FCC Aims to Expand Broadband to Underserved Areas

If you're one of the businesses in America’s remote rural or isolated areas that can't get broadband service to speedily connect with customers, relief may be in sight. The Federal Communications Commission proposed Feb. 8 to change the rules of the road to build out the necessary infrastructure that will bring affordable wired and wireless broadband service — and the jobs and investments they spur — to the entire nation.

Nationwide broadband infrastructure is crucial for the country’s economic health, said FCC Chairman Julius Genachowski in announcing the proposed changes. Businesses need broadband to start, compete and grow.

All told, there are 24 million Americans without access to broadband service because the infrastructure isn’t available. The FCC aims to fix that by transforming its current programs focused on 20th century voice service into a streamlined and efficient Connect America Fund that would help make 21st century broadband available for all.

This, the FCC said, requires that the Universal Service Fund (USF) be updated and modernized.  The USF, which helped connect rural America to telephone service, fails to effectively and efficiently target support for broadband in rural and isolated areas.

It can also be wasteful and inefficient in some situations, the FCC said, paying more than $20,000 a year in support for some households, while providing little or no support in other communities where households and businesses lack broadband.

The problem is compounded by a complex system of payments between carriers called intercarrier compensation (ICC) that the FCC says is outdated and inefficient.

The FCC said its intention was to eliminate waste and inefficiency in the current program, using savings to spur high-speed Internet in unserved areas, reform the ICC system and increase accountability across the board.

The FCC move received a positive reception from the communications companies that serve such areas.

“Today’s FCC action to initiate reform of intercarrier compensation and the Universal Service Fund is an important first step towards ensuring America’s broadband future by fixing a broken system,” Kathleen Q. Abernathy, chief legal officer of Frontier Communications, said in a statement. Frontier provides communications services in 27 states.

CenturyLink, Windstream Communications and Qwest Communications, which also serve largely rural areas, joined Frontier in issuing a joint statement in support of the FCC move, stating their commitment to broadband deployment.

“We applaud Chairman Genachowski’s call for comprehensive and rational reform of the nation’s intercarrier compensation regime and Universal Service Fund,” they said. “We agree that such reform should encompass the pursuit of modernization, fiscal responsibility, accountability, market-driven and/or incentive based outcomes, and sensible transitions.”

The Small Business & Entrepreneurship Council (SBE Council), on the other hand, doesn’t believe that the federal government should be supporting communications services.

"The federal government should not be subsidizing any telecommunications services,” said Raymond J. Keating, the SBE Council’s chief economist. “The predictable outcome is that resources get allocated according to political preferences, and the fund moves beyond its original mission. That's exactly what's going on here. We'd be better off if the $2 tax were simply ended and the fund eliminated. If subsidies are going to be considered, then it should be left to the states."

• 5 Technologies That Just Might Be Extinct By the End of 2011
• What Net Neutrality Means for Small Business
• Mobile Web Strategy Puts Consumer Purchases on Fast Track

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.