FCC about to reveal rules for rural broadband fund

On Thursday Federal regulators are going to reveal their plan of overhauling the $8 billion fund, subsidizing phone service in rural areas and for the poor, with the goal to redirect the money toward broadband expansion.

The Federal Communications Commission is also pares in disclosing the latest rules for the byzantine system, governing how phone companies pay each other for phone calls. It is a system that, almost everyone in the industry has the same opinion, is outdated and leads to perverse schemes by carriers in stimulating certain kinds of phone traffic.

However, improvement of the system caught up for years by competing significances.

Together, the current rules set to be the Obama administration’s most significant overhaul of telecommunications rules. The five-member commission is going to vote on the rules at an assembly on Thursday morning.

The Universal Service Fund created in an effort to ensure all Americans have access to a necessary telephone line. The act supported by a supplement on the long-distance phone bills. The program sponsors phone service for the poor and pays for Internet right to use in schools, libraries and rural health clinics. However, over half the money goes to paying phone companies, which provide phone service in rural places where lines are supposedly unbeneficial.

John Stephens, chief financial officer of the country’s biggest phone company, AT&T Inc., last week told investors that, as a general rule, they are decidedly positive to the idea of restoring such rules.

AT&T and the other prominent phone companies have proposed their own reform proposal. The FCC’s plan expected in borrowing no less than some features from it. That plan recommended capping the size of the new fund at $4.5 billion yearly, giving subsidies to only one provider in an area and directing funds toward places where there is no business case for companies in an effort to provide service on their own. Besides, it would fund wireless broadband access in isolated or rough areas where wired line construction costs the most.

Policy director Matt Wood at consumer advocacy group Free Press says the phone-company plan had meager to do with increasing broadband implementation. Everything is about allowing monopoly local phone providers in reaching further into the pockets of consumers.

In the meantime, small, rural phone companies got their own plan, and are nervous that the FCC is going to place limits on how they are using their funds and diverting money to wireless broadband.