Bloomberg News

Revamping Phone Subsidy Key to Job Creation, FCC Chief Says

October 14, 2011

(Adds background on proposed changes to subsidy starting in third paragraph.)

Oct. 14 (Bloomberg) -- Federal Communications Commission Chairman Julius Genachowski told the largest U.S. business lobby that his agency’s plans to revamp a $4.3 billion landline phone subsidy to expand high-speed Internet will spur economic growth.

“We’ve got to get the broadband infrastructure right,” Genachowski said today in a speech before the U.S. Chamber of Commerce in Washington. “If we don’t, we’ll still have the job losses here” and new jobs will go to other nations that are investing in Internet access.

The changes to the subsidy for phone service in high-cost regions, were proposed Oct. 6 by Genachowski, who favors broadband adoption as a vehicle for stimulating the economy and creating jobs. The proposal will be brought before the agency’s four commissioners at an Oct. 27 FCC meeting.

Under Genachowski, the FCC has sought to increase the share of people who use high-speed Internet at home to 90 percent from the current 65 percent, according to the agency’s national broadband plan. Between 14 million and 24 million Americans lack access to broadband, “and immediate prospects for deployment to them are bleak,” the FCC said in a report last year.

FCC is seeking to transform the Universal Service Fund, which includes the subsidy for high-cost regions, into a “Connect America Fund” designed to ensure affordable high- speed Internet service in regions that lack access and to promote mobile broadband nationwide.

The USF, which also supports phone service to schools and libraries, is financed by charges on long-distance calls paid by telephone subscribers, and it subsidizes companies including Windstream Corp. and Frontier Communications Corp.

--With assistance from Michael Shepard in Washington. Editors: Michael Shepard, Andrea Snyder

To contact the reporter on this story: Juliann Francis in Washington at jfrancis31@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net


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