostly in rural areas, would obtain access to broadband services as a result of the program. The Commission would also introduce a competitive bidding system that would ensure the most efficient and cost-effective distribution of Connect America Fund resources, allowing the program to better control program costs.

The Commission’s proposal would also revamp the current Intercarrier Compensation system (ICC), which subsidizes local telephone services for certain consumers. The Commission would immediately close loopholes and schemes that it says allow carriers to divert wireline traffic to wireless networks to avoid paying the ICC fee. The Commission also proposes to phase down ICC charges over a multi-year period to bring intrastate access rates to parity with interstate rates, thereby providing consumers with more than $1 billion in annual benefits.

According to Genachowski, “our plan would deliver tremendous benefits for consumers.” “By connecting millions of unserved Americans who are being left out of the broadband revolution, this plan will bring enormous benefits to individual consumers, our national economy, and our global competitiveness.”

Read the complete text of the press release on the Commission’s proposed changes to the USF and ICC.