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AT&T, Verizon Receive Billions From FCC Phone Fund

As the FCC moves to reform the Universal Service Fund (USF) -- possibly to include more broadband access for rural areas -- the Congressional Energy and Commerce Committee released figures showing that AT&T and Verizon Communications already received more than $2.5 billion combined from the fund over the past three years.

Since the FCC announced its National Broadband Plan, lobbyists representing carriers as a well as public interest groups have swarmed around the USF money pot attempting to figure ways to earmark funds for their constituents.

There is widespread agreement that the Universal Service Fund should be reformed to take advantage of new technologies and also to help bring broadband to underserved areas.

"Subscribers now pay close to 14% of their long-distance phone bills to subsidize scores of telephone providers in each geographic market while other providers are serving the same markets without a penny of support," said Representative Joe Barton (R-Tex.) in a statement.

Barton, who opposes the FCC's plan to classify Internet access as a telecommunications service -- thereby giving the FCC more control over the service -- said the FCC should be focusing on reducing antiquated voice service subsidies. Verizon in particular has been working to spin off old wireline assets in rural areas, although its early attempts in Hawaii, Maine, New Hampshire and Vermont have resulted in bankruptcies.

Verizon recently spun off wireline assets to Frontier Communications in several states and has worked with ADTRAN to bring broadband service in the new Frontier state assets. Verizon has also announced plans to bring its high-speed LTE service to rural areas - a proposal that has been hailed by both FCC chairman Julius Genachowski, a Democrat, and Meredith Baker, a Republican.

Verizon has said it plans to introduce LTE in at least 25 urban areas before the end of 2010.

According to the figures released by Congressman Barton, AT&T received $1.3 billion over the three-year period while Verizon got $1.27 billion. CenturyTel, which is currently in the process of acquiring Qwest Communications, received $931 million in the three-year period.