The FCC created the Universal Service Fund (USF) in 1997 to help connect rural America to the telephone service. The FCC has openly criticised the USF for being wasteful and inefficient, claiming that it is “locked in the last century” and citing examples of the USF paying as much as $20,000 a year in support per line for some households, while other areas lack any support at all.
With the CAF, it now proposes to reform its universal service and carrier compensation policies, redirecting the high-cost portions of the USF to support broadband while also reforming the cost of access charges and traffic termination charges. Charice Wong, an analyst with Ovum said: “Modernising and streamlining the USF is crucial to get broadband to rural America.” To encourage investment in the CAF among operators, the FCC is proposing to award funding through a technology neutral reverse auction in 2012.
Research conducted by the National Telecommunications and Information Administration and the FCC shows the disparity in availability of broadband speeds between urban and rural communities: 55.7% of rural households in the US have access to 10Mbps download speeds; while in urban areas 93.5% have access. Only 34.6% of rural households have access to 3Mbps upload speeds compared to 70.5% of urban households.
According to Wong, next-generation technology will be important to rural America and consist of wireline technologies, fixed and mobile terrestrial wireless technologies and fixed and mobile satellite technologies. “In my view, the ‘4G’ mobile broadband will be a key technology used for broadband connection in rural areas.”
