If federal subsidies are any indication of national trends, a recent announcement by the Federal Communications Commission (FCC) signals what may be the end of an era.
On Oct. 27, 2011, the FCC began the process of phasing out a multibillion-dollar federal subsidy program for rural telephone service and phasing in a new program to provide support for the deployment of broadband in the same underserved areas.
The FCC’s Universal Service Fund has provided $8 billion in annual subsidies to help deploy landline and mobile telephone service in rural and other remote locations. Recognizing the need for a massive priority shift, the FCC voted unanimously to transfer more than half of that amount, $4.5 billion, to the new Connect America Fund, which will instead support the deployment of broadband. Over the next several years, the older fund will be phased out and eventually replaced by the new fund.
In announcing the decision, FCC Chairman Julius Genachowski offered statistics that highlight the glaring lack of broadband access in many areas of the country. He deplored the nation’s 68 percent broadband adoption rate, contrasting it with nations such as South Korea and Singapore where adoption rates exceed 90 percent. In actual numbers, the 68 percent adoption rate translates to approximately 100 million Americans, or one-third of the population, who do not have broadband. Notably, minorities and low-income families are the most affected. According to the chairman’s statistics, less than one-third of the poorest Americans have adopted broadband, in contrast to 90 percent of the richest. Also, less than 50 percent of African-Americans, Latinos, elderly and rural populations have adopted broadband.
The Connect American Fund is designed to address those discrepancies and help the country achieve universal access to broadband. Genachowski called the commission’s decision a “once-in-a-generation overhaul of universal service,” and projected that, in the next year, it will bring broadband to more than 600,000 Americans who wouldn’t have it otherwise.
Projects could begin early next year.