US to vote on sharp increase in broadband subsidies

New funds target broadband deployment to 5 million US residents, the FCC says

The U.S. Federal Communications Commission will vote Wednesday on a proposal to pump US$1.8 billion into a fund that subsidizes broadband deployments in rural communities.

It would be the second investment for the FCC's Connect America Fund and should bring broadband service to nearly 5 million U.S. residents who don't have coverage now, an FCC official said. The new funding, planned for next year, would amount to a 70 percent increase in subsidies, said the official, speaking on background.

The FCC voted in October 2011 to begin transitioning subsidies for traditional telephone service in its Universal Service Fund to broadband subsidies. To date, the new Connect America Fund has spent $438 million to expand broadband to about 1.6 million U.S. residents and $300 million to expand mobile broadband service. It subsidizes deployments in rural communities and other areas where it would be expensive to build networks.

Commissioners are scheduled to vote on the phase-two plan Wednesday. The $1.8 billion would be made available to the largest telecom carriers in the U.S., including Verizon Communications, AT&T and CenturyLink. Those carriers would have the option of accepting the subsidy and building out broadband service, or rejecting the money.

If the large carriers reject the subsidy in an area of the country, the FCC would award the subsidy based on a bidding process. The commission on Wednesday will vote on a proposal to approve the details of that bidding process, the official said.

The FCC will also issue a proposal asking for public input on whether the Connect America Fund should increase the minimum download speeds of broadband available to get subsidies. The current minimum is 4Mbps, but the agency will ask whether the minimum should be 10Mbps.

It will also ask for input on whether a second version of its Mobility Fund should target areas of the country that lack 4G LTE service. And it will consider whether to establish a Connect America Fund for the small telecom carriers, the official said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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Tags telecommunicationU.S. Federal Communicationsat&tregulationCenturyLinkgovernmentVerizon Communicationsbroadband

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