FCC unveils rules for rural broadband fund

October 27, 2011 - 12:10 PM

WASHINGTON (AP) — Federal regulators have unveiled a plan for overhauling the $8 billion fund that subsidizes phone service in rural areas and for the poor. It redirects the money toward broadband expansion.

The Federal Communications Commission's plan, adopted Thursday, establishes a new "Connect America Fund" for mobile telephone and broadband in rural communities and needy areas.

The changes represent the Obama administration's most significant overhaul of telecommunications regulations.

The money will continue to come from a surcharge on consumers' and businesses' monthly phone bills. Rates should stay flat or decline for most consumers, an FCC commissioner said. The size of the fund will be capped at $4.5 billion annually.

The FCC also approved new rules for the complex system that governs how phone companies pay each other for phone calls.