Lawmakers propose bill to use phone subsidy to fund broadband

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Lawmakers proposed a measure to overhaul the $7-billion program that subsidizes rural telephone service, devoting a portion of the fund paid by telephone users to expand high-speed Internet service.

The bill was put forward as a “discussion draft” by Rep. Rick Boucher, the Virginia Democrat who heads a House subcommittee on telecommunications, and Rep. Lee Terry, a Nebraska Republican.

Consumers pay more than 12% of long-distance charges into the fund, and that number will “jump” to more than 14% next year, the lawmakers said in a statement. The rates are rising as customers spend less on long-distance calls.

“The draft released today will assist with the deployment of broadband, especially in rural areas” by declaring high-speed Internet eligible for the program’s subsidy, the lawmakers said in their statement. The bill establishes mechanisms to control costs, the lawmakers said.

The Obama administration has made expansion of broadband a priority, and the Federal Communications Commission is drafting a plan to increase access to high-speed Internet.

The Universal Service Fund spent an estimated $7.1 billion in 2008, according to the Universal Service Administrative Co., a nonprofit corporation that administers the program.

AT&T Inc., the largest U.S. telephone company, is “especially supportive” of the bill, said Tim McKone, the company’s executive vice president for federal relations, in an e-mailed statement. The draft legislation is “a big step forward,” Tom Tauke, Verizon Communications Inc.’s executive vice president of public affairs, policy and communications, said in an e-mailed statement.

— Bloomberg News