The Federal Communications Commission voted to reform the Universal Service Fund and intercarrier compensation systems, setting the stage for the agency's direct support of broadband service in high cost areas for the first time in history.

"The American Cable Association applauds the FCC  for taking truly historic action to modernize the USF program in an effort to ensure that all Americans, especially those located in rural areas that are more expensive to serve, have broadband Internet access and can participate on an equal basis in the transformative Internet-based economy," ACA President and CEO Matthew M. Polka said.

"ACA is very pleased that Chairman Genachowski agreed with the independent cable operator community on the need to curb the size of the High Cost Fund by requiring it to operate under a budget for the first time and for limiting financial support for telephone companies in areas where they face broadband competition from providers that do not receive any USF support," Polka continued.  "Reforming USF has been a marathon campaign to develop new policies that balance the needs of the American consumer and a wide range of industry stakeholders. ACA has nothing but high praise for all FCC Commissioners and their dedicated and professional staff members, who conducted a fair and open process leading up to today's vote."

ACA also expressed disappointed that the fund provides larger telephone carriers with a right of first refusal to provide broadband in high cost, unserved areas worth up to $1.8 billion annually -- twice the amount of support these carriers receive under the existing USF program today. 

Polka said, "More than 500 smaller cable operators who are ACA members and were interested in having the same opportunity to participate in the Connect America Fund program know that consumers would have received better broadband services, such as higher speeds, if the FCC had opted for competitive bidding instead of the right of first refusal.

In the months ahead, the FCC will commence a number of important rulemakings, such as the development of cost models that will largely determine the level of rural broadband support on a provider-by-provider basis, and the development of a competitive bidding process to serve areas rejected by mid-sized and larger telephone carriers.

"ACA will remain fully engaged, and our group plans to fully participate in these upcoming proceedings," said Polka.