FCC takes first step toward mobile broadband fund

The U.S. Federal Communications Commission took the first step Thursday toward long-advocated reform of a huge program that subsidizes traditional phone service by proposing a new fund to pay for mobile service in rural areas.

The proposed Mobility Fund would come from money available through the 13-year-old Universal Service Fund (USF), a subsidy program with an annual budget of about $7 billion. The proposal unanimously approved by the FCC on Thursday would authorize a one-time outlay of $100 million to $300 million to establish the mobile fund, which would target areas of the U.S. that don't have 3G service available.

The FCC's proposal would award funds based on a reverse auction, with mobile providers bidding on the lowest amount of support they would accept to serve an area.

The Mobility Fund will help move forward a national broadband plan the FCC released in March, said Julius Genachowski, the agency's chairman. The fund would also be a major step toward a larger effort to reform the USF, he said.

For years, lawmakers have been calling on Congress or the FCC to restructure the USF. In some cases, the USF now provides subsidies of $10,000 per phone line in areas where there are competitors, Genachowski said.

"The status quo for USF is unsustainable," he added. "The current program is designed to support the communications networks of the past, not the future. It is -- we have to acknowledge -- filled with inefficiencies. And it is poorly targeted in too many respects, with perverse incentives and the result that millions of Americans remain unserved by broadband."

The national broadband plan also recommended that the FCC convert the main portion of USF to a broadband fund. That recommendation wasn't part of the FCC's action Thursday to launch a notice of proposed rulemaking (NPRM) on the Mobility Fund. In an NPRM, the FCC proposes new rules and seeks comment.

The NPRM also seeks public comment on whether the FCC should target areas to receive funding or make the fund available to any area unserved by 3G mobile. The FCC also wants public input on the minimum performance and coverage requirements it should include with Mobility Fund dollars.

The new fund will provide "a much-needed down payment on closing America's digital divide," said Commissioner Michael Copps. Copps said he was reminded that the U.S. has "a ways to go" on mobile services during a recent visit to China.

"We sailed down the Yangtze River, surrounded on both sides by mountains, and as we floated down those long and beautiful river valleys, I was almost never without 3G service," he said. "The sight of that 3G signal along the top of my BlackBerry screen almost everywhere we went on our trip made quite an impression on me. I dare say there are many places in the United States -- and they're not just river valleys, either -- where I wouldn't find that kind of service."

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 e-mail address is grant_gross@idg.com.

Copyright © 2010 IDG Communications, Inc.

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