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Lawmaker Pushes for New Broadband Funding

The U.S. government should spend more on broadband adoption by redirecting money from a fund that subsidizes traditional telephone service to high-speed Internet service, a U.S. lawmaker said Tuesday.

The U.S. Federal Communications Commission should set up a program under the Universal Service Fund (USF) to subsidize broadband subscriptions, Representative Doris Matsui, a California Democrat, said during a speech at an event sponsored by Third Way, a Washington, D.C., think tank.

"It is clear that millions of Americans simply can't afford to pay up to [US] $60 a month for broadband services," Matsui said. "I've heard from a woman who is living off a fixed income, and is counting her pennies each month to make ends meet. If her Internet service goes up 'by one cent,' she says she will have to drop it."

Matsui's Broadband Affordability Act, introduced in September, would require the FCC to establish a broadband assistance program for low-income people by expanding the USF's Lifeline Assistance program.

The Lifeline Assistance program, which now provides discounts of up to $10 a month for telephone service, has a budget of about $800 million a year. Matsui's proposal would add an additional $100 million, a spokeswoman for the congresswoman said in September.

Senator Jay Rockefeller, a West Virginia Democrat, introduced a similar bill in December. Rockefeller's bill would direct the FCC to establish a pilot program for broadband in the USF Lifeline program.

Several groups and lawmakers have suggested that the USF should support broadband. CTIA, a trade group representing mobile carriers, supports efforts to reform the USF, said Steve Largent, CTIA president and CEO. "We look forward to working with Representative Matsui to extend wireless broadband to low-income Americans," he added.

In addition to the lifeline broadband legislation, Representative Rick Boucher, a Virginia Democrat and chairman of the communications and Internet subcommittee of the House Energy and Commerce Committee, has proposed using part of the USF for broadband deployment. Boucher has said he will push for USF reform this year.

Matsui noted that about 96 percent of U.S. residents have access to broadband service, but fewer than two-thirds subscribe.

"A lifeline program for broadband will have significant tangible benefits for lower-income households residing in urban areas," she said in a text of the speech provided by her office. "It will also greatly benefit consumers in rural areas, as more rural telecom providers will build out to unserved areas knowing that there will be more consumers able to afford broadband services."

Broadband subsidies will help the U.S. economy, she said. Matsui called on the FCC to include broadband support in a national broadband plan due out within weeks.

"And as we continue our path towards economic recovery, broadband investment will be key to spur job creation, innovation, and long-term economic growth," she said. "Broadband access is also key to finding a job in today's economy. As both large and small businesses begin to hire new workers, a majority of job postings are now being advertised on the Internet, which has become the primary mode for collecting resumes nowadays."

Representatives of Public Knowledge and Free Press, two digital rights groups, said they see benefits to Matsui's proposal.

"For millions of Americans broadband and broadband access devices will remain prohibitively expensive absent some type of subsidy," said Derek Turner, research director of Free Press.

But Lifeline traditionally supported telephone service, which has its rates regulated, Turner said. "The contribution margins ISPs [Internet service provders] earn on broadband Internet access services are in most cases north of 80 percent," he said. "Under no circumstance should the [FCC] be subsidizing profits this high."

The FCC should require broadband providers to offer low-income households basic service at $10 a month in order to get the subsidy, Turner said.

"Bottom line: We strongly support extending Lifeline to broadband services, but ratepayer funds should not be used to pad exorbitant ISP profit margins," he added. "The program should require ISP participation, reimbursing participating providers at a reasonable rate of return."

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