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Universal Broadband|Service Gets a Bump

WASHINGTON (CN) - In a move it estimates will give 7 million rural Americans access to high-speed Internet and reliable voice services over the next six years, the Federal Communications Commission has overhauled its universal service fee and intercarrier compensation systems into a new Connect America Fund.

Some form of universal service fee has been charged to most telephone customers to subsidize service to areas and customers' phone companies that could not serve in a cost-effective manner, since 1913.

Since 1996, those fees have been administered by the Universal Service Fund. For the first quarter of 2011 the fees were equal to 15.5 percent of the revenue carriers collected from customers and charges for interstate transmission, totaling about $4.5 billion, according to the FCC.

Universal access to mobile broadband, with both voice and high speed internet access, is the goal of the new Connect America Fund, which will have the same budget as the fund it replaces.

To subsidize the necessary infrastructure, the FCC will ask carriers to accept a cap on the subsidies they currently receive to operate high-cost landlines in exchange for access to $300 million in funding to deploy broadband networks capable of supporting actual speeds of 4 Mbps (megabits per second) downstream and 1 Mbps upstream.

The FCC also will phase out the system of charges for the exchange of voice traffic across different carriers - known as intercarrier compensation - in favor of a "bill-and-keep" pricing model where carriers agree not to charge each other termination fees for calls on each other's networks.

This change means carriers will recover costs from their own customers rather than their competitors, and the FCC believes this will allow wholesale pricing of these calls, lowering retail prices and driving up call activity.

While the FCC adopted these changes at its meeting in October, its order was not published in the Federal Register until Nov. 29. Its provisions become effective Dec. 29.

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