WASHINGTON -- AT&T Inc., Verizon Communications Inc. and four other telecom companies are offering a proposal to overhaul the $8 billion federal phone subsidy program to pay for high-speed internet connections in rural and other underserved areas.
They said the plan, which was filed with the Federal Communications Commission, would bring broadband service to almost all Americans within five years.
The proposal is one of dozens that the FCC will likely receive as it seeks to bring the federal program, called the Universal Service Fund, into the digital age. The agency voted unanimously in February to begin drafting a blueprint to modernize the fund.
But the new plan is particularly significant since it has the backing of six key telecommunications companies that are some of the biggest recipients of Universal Service dollars. In addition to AT&T and Verizon, the nation's two largest phone companies, the plan is supported by CenturyLink Inc., Fairpoint Communications Inc., Frontier Communications Corp. and Windstream Corp.
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The Universal Service Fund was created to ensure that all Americans have access to a basic telephone line. It is supported by a surcharge on long-distance phone bills. The program subsidizes phone service for the poor and pays for internet access in schools, libraries and rural health clinics. But more than half the money goes to pay phone companies that provide voice service in rural places where phone lines are unprofitable.
The FCC now wants to tap the rural program, called the High Cost Fund, to pay for broadband too.
The agency's actions could have consequences not just for rural Americans still stuck with dial-up links or painfully slow broadband connections, but also for rural phone companies that rely heavily on Universal Service money.