Senate Bill Aimed at Cable-Data Revenue

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A new Senate bill could require cable to contribute some of its $10 billion in broadband-access revenue to launch and sustain a new subsidy program designed to deliver high-speed data to unserved areas.

Cable contribution of access revenue would be decided at the discretion of the Federal Communications Commission. The agency would be authorized to spend a maximum of $500 million annually on the rural-broadband program.

The bipartisan legislation (S. 1583) was introduced by Sens. Gordon Smith (R-Ore.), Byron Dorgan (D-N.D.) and Mark Pryor (D-Ariz.) last Friday, just as Congress was heading into its August recess.

Under current FCC rules, cable companies do not contribute data revenue to subsidize voice communications in rural areas. Phone companies, in contrast, need to contribute a portion of their digital-subscriber-line revenue.

The phone-subsidy program, called universal service, is popular with rural lawmakers. But expanding it to including broadband access could prove controversial because some on Capitol Hill think the current program is mismanaged and needs to be reformed before mission expansion is adopted.

The FCC would decide whether an area is “unserved.” Satellite provision of broadband access in a rural area would not preclude the FCC from designating the area unserved if the satellite service has only a few subscribers.

The National Cable & Telecommunications Association is reviewing the bill. NCTA spokesman Brian Dietz said, “Cable operators took the lead by voluntarily paying into [universal service] with [voice-over-Internet-protocol] services as part of the industry's commitment to meet important social obligations.”

Under an FCC order from last November, state regulators are barred from forcing VoIP providers to contribute to their universal-service programs.

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