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Senators Want to Expand Telecom Fund

Sens. Gordon Smith, R-Ore., and Byron Dorgan, D-N.D., are in the early stages of drafting legislation that would expand the program designed to provide ubiquitous telephone coverage to include high-speed Internet access. Aides to Smith said the bill would make money in the Universal Service Fund available so telecommunications providers could build out broadband facilities. "It would be built into the same structure, and might end up as a stand-alone fund, within the current system next to the high-cost fund," an aide said. USF has four major components: the $3.5 billion high cost fund, which subsidizes phone companies serving rural customers; the $2.25 billion e-rate, which provides Internet access to schools and libraries; the $758 million low income program; and the $25 million rural healthcare fund. Although the e-rate funds Internet access, the high cost fund pays only for narrowband telecom such as telephones -- and not broadband. The high cost fund is subdivided into a larger portion subsidizing small rural carriers and cooperatives, and a smaller portion subsidizing Bell companies in rural areas.

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