FCC Approves Obama Administration's Government-Run Rural Broadband Plan
October 28, 2011 3:12 PM
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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
U.S. Federal Communications Commission
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.
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,
, "[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, 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.
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RE: Gov't Subsidized Broadband? No Thank You.
10/28/2011 6:34:40 PM
There are a lot of things that are important to remaining competitive in the world market but I don't see the government delivering them or asking us to reach into our pockets and foot the bill for a small percentage of Americans to have those things.
If you want to start on the things that are important to remaining competitive in rural areas lets go with cheap energy. When it costs over $500 in freight to haul a truck load of cattle 30 miles to auction it's tough to foot the bill and remain competitive. When it's costing $5 per mile for truck transportation of goods to rural areas it's tough to remain competitive. I don't see the federal government asking us to all chip in to give discounts to rural areas because they're at a disadvantage in these areas. I'm thankful the government isn't doing that because I don't think the rest of America should be penalized for my decision on where to live. Having pavement to my house, curb and gutter, sidewalks, street lights and all the other things the government funds isn't going to happen here nor do I want it to so why are they funding broadband?
I love how this is structured, "only cover areas that private businesses refuse to cover". What private businesses were asked? Verizon and AT&T? Comcast? The local telco? I know for a fact that three of the small local WISPs in this area were never contacted about broadband mapping or what areas they provide service. Furthermore, the fourth that was contacted gave maps of their coverage and the pencil pushers looked at the maps and said there was no way they could cover those areas and restructured their coverage and throughput maps. All of the companies offer at least 3 Mbps down and one has customers up to 30 miles from sites getting higher speeds than that but the pencil pushers didn't believe them so they threw their info out the window.
Disney isn't required, but neither is government provided and taxpayer funded broadband. If there is sufficient demand in an area someone will figure out how to deliver a service at a price where they can make a profit. The government will figure out how to do it slower, poorer and at a loss.
"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay
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