Federal Communications Commission Chairman Julius Genachowski on Thursday unveiled a plan that he said will help bring broadband service to the 18 million Americans who are currently without access.
Specifically, the plan would revamp the Universal Service Fund (USF) to include broadband. The USF is a government fund created in 1997 intended to provide all Americans with access to telecom services, as well as Internet service in schools and libraries.
Since the majority of Americans now have access to phone service, the FCC's plan would create a Connect America Fund (CAF), which would essentially put phone funds toward broadband. Genachowski didn't talk exact figures today, but the commission's national broadband plan proposed shifting $15.5 billion over the next 10 years from the USF to the CAF.
The CAF will have two core goals, Genachowski said: making broadband available in underserved areas, with build-outs to hundreds of thousands of consumers starting in 2012 and millions more in the next five years; and ensuring access to mobile broadband via a Mobility Fund, which would provide one-time support for states deploying mobile broadband networks.
That Mobility Fund, Genachowski said, will help "accelerate deployment of 4G networks."
The chairman stressed that its efforts will not compete with existing providers. "Funding will be targeted exclusively at areas without an unsubsidized competitor, and where support is needed to extend or sustain broadband networks," he said.
To that end, Genachowski also proposed making the process of obtaining USF funds a more competitive process. One of the major complaints about USF over the years is that it was wasteful and had little oversight. "The fund pays some companies almost $2,000 a month – that's more than $20,000 a year – for a single home phone line," Genachowski acknowledged today.
As a result, the FCC will introduce a bidding process for distribution of CAF monies, the first time the agency has done this for USF.
Genachowski also proposed changes to intercarrier compensation (ICC), the money that one carrier pays to another to route traffic to the appropriate place. Carriers have long complained that those charges are too high. The FCC's plan would eliminate billions in hidden subsidies currently built-in to wireless and long-distance bills, the chairman said.
The FCC voted to overhaul USF back in February, and opened it up to public comment. The commission has now taken that input into consideration for this final plan, which Genachowski said today has been submitted to his fellow commissioners for consideration. They will vote on it at the FCC's next public meeting on October 27.
In a statement, Sprint said it is "encouraged" by the chairman's plan. "This transition will provide exciting new services and lower costs to consumers. For these reasons, Sprint has emphasized the need to adopt a forward looking plan that recognizes the differences between IP networks and analog networks."
Bob Quinn, chief privacy officer at AT&T, said without changes, the USF and ICC "will stifle innovation and the benefits of broadband for consumers." He said the chairman "deserves credit for bringing this important issue to this point, [and AT&T is] committed to working with him and the entire Commission, as it works to bring this opportunity for a fair, reasonable plan across the finish line."
Broadband trade group USTelecom, meanwhile, also applauded the plan, with some caveats. "While we have some concerns with what he outlined today, we appreciate that he and his fellow commissioners are looking to find the right balance that will benefit consumers, advance the public interest, accelerate broadband investment, and create jobs," the group said.
Reps Mike Doyle and Anna Eshoo, meanwhile, penned a letter to Genachowski urging him to make sure that consumers are protected during any USF transition.
"We are concerned by a proposal put forward that could lead to a 20 percent increase in the federal Subscriber Line Charge (SLC) for all basic telephone subscribers, in order to offset reductions in revenue from ICC access charges experienced by a subset of telephone companies," they wrote. "This increase would force consumers in many regions of the country to pay higher bills each month, at a time when many families are already suffering financially due to the economic downturn. We urge the Commission to ensure that any increase in consumer costs are justified based on a demonstrated need for carrier cost-recovery."