February 08, 2011, 3:51 PM — When it's not doling out meaningless wrist-slaps to giant corporations like Verizon, the Federal Communications Commission actually can make some sense.
The FCC on Tuesday proposed redirecting $8 billion in federal subsidies for landline phone services to help build out Internet broadband to rural parts of the U.S.
"We won't fully realize the promise of broadband and the fundamental promise of American opportunity if large swaths of our country are left out," FCC Chairman Julius Genachowski said at an open meeting of the agency.
Some 24 million Americans live in areas not served by broadband service, but a modernized, streamlined universal service program could begin to bridge these gaps in infrastructure, Genachowski said.
The universal service fund, which has been around since the mid-1990s, has been used to subsidize landline service for rural and low-income Americans, as well as schools and libraries. It's paid for through a $2 charge on customers' monthly landline phone bills.
The FCC wants to use the funds instead to develop fixed and mobile broadband infrastructure -- which also could be used for voice service -- where it currently doesn't exist. The commission also aims to save money by phasing out funds going toward identical services being offered in the same areas by more than one carrier.
FCC commissioner Michael Copps said, "We see some money, frankly, being wasted right in sight of the need for funds in unserved areas."
Of course. Honestly, the commission should have done this years ago, but it has run into resistance in the past from phone companies that -- surprise! -- didn't want to lose their government subsidies.
No idea what the timeline is for the FCC's proposal, though the Wall Street Journal says the program overhaul most likely will "take several months to complete," in part to work out how to revamp the complex payment system between phone companies called "intercarrier compensation." Telcos typically reimburse each other for handling interstate phone calls on their networks.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.