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FCC Creates Connect America Fund to Expand Broadband, Create Jobs

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Released: October 27, 2011

Federal Communications Commission

News Media Information 202 / 418-0500

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Washington, D. C. 20554

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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action.
See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).



October 27, 2011
Neil Grace, 202-418-1032
Mark Wigfield, 202-418-0253




Agency delivers bipartisan vote to modernize America's communications

infrastructure and expand broadband throughout the nation
Washington, D.C. In the most significant policy step ever taken to connect all Americans to high-speed
Internet, wherever they live, the FCC voted unanimously to comprehensively reform its Universal Service
Fund and intercarrier compensation systems. Those systems have been widely viewed as broken, and long
overdue for reform. Efforts to expand high-speed Internet to rural America over the next six years will
increase economic growth by $50 billion over that period, the FCC estimates.
These reforms create a new Connect America Fund with an annual budget of no more than $4.5 billion,
which will extend broadband infrastructure to the millions of Americans who currently have no access to
broadband. As a result, today's action has the potential to be one of the biggest job creators in rural
America in decades. The FCC estimates that approximately 500,000 jobs will be created over the next six
years by expanding high-speed Internet access to over 7 million Americans living in rural areas. And by
increasing the overall size of the U.S. marketplace, small Main Street businesses across the country will
benefit from the opportunity to sell to new customers.
As part of this reform, the FCC recognizes the growing importance of mobile broadband and makes it an
independent universal service objective for the first time in history. Dedicated support to expand mobile
broadband nationwide will be provided through a new Mobility Fund.
The Connect America Fund will put America on the path to universal broadband and advanced mobile
coverage without increasing costs to consumers. By eliminating waste and targeting support where it is
most needed, these reforms put universal service funding on a firm budget, and they will impose strict
new accountability on fund recipients.
The Order and Further Notice of Proposed Rulemaking reflect broad input received by the FCC in over
2,700 comments from a diverse array of stakeholders. Further details are provided in the attached
Executive Summary. The outlines of this comprehensive reform are as follows:


: The FCC estimates that, over the next six years, the
Connect America Fund will expand broadband access to over 7 million residents of rural areas
who are currently unserved, and will put the country on the path to universal broadband within a

decade. The Mobility Fund will expand advanced mobile broadband access to tens of thousands
of road miles, where millions of people work, live, and travel, and will include dedicated support
for Tribal areas. Intercarrier compensation reform will eliminate hidden costs in consumer bills,
providing economic benefits to long distance and wireless consumers across the nation of $2.2
billion annually in the form of lower prices, better value for the money, or both. Expanded
broadband access will generate approximately 500,000 jobs over the next six years. As part of
this reform, some consumers may pay, on average, an additional 10 to 15 cents a month on their
bills; but for every dollar in cost, reform will provide $3 in benefits for consumers. And no
additional charges can be imposed on consumer phone bills that are at or above $30 a month
(inclusive of most fees consumers pay on their bills), nor can such charges be imposed on low-
income consumers served by the FCC's Lifeline program. Any new charges will begin to decline
after six years.


: A firm annual budget set at current levels--$4.5
billion--will prevent growth in the Fund and help protect consumers from increased contribution
fees. Programs that provide subsidies where they are not needed are eliminated, and
compensation for corporate overhead expenses is reduced. Market-based mechanisms, including
competitive bidding, will be used to distribute money more efficiently.


: In order to receive Connect America Fund support, carriers
must demonstrate they are deploying broadband to their customers. These networks must meet
performance criteria that enable the use of common applications such as distance learning, remote
health monitoring, VoIP, two-way high quality video conferencing, Web browsing, and email.


: Intercarrier compensation
distorts investment in technology and discourages investment in modern Internet Protocol
networks. It is also unfair to consumers, forcing wireless and long distance customers to provide
billions of dollars per year in hidden subsidies to phone companies. Reform will ensure fairness
to consumers, promote competition, and foster innovation in communications services. In
addition, the Order takes immediate action to end wasteful and costly gaming of the intercarrier
system, including schemes such as phantom traffic and traffic pumping.
Action by the Commission, October 27, 2011, by Report and Order and Further Notice of Proposed
Rulemaking (FCC 11-161). Chairman Genachowski, Commissioners Copps and Clyburn, with
Commissioner McDowell approving in part and concurring in part. Separate statements issued by
Chairman Genachowski, Commissioners Copps, McDowell, and Clyburn.
Docket Nos.: 10-90, 09-51, 07-135, 05-337, 01-92, 96-45, 03-109, 10-208
Wireline Competition Bureau Staff Contacts: Amy Bender, at 202-418-7400, and Victoria Goldberg at
Wireless Telecommunications Bureau Staff Contact: Margaret Wiener at 202-418-2176
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