The US Federal Communications Commission voted unanimously Thursday to reallocate most of a $4.5 billion fund originally intended to expand telephone access to rural areas toward the expansion of national broadband Internet service.
“We are taking a system designed for the Alexander Graham Bell era of rotary telephones and modernizing it for the era of Steve Jobs and the Internet future he imagined,” said FCC Chairman Julius Genachowski.
The move is a transition away from the Universal Service Fund (USF), which was created in 1997 to expand access to telephone service to rural America, to the newly created Connect America Fund.
Over the next six years, the broadband fund is expected to deliver faster Internet access to 7 million Americans who don’t have broadband service. Currently, about 18 million people in the US are without access to a broadband connection.
In addition, the FCC will allocate $500 million toward a “mobility fund,” which will help expand mobile broadband access to rural Americans.
“This is a once-in-a-generation overhaul of universal service,” said Genachowski. “[The broadband fund] will create jobs in the near term, and lay the foundation for enduring job creation, economic growth, and US global competitiveness for years to come.”
The transition from subsidies for telephone service to broadband service will begin next year, with an initial $300 million going to broadband expansion. Another $300 million will be spent during 2012 on the mobility fund, moving up to an annual budget of $500 million in 2013.
In total, the fund will cost Americans who pay less than $30 a month for telephone service between 10 cents and 15 cents extra per month. After six years, that amount will go down.
Starting in 2013, telecom companies will compete in a bidding process to be awarded the subsidies.