September 30, 2022

F.C.C. Plans to Direct More Support to Broadband

WASHINGTON — The chairman of the Federal Communications Commission on Thursday outlined a plan to transform the Universal Service Fund, an $8 billion fund that is paid for by the nation’s telephone customers and used to subsidize basic telephone service in rural areas, into one that will help expand broadband Internet service to 18 million Americans who lack high-speed access.

The chairman, Julius Genachowski, said the overhaul of the fund would eliminate waste and inefficiencies in a program that is outdated, unfair and not accountable to the consumers who support it through monthly assessments on their phone bills.

An F.C.C. official, who spoke on the condition of anonymity to avoid overshadowing the chairman’s address, said the amount that consumers paid each month to finance universal service was unlikely to fall and could increase. Phone companies are assessed a percentage of their revenue from interstate and international service, and most pass along those charges to customers. The contribution rate has more than doubled over the last decade, to 15 percent currently, up from 7 percent in 2001.

Telecommunications industry groups and consumer watchdog organizations offered cautious support for the plan. Though Mr. Genachowski presented an overview of a new system, he offered few details on how it would affect phone companies and broadband providers.

“Broadband has gone from being a luxury to being a necessity for full participation in our economy and society,” Mr. Genachowski said in a speech Thursday at the agency’s headquarters. “This plan will bring enormous benefits to individual consumers, our national economy and our global competitiveness.”

The plan would provide for broadband in hundreds of thousands of homes and businesses beginning next year, Mr. Genachowski said, and would cut by half the number of Americans without broadband access by 2017. “And it will put us on the path to universal broadband service by the end of the decade,” he added.

The plan would transform the largest component of the fund, which provides $4.5 billion annually to subsidize residential phone service in rural areas that would otherwise be uneconomical for companies to serve.

The money would instead go to a new Connect America Fund, providing both wired and wireless Internet access to homes, businesses and “anchor institutions” like libraries and public service organizations.

Subsidies for landline telephone service will be phased out as broadband is expanded, but the F.C.C. chairman said he believed that the development of Internet-based phone services like Skype would supplant traditional telephones for many consumers.

For the first time, the Universal Service Fund will be put on an annual budget, rather than being allowed to spend freely, Mr. Genachowski said, and competitive bidding will be used to determine which companies receive subsidies — also a first.

Part of the money will be used to establish a Mobility Fund, which would extend and sustain the latest generation of mobile broadband service along and around more than 100,000 miles of roadways around the country, “where millions of Americans live, work and travel,” he said.

Also outlined Thursday were changes to the Intercarrier Compensation program, which provides subsidies for local phone companies through an assessment on long-distance calls.

That system, Mr. Genachowski said, “actually discourages investment in 21st-century Internet protocol networks, because companies fear losing the subsidies they receive for connecting calls using traditional telephone technology.”

Details on the full plan outlined by Mr. Genachowski are being circulated to the three other F.C.C. commissioners. They can suggest revisions and amendments to shape the final regulations, which will be voted on by the commission on Oct. 27.

Because of the lack of details, consumer and industry groups generally said they would have to review the final plan before reacting fully to the proposals.

“We applaud Chairman Genachowski for his commitment to connecting all Americans to high-speed broadband,” said Walter B. McCormick Jr., president and chief executive of USTelecom, a broadband industry trade association. “While we have some concerns with what he outlined today, we appreciate that he and his fellow commissioners are looking to find the right balance that will benefit consumers, advance the public interest, accelerate broadband investment and create jobs.”

Parul P. Desai, policy counsel for Consumers Union, similarly supported the initiative, but she said that the F.C.C. should not allow companies to raise the rates they charge for landlines, because many seniors and lower-income households will continue to depend on that service.

“Broadband companies are generating huge revenues while many consumers are struggling to make ends meet,” Ms. Desai said. “The F.C.C. shouldn’t allow the industry to pay for expansion on the backs of consumers.”

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Negotiators Nearing Deal on Mileage for Vehicles

The administration had earlier proposed a goal of 56.2 miles per gallon, while Detroit automakers and Michigan lawmakers have been pushing for a lower standard.

But people close to the talks said Tuesday that some automakers were now willing to support a 54.5 m.p.g. rule, particularly because the ramp-up period is less aggressive for light trucks than for passenger cars. The new proposal would almost double the current fuel-efficiency standards of about 27.8 m.p.g.

The talks among the administration, automakers, environmental groups and California officials have been continuing for weeks, as the various sides grappled with how to reduce global warming emissions, cut fuel consumption and reduce the costs that consumers pay at the pump.

The new administration proposal calls for increasing fuel efficiency for light trucks by 3.5 percent annually from 2017 to 2021. It would then be increased by 5 percent a year from 2022 to 2025.

Passenger cars would need to become 5 percent more efficient every year over the entire eight-year span of the standard.

In 2009, automakers agreed to an administration plan to increase fuel economy to about 35 m.p.g. by 2016.

The proposed standard has the potential to curtail vehicle emissions drastically and reduce the nation’s dependence on oil. However, industry groups have argued that the changes could add thousands of dollars to the price of new vehicles in the showroom.

There was no immediate comment from the White House on Tuesday, but people familiar with the discussions said the talks appeared to be nearing a conclusion.

“We are encouraged by the strong, positive feedback we are receiving from many companies and look forward to wrapping up the discussions in the near future,” said an administration official who spoke on condition of anonymity because the negotiations were continuing.

One item still under intense discussion is the so-called midterm review of the standard. Environmentalists were concerned that a review stipulation could allow automakers to circumvent increases in fuel efficiency in the latter stages of the agreement.

“Until the White House provides us the full details, we are not in a position to assess whether this a strong proposal or whether there are any significant flaws,” said Roland Hwang, the transportation program director at the Natural Resources Defense Council in San Francisco.

A spokesman for General Motors, Greg Martin, said the nation’s largest auto company was optimistic that an agreement could be reached that balanced the economic concerns of the industry with the goal of reducing fuel consumption.

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Wall Street Moves Higher as Stocks Look Beyond Greece

The downturn brought the Standard Poor’s 500-stock index close to its average level of the prior 200 days. So long as the index doesn’t sink far below that level, many technical traders see it as a sign to start buying stocks again. The S.P. is now 6 percent below the 2011 high it reached on April 29.

“In the short term, stocks have been oversold, and you’re going to get some sort of bounce, whether justified or not, just for technical reasons,” said Paul Simon, chief investment officer for Tactical Allocation Group, which has $1.5 billion in assets under advisement.

The S.P. 500 index rose 6.86 points, or 0.54 percent, to 1,278.36. The Dow Jones industrial average added 76.02 points, or 0.63 percent, to 12,080.38. The Nasdaq composite index gained 13.18, or 0.50 percent, to 2,629.66.

Health companies like Aetna Inc. and Humana Inc. rose nearly 1 percent, the largest gain among the 10 industry groups that make up the S.P. 500 index. Financial companies like Morgan Stanley, which lost 2.2 percent, were the only group to lose ground.

The S.P. 500 was on pace for its third straight day of gains, which would be the longest stretch of increases in the stock market for nearly a month. The index eked out a tiny gain last week, breaking a six-week losing streak driven by concerns that U.S. economic growth would falter in the second half of the year and that Greece’s debt crisis would spread. It was the S.P.’s longest slide since 2002.

Signs that the European financial crisis may be contained helped ease investor’s concerns. European Union officials in Luxemburg said Monday that the EU would raise their guarantees for bailout loans in order to boost market confidence.

European leaders failed over the weekend to agree on releasing more financial aid to Greece, saying the country must first agree to more budget cuts. Greece’s recent efforts to slash spending have led to street protests and political turmoil in Athens. The Greek government faces a confidence vote on Tuesday.

Some analysts say investors are ready to move beyond the Greek crisis and focus on corporate earnings and the U.S. economy.

“There’s a little fatigue about hearing about the same problems, and there’s no shock factor anymore,” said Oliver Pursche, president of Gary Goldberg Financial Services. Traders are now starting to look ahead to the Federal Reserve’s two-day policy meeting, which begins Tuesday, and the next round of corporate earnings reports that begin in July, he said.

Analysts expect that operating earnings per share for companies in the S.P. 500 index rose 14 percent in the second quarter. They also expect the Fed to keep interest rates at nearly zero, a record low.

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