$4.5 Billion Annual Subsidies for Broadband Approved

The FCC has unanimously approved the conversion of the $4.5 billion Universal Service Fund (USF) High Cost fund into the Connect America Fund (CAF) for bringing broadband to rural america.  Even compared to the onetime $7.2 billion 2008 broadband stimulus bill, this $4+ billion dollar subsidy represents a significant allocation of funds to broadband connectivity in America.

A subsidy of this magnitude should bring a significant improvement in broadband access for rural America, which presently has weak access to broadband.  Regardless of how one feels about broadband subsidies (especially given the funding source, which is essentially a telephone sales tax) the USF High Cost fund was indisputably being wasted on a massive scale.  Regular phone lines were being subsidized at over $16K a year which is higher than the cost to rent a home in many places.  With such rampant waste, it is easy to see why reforming the USF is supported across the political spectrum.


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