Panel says FCC should increase use of long-distance tax money to subsidize broadband

An advisory panel recommended yesterday that the Federal Communications Commission "cap the fast-growing subsidies the government allots to providers of telephone service in rural America and allow some of the funds to be used for promoting broadband service," reports Peter Kaplan of the Reuters news service.

The federal-state advisory board said the biggest slice of the Universal Service Fund, which subsidizes rural phone service, should be limited to its current $4.5 billion, and also said subsidies for rural wireless service should be capped. The wireless industry opposes that, but FCC Chairman Kevin Martin voiced support for shifting the fund's emphasis to broadband. The FCC has a year to act on the recommendations.

The fund is financed by an 11 percent surcharge on long-distance phone calls. "In addition to rural service, the fund subsidizes phone service to low-income households, as well as communications services and Internet access for schools, hospitals and libraries," Reuters notes. (Read more)