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Land line subsidies to die completely in 2020, broadband fee and subsidy system kicks in next year

The federal government's effort to expand communications to impoverished and rural Americans is shifting gears from phone lines to broadband.  The U.S. Federal Communications Commission have approved a new plan and a new set of rules that will revamp the way taxes are used to improve communications in the U.S.

I. "Bye Bye" Land Line, "Hello" Broadband

The new rules revamp the Universal Service Fund (USF), a government fund financed by a 10 percent government fee (tax) on phone lines (cell phones, land lines) in the U.S.  The USF was first created as part of a broad package of telephone and internet reforms passed in the Telecommunications Act of 1996, which was signed into law by President Bill Clinton (D).

Under the Obama adminstration's plan, the estimated $8B USD the USF pulls in annually from U.S. taxpayers is being redirected.  The plan, approved by the FCC this week will eventually throw out the old subsidies on poor, rural Americans' phone service.

In its place will be two plans, aimed at bringing more modern communications technologies to these folks.  The first is the "Connect America Fund", which will direct $4.5B USD annually to funding mobile phone and broadband service to rural areas.  The services will only cover areas that private businesses refuse to cover.

American coverage
Much of America [orange] is not covered by what the FCC defines as high-speed internet (3 Mbps down; 768 kbps up). [Source: FCC]

A second fund, "The Mobility Fund", will get $500M USD.  This fund will focus its efforts on spreading wireless internet.

The plan was approved by a unanimous 4-0 vote, with FCC Chairman Julius Genachowski calling the plan "a momentous step in our efforts to harness the benefits of broadband for every American."

The plan is expected to provide service 7 million Americans over the next six years, and create 500,000 high-tech jobs, keeping America viable in a "fiercely competitive" global economy.

II. Some Warn Broadband Bills Will Go Up, FCC Says They Won't

The fly in the ointment may be higher bills.  Until 2017, the fees supporting USF will still be in effect, and the government will be funding the CAF and Mobility Fund from additional fees on broadband.

Public Knowledge, an advocacy group, warns, "[W]e share the concerns of other consumer organizations that the Commission's actions will lead to higher prices at a time when the average American is watching every penny."

Generally, while mobile service providers are pleased with the plan (which may give them funding for network expansion), broadband providers are irrate.

But the FCC's three Democratic comissioners, and the loan Republican commissioner were unilateral in insisting consumer bills will not, on average, increase.  They say that their plan counteracts the extra broadband fee by eliminate some of the network of confusing subsidies and kickbacks on broadband and phone service.  As  a result, these cuts will create enough of a price cut to absorb the new fee, they say.

Comments Republican Commissioner Robert McDowell, who endorsed the plan, "For the vast majority of consumers, rates should decline or stay the same."

Robert McDowell
Robert McDowell, the FCC's sole Republican commissioner spoke for some in his party in supporting the plan. [Source: C-Span]

Democratic FCC Chairman Genachowski adds, "I don't expect that overall consumer rates will go up as a result of this."

The plan will go into effect this year, with funds being put to use between 2012 and 2016.  Between 2017 and 2020, the USF will be discontinued and rural areas will stop receiving subsidies to keep their phone land lines alive.

The government playing utility is a role that troubles some, but it's an issue complicated by the fact that there's almost 10 million Americans living in regions that the private sector refuses to cover.  Thus, there should be plenty of lively debate on this topic.

Sources: FCC, Public Knowledge



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RE: Really?
By semiconshawn on 10/28/2011 5:01:05 PM , Rating: 0
So by the government taking your money and using it that is them paying for it? I pay for my kids to go to private school so yeah I would and I do pay for what I need. (I still pay property taxes for public schools why?). I donate time and money to local charities and events to help say build houses and help feed families around here. We get more done with less money that ANY government program. If we could have even a fraction of what the gov't wastes just in our town there would be no hungry or homeless people here. Do not project your unwillingness to do your part on me.


RE: Really?
By ClownPuncher on 10/28/2011 6:13:30 PM , Rating: 3
If private citizens and corporations could and would provide the needed services, we wouldn't have government infrastructure in the first place.

Keep in mind, much of what the government builds is farmed out on contracts to private business, creating waste, but serving as a catalyst.

The list of things the governmeent provides should not be very long, but needed infrastructure (roads, water, electricity) weren't being implemented by private organizations at the pace needed to sustain our population. Supply side economics shouldn't be applied to that kind of infrastructure, even though it already is in many respects.

That said...

Get rid of the local, state, and federal restrictions on broadband proliferation and we might see actual headway. I remember 10 years ago, or so, working with a company trying to get contracts for huge stretches of fiber installations, but eventually got bogged down and tanked due to multiple layers of government bureaucracy.


RE: Really?
By The Raven on 10/31/2011 5:59:13 PM , Rating: 2
I'm tracking with you but the gov't is too quick to jump on whatever fad is popular. People are too gd impatient. Yes heaven forbid it takes 10 years for broadband to reach all the way out to BFE or our cars to gain an extra 10mpg. Who knows where we will be in 5 years regarding this conversation. But the gov't steps in and Bush, Obama or whoever is hailed as a saint for getting something done that only needed 5 more years for the private sector to do on "their own" (meaning: with the influence of public pressure by way of demand (at the register or otherwise)).


RE: Really?
By ClownPuncher on 11/1/2011 12:27:21 PM , Rating: 2
Exactly, more laws are not needed, clearly defined laws are. What is the role of the government, and how much has it changed even int he last 50 years?


RE: Really?
By cjohnson2136 on 10/28/2011 6:29:36 PM , Rating: 3
I'm talking about paving roads and your talking about sending kids to school. Totally different. Would you pay to build roads for other people. No you would pay for the stuff that benefits only you and your family.

Donating time and money to a charity is a lot different then donating money for infrastructure.


RE: Really?
By The Raven on 10/31/2011 6:14:53 PM , Rating: 2
quote:
Would you pay to build roads for other people.
No he wouldn't directly, but he would buy goods from someone who needs the roads and THEY would pay for it. Where do they get their money? From him, when he buys something from them. (Or from the bank when they are just getting started.)

I mean are you going to build a warehouse for Walmart whether you know it or not. Applied to Walmart, you are asking him if he is going to build a distribution infrastructure for Walmart. Well Walmart and all their suppliers already did that without the gov't. And we as the "People of Walmart" paid for it all.

And I don't mean to sound completely down on gov't but it shocks me to see how dependent everyone here seems to be with regards to this issue. Its as if they just got here and have no concept of how things have been operating in this world since the dawn of time.


RE: Really?
By room200 on 10/28/2011 8:53:44 PM , Rating: 3
You pay for public schools because that's what AMERICA has said is needed in order to keep America as educated as possible. When I was living in an apartment, my taxes were being used to subsidize those who owned homes when they claimed their deductions; I didn't ask why.

I don't believe anyone who's asking why they should be paying for public schools is as generous as you claim to be.


RE: Really?
By The Raven on 10/31/2011 6:41:35 PM , Rating: 2
quote:
I didn't ask why.
You should. Tax money fuels a lot of things and you just may be against some of those things (abortion rights, bailing out bad real estate investments, war in Iraq, etc.)
I'm not saying you should be anti-tax, but you sound like a product of US public schools when you say that. Think it over.

And with regards to calling him out on not being generous, I'm guessing you don't do much donating yourself. You must assume that this guy is Mr. Moneybags and just throws his money everywhere. No, I'm sure that he does so after some research. And if you research the performance of public schools v. private schools you probably wouldn't want to invest your donations there either.
quote:
that's what AMERICA has said is needed

Well around 1979 only <half of America said that there should be a federal DOE. Namely Carter and the Democrats. If I think formal education should be mandatory for every child, I certainly wouldn't want my $$ going to the current federally controlled system. It is an abomination and mobbed up beyond recognition. All the good that comes out of the public education system (in my experience in CA and MO) is from the states themselves.


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