FCC puts cap on rural service subsidies

The FCC got the upper hand in realigning the Universal Service Fund as a U.S. appeals court upheld the agency's move to cap subsidies paid to rural service providers.

Despite protests from both the Rural Cellular Association and other smaller wireless operators, the U.S. Court of Appeals for the District of Columbia Circuit concluded that the FCC "acted reasonably" in developing an interim cap to prevent subsidy payments from coming in conflict with a federal Universal Service Fund (USF).

Since 2001, the FCC said that the subsidy payments meant to help extend telecom services (mainly voice services) to rural areas have skyrocketed from $2.6 billion to $4 billion in 2007. Backed by AT&T and Verizon, the FCC argues that without the cap the USF would require more consumer contributions, which would ultimately translate into higher prices for telecom services.  

For more:
- Wall Street Journal via Dow Jones has this article

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