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Officially launches Connect America fund, part of its long-term National Broadband Plan

The FCC Wednesday officially launched its Connect America fund, an expansion of its phone subsidy program to broadband support, which is part of its long-term National Broadband Plan.

The FCC voted last fall to reform the Universal Service Fund with an eye toward freeing up money to help migrate phone subsidies to broadband subsidies, where all the telecom action is these days.

In this first phase of funding, dubbed a “transitional mechanism to distribute high cost universal service support to price cap carriers,” phone companies have 90 days to take the money and run with its aggressive build-out requirements. The FCC is expecting those companies to be spending some of their own money as well to help extend broadband to rural “unserved homes and businesses.”

The initial outlay is estimated to deliver broadband to up to 400,000 homes and businesses.

The announcement comes only two days before the FCC plans to launch the next phase in reforming the Universal Service Fund, which is to seek comment on how to “reform and modernize” how the funds are assessed and collected. Telecom carriers pay into the fund — and pass that fee along to customers — to subsidize phone-now broadband service — where there is not a business case for it.