On August 21, 2012, the Federal Communications Commission (FCC) issued its eighth annual report on advanced communications capability in America, pursuant to section 706 of the Telecommunications Act of 1996. Using the information in this report, the FCC concluded that despite continued investments by the private sector, as well as grants and funding from the universal service fund (USF), there are still 19 million Americans living in 7 million households without fixed broadband capabilities. While that means 95 percent of Americans now have access to broadband, the FCC has determined that “implementation work is far from complete.”

In 2009, Congress directed the FCC, as part of the National Broadband Plan, to ensure that every American had “access to broadband capability.” To help achieve this goal, the FCC expanded the definition of universal service to include broadband services and began transitioning the USF program into an umbrella fund that includes the Connect America Fund (CAF) in October, 2011. Underpinning the details of the FCC’s August 21, 2012 report is the implication that broadband is an entitlement that should be provided to all regardless of the cost to American taxpayers. As CAGW blogged in February, 2012, broadband access is not an entitlement.

The USF is a hidden federal tax that appears as a fee on all landline and wireless phone bills. The USF fee yields approximately $7.7 billion annually, and is used to provide grants for communications build-out to underserved or unserved areas of the country, as well as support for schools and libraries, rural hospitals, and phone service, including wireless lines, to low-income eligible individuals through the Lifeline program. An August 17, 2012 article in the Middletown Journal describes the explosive growth of the Lifeline program, which has doubled to 1 million subscribers in Ohio.

Unfortunately, the FCC report discounts the increased reach of broadband deployment, which rose from 15 percent of all Americans in 2003 to 95 percent in 2009. While the report acknowledges private-sector investments in the pursuit of expanding mobile broadband, it discounts these substantial investments and achievements in its final analysis of the success of broadband deployment for the purposes of meeting the National Broadband Plan goals. However, even a cursory glance at the two maps associated with the report reveals that the reach of mobile broadband is quickly expanding beyond the coverage offered by fixed broadband deployment.

In his dissenting views, Commissioner Robert M. McDowell stated that in 2011 more than $25 billion was invested in wireless infrastructure in the United States, with nine out of every 10 Americans having a choice between at least five wireless service providers. In addition, Commissioner McDowell noted that the United States is leading the world in deploying 4G mobile broadband. Even as mobile technology advances, the FCC continues to focus on antiquated fixed broadband technology in its assessment in the report.

For the FCC, it is apparently not enough that 95 percent of all Americans have access to fixed broadband, or that mobile broadband technology is becoming increasingly available across the country. The commission’s focus on fixed broadband is narrow-minded, and appears designed to perpetuate a rationale for continuing the hidden taxes that fund the USF and CAF. Given the rhetoric from the FCC’s majority on the need to further expand and regulate communications to provide 100 percent access to fixed broadband, it is clear that the real impetus is to ensure a stream of money to underwrite massive grant funding to further enhance and expand the FCC’s reach.

As Commissioner Ajit Pai stated so succinctly in his dissenting statement: “The Commission’s authority to enforce net neutrality, subsidize broadband for low-income households, or support digital literacy programs hangs in the balance each year, dependent on a finding that broadband is not being deployed in a reasonable and timely fashion.” Pai continued, “if we believe instead that data should drive our decisions – not vice versa – then section 706(b) can never be a reliable authority for implementing good policy since we will eventually be forced to concede once again that broadband is being deployed in a timely and reasonable fashion.”