Released: May 02, 2008

FCC caps rural wireless subsidies

Source: Peter Kaplan, Reuters

The U.S. Federal Communications Commission voted on Thursday to impose a cap on fast-growing subsidies the government allots to providers of telephone service in rural America.

The FCC voted by a 3-2 margin to cap the fund at March 2008 levels, or about $1.3 billion to $1.4 billion a year, by one recent estimate. The measure approved by the commission exempts phone carriers that serve tribal lands and Alaska native lands.

The rural phone subsidies are the largest component in a larger, “universal service” fund administered by the FCC. It is funded by an 11-percent surcharge on long-distance phone calls that is billed to carriers and typically passed on to their subscribers.

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