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October 7, 2011

FCC proposes subsidy cuts to expand broadband service in US

Revised plan will put the country on the path to universal broadband service by the end of the decade, says chairman Genachowski

By CBR Staff Writer

The chairman of the Federal Communications Commission (FCC) has revealed a plan to transform the Universal Service Fund into one that will be used for the expansion of broadband Internet service in the country.

The Universal Service Fund is an $8bn fund that is contributed by telephone customers. At present it is used to subsidise basic telephone service in rural areas. Each year, around $4.5bn of the fund is spent on subsidising telephone service.

The New York Times said that the FCC chairman Julius Genachowski’s proposal aims to achieve universal broadband coverage by the end of the decade, by providing access to broadband to around 18 million Americans.

Genachowski believes filling the broadband gap is more important than subsidising telephone service.

"The costs of this broadband gap are measured in jobs not created, existing job openings not filled and our nation’s competitiveness not advanced," Genachowski said.

Genachowski added, "Broadband has gone from being a luxury to being a necessity for full participation in our economy and society.

"This plan will bring enormous benefits to individual consumers, our national economy and our global competitiveness."

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"And it will put us on the path to universal broadband service by the end of the decade," he concluded.

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