FCC aims to bring broadband to millions in rural areas

Posted Oct. 28, 2011, at 9:02 p.m.

WASHINGTON — The Federal Communications Commission said Friday that proposed changes to subsidies for rural telephone service are intended to help customers in remote areas gain access to faster Internet service and better wireless phone service, and some industry groups say that reflects what consumers are choosing already.

FCC spokesman Mark Wigfield said the Universal Service Fund, which everyone who gets a phone bill each month pays into, needs to be updated, because the system was designed back in the days of when Internet service came via dial-up phone lines.

“The current system has gotten out of whack,” he said.

He said the system provides too many “incentives for carriers to get paid to keep older technology in place” when 18 million rural Americans lack access to broadband.

“You have an old system that was designed to support voice in rural America,” he said.

CTIA: The Wireless Association, the Washington group that lobbies on behalf of cellphone providers, applauded the FCC’s plan, which commissioners unanimously approved Thursday, and said that the $8 billion Universal Service Fund, established in 1997, had served the public well.

“We were very interested in seeing these programs reformed,” said Scott Bergmann, CTIA’s vice president for regulatory affairs. “They did a fantastic job getting legacy wire-line voice telephone service out to rural America.”

Wigfield said the agency was trying to work within the limits of the existing program so that phone customers won’t see an increase on their monthly bills.

“We are doing more with the same amount of money, so that does involve some belt tightening,” he said, adding, “Some places are expenses to serve, no matter what.”

Lawmakers who represent rural states had expressed some concerns about the changes. Earlier this month, Alaska’s two senators and lone congressman wrote FCC Chairman Julius Genachowski to say that the Universal Service Fund is the only thing that prevents rural Alaskans from becoming a community of digital “have-nots.”

“Without continued high cost support, tens of thousands of Alaskans will be relegated to using antiquated communications services or having no services at all,” they wrote. “With many communities accessible only by plane or boat, the need for reliable, modern and advanced communications services is vital for 21st century jobs, education, health care and public safety.”

Wigfield said the current system is inefficient, with multiple carriers sometimes serving one location. “That doesn’t make a lot of sense when you have limited resources,” he said.

And he acknowledged that some rural phone providers that receive funding may wind up receiving less. But he said the FCC’s plan wouldn’t pull the plug on them right away.

“Companies may get a little less money, but the transition is gradual, and they will adapt,” he said.

Bergmann said that the support system should be allocated toward the services consumers are choosing, and with the number of wireless subscribers in the United States in the tens of millions and growing, he’d like to see even more of the fund go toward wireless.

“We really think the future of communications is mobile,” Bergmann said.

Many smaller rural telecommunications providers that rely heavily on the fund as it’s currently structured oppose the changes, but none could be reached for comment Friday.

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