When you pay your phone bill each month, a small percentage goes to a federal fund that subsidizes phone service for people in remote areas and for the poor. Now the Federal Communications Commission (FCC) is considering expanding this $7 billion Universal Service Fund to give all Americans access to high-speed Internet.

President Obama recently announced his plan to contribute $2 billion in stimulus funds to the effort, but creating truly universal broadband access could cost as much as $350 billion. Next month, an FCC task force will recommend ways to pay for the expansion.

FCC chairman Julius Genachowski claims that providing universal broadband is an essential national mission that will boost the economy by enhancing communication and commerce, improving the delivery of health care, and providing new educational opportunities for millions. “It is to us what railroads, electricity, highways, and telephones were to previous generations,” he says.

Rather than tack more fees on to phone bills, Joel Kelsey of Consumers Union suggests applying the fee to broadband-Internet users as well. (Right now, landline and mobile-phone users contribute to the Universal Service Fund.) “With an expanded base, the burden would be on more people so the cost to individual users would be lower,” he says.

Barbara Esbin of the Progress and Freedom Foundation, an industry-backed think tank, says the costs shouldn’t be borne just by consumers. “If we all agree this is a good thing for the entire nation,” she argues, “it would be better to support it through general tax revenues so everyone shares in the costs.”

— J. Scott Orr

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