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Posted at 05:23 PM ET, 10/27/2011

FCC approves $4.5 billion broadband fund

The Federal Communications Commission approved a $4.5 billion broadband Internet fund Thursday aimed at giving money to private companies to bring access to rural households.

In a unanimous vote, four sitting members touted the decision to divert those billions of dollars -- drawn from consumer fees -- that have for years been used to service plain old telephone lines in isolated parts of the nation. The FCC’s new rules will use those funds for landline and mobile broadband connections to the five percent of the nation that isn’t connected to the Internet today.

Speaking after the vote, FCC Chairman Julius Genachowski promised that the creation of a broadband fund would further the agency’s goal of extending broadband Internet — what he describes as “infrastructure” for the economy.

He said that within a decade, 18 million Americans without access today would be connected by landline broadband connections or mobile services at 3G or 4G speeds.

The FCC’s move immediately drew praise from some Democratic lawmakers, consumer groups and some Internet service providers who have said federal programs have lagged consumer trends. One-third of Americans have replaced landline phones for cellphones, for example.

But some consumer groups and phone competitors raised concerns.

The plan includes changes in how companies pay each other for carrying phone calls. The change could lead to a 50-cent or higher monthly increase on consumers’ phone bills .

“We 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,” said Gigi Sohn, president of public interest group Public Knowledge.

Genachowski pledged that consumer fees won’t increase.

Cable and some wireless companies said they were concerned that language in the summary text of the plan could give phone companies first dibs on some projects. The FCC said it will reveal the full order within weeks.

“While we are disappointed in the commission’s apparent decision to ignore its longstanding principle of competitive neutrality and provide incumbent telephone companies an unwarranted advantage for broadband support, we remain hopeful that the order otherwise reflects the pro-consumer principles of fiscal discipline and technological neutrality that will bring accountability and greater efficiency to the existing subsidy system,” said Michael Powell, a former FCC chairman who heads the cable industry lobby group National Cable & Telecommunications Association.

The plan comes as some Republican and Democratic lawmakers have been questioning the success of federal loan guarantees and grants in “new economy” projects such as clean energy and broadband Internet.

The collapse of solar panel firm Solyndra, which received $535 billion in federal loan guarantees, has been the subject of Congressional investigations. Democrats have called for probes of the USDA’s $267 loan commitment to failed broadband Internet firm Open Range.

The money for the FCC’s new Connect America Fund will continue to be collected from a surcharge on monthly phone bills.

By  |  05:23 PM ET, 10/27/2011

 
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