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Hawaiian Telcom will receive $400,000 in federal funding over the next three years to subsidize the cost of providing broadband Internet service to 519 households in rural areas of the state.
The funding is part of the Federal Communications Commission’s new "Connect America" program designed to extend the reach of high-speed Internet into unserved areas of the country.
The FCC estimates that more than 17 percent of Hawaii’s rural population — about 7,700 households — do not have a broadband Internet connection. Hawaii ranks 32nd out of the 50 states in the rate of rural broadband availability, according to the FCC.
The FCC is allocating $115 million in the first phase of the Connect America Fund to expand broadband service to 400,000 residents in 36 states. The subsidy works out to about $770 per household. The program was created last year as part of the FCC’s restructuring of the Universal Service Fund, which is used to subsidize telephone voice service in rural areas. The overhaul shifted the FCC’s emphasis away from subsidizing voice service to increasing broadband penetration.
FCC Chairman Julius Genachowski said the launch of the Connect America program marks the beginning of "the most significant public-private" effort in history to connect 19 million unserved rural Americans to high-speed Internet by 2020. Over the next 10 years the FCC plans to spend about $46 billion from the Connect America Fund.
To be eligible for the subsidy, Internet providers must follow oversight procedures and report how the money was spent. Hawaiian Telcom must complete two-thirds of its new broadband commitments within two years and the remainder in the third year.
Both the Universal Service Fund and the Connect America Fund are paid for by consumers through a "Universal Connectivity" fee on their telephone bills.
A recently imposed cap on what telephone companies can draw from the Universal Service Fund is having an impact on Hawaii-based Sandwich Isles Co., which provides telephone service to residents living on Hawaiian Home Lands. The cap would effectively reduce by about 70 percent the amount Sandwich Isles can draw from the fund. Sandwich Isles officials say the viability of the company could be jeopardized if the FCC does not approve its request for a waiver from the new regulations.