Court Upholds FCC Move of USF Funds to Broadband

FCC chair says it paves way for billions in investment without boosting contributions from consumers, businesses

By John Eggerton -- Broadcasting & Cable, 7/13/2012 1:12:56 PM

According to the FCC, the Federal Appeals Court for the D.C. Circuit Friday upheld the commission's decision last fall to plow Universal Service funds reclaimed -- primarily from wireless carriers -- into the fertile field of broadband via the newly created Connect America fund.

The Rural Cellular Association and the Universal Service for America Coalition had challenged the FCC's order.

The FCC is migrating phone subsidies to broadband, a transition it has recognized will be hard on some incumbents -- including smaller rural carriers -- who relied on those funds.

"I am pleased that the court of appeals upheld the FCC's ruling, an important victory for our universal service reforms," said FCC Chairman Julius Genachowski. "The Commission's once-in-a-generation overhaul of the universal service fund created the Connect America Fund to deliver broadband access to unserved rural communities, which lack access to the benefits of broadband, including jobs, opportunities for small businesses, better education and quality healthcare. Funding previously relinquished by some carriers has been used as a fiscally responsible down payment on those reforms. The Court's opinion ensures that the FCC will continue to be able to use funds on hand to rapidly implement the Connect America Fund and spur billions of dollars in private investment, without increasing contributions paid by consumers and businesses."