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The FCC has received approval to subsidize internet services in rural areas

At long last, the FCC can move forward with reforming its rural connection subsidies for the broadband era. A federal appeals court has upheld the agency’s Connect America Fund after challenges from smaller carriers, which were worried that the shift from subsidizing phone calls to fast internet access would hurt their bottom line. Their arguments were either “unpersuasive” or were blocked from legal consideration in the first place, the court says. However, the fund still faces criticism from those worried that the $4.5 billion in subsidies will hike phone bills through growing fees

A federal appeals court on Friday upheld the Federal Communications Commission’s effort to convert its $4.5 billion program that pays for telephone service in rural parts of the country into one that subsidizes high-speed Internet service in high-cost areas. The program, known as Connect America, is the largest portion of the $8 billion Universal Service Fund, which pays for a variety of efforts to provide telecommunications links to schools, low-income families and others. In October 2011, the F.C.C. approved an overhaul of the fund. Soon after its approval, however, the effort was challenged in court by dozens of phone companies. Many were small carriers that provided service in rural areas and that stood to lose annual subsidies because of the changes. The United States Court of Appeals for the Tenth Circuit, in Denver, rejected the phone companies’ arguments because their claims were “either unpersuasive or barred from judicial review.”

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