FCC goes public with its ambitious Connect America Fund

The Federal Communications Commission (FCC) has taken the covers off its $4.5 billion "Connect America Fund," an effort that is designed to subsidize broadband service in rural hard to reach areas, redirecting funds previously set for traditional voice services.

Released 23 days after the agency's commissioners voted to pass it on Friday, Nov. 18, the FCC said the new fund will bring broadband to seven million people over the next six years.

But the order isn't about wireline-based broadband alone as it also allocates money to help drive more mobile broadband services via the new Mobility Fund.

In addition, the order aims to simplify the intercarrier compensation process, which is the regulated charges service providers pay one another to terminate their respective voice traffic on their networks, to what it calls a "bill-and-keep" framework. The agency claims that the bill and keep framework will improve service and lower costs by removing hidden subsidies on consumers' bills and rids impediments to deploying next-generation networks.   
By January 2012, the FCC said the rules will take effect.

While it will take time for both large and smaller Tier 3-4 service providers to digest the rules, it's likely the FCC will be seeing a number of questions and comments.

Previously, a group of the six largest U.S.-based service providers, including AT&T (NYSE: T), CenturyLink (NYSE: CTL), FairPoint (Nasdaq: FRP), Frontier (NYSE: FTR), Verizon (NYSE: VZ) and Windstream (Nasdaq: WIN), which developed their own America's Broadband Connectivity (ABC) plan, had been supportive of the FCC's proposals.

However, three groups that represent small rural service providers, including the National Telecommunications Cooperative Association (NTCA), the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), and the Western Telecommunications Alliance (WTA), said they need to evaluate what effect the plans could have on their constituency.

"It is essential that the order and the final outcome of the further notice of proposed rulemaking eliminate lingering regulatory uncertainty so that small rural carriers can attract capital and operate high-quality rural broadband networks," said Shirley Bloomfield, NTCA CEO in a statement.    

That uncertainty has a near and long-term effect on how rural service providers can expand broadband to more of their users.

A key concern that the rural telco organizations cite is the cost to either deploy new network facilities or upgrade existing network facilities to provide services in rural areas. They believe their member companies need a support mechanism that not only supports broadband investment, but allows them to operate in harder to reach areas.

For more:
- see the release

Related articles:
FCC's new USF Connect America fund draws different reactions
Obama nominates 2 to fill Copps, Attwell-Baker commissioner posts at FCC
FCC lays out USF reform plan that redirects funds to broadband
FCC's Genachowski to reveal USF reform plans
Putting America's broadband speeds to the test