Last Tuesday the Federal-State Joint Board on Universal Service released their latest recommendations. In short they said that the high cost portion of the fund should be capped at $4.5 billion and part of the Universal Service Funds should be dedicated for wireless phone and high-speed Internet service. Specifically, mobile wireless services are eligible for $1 billion and the remaining dollars are allocated to broadband ($300 million) and providers of last resort ($3.2 billion).

As was pointed out in an article in xchange (FCC Advisory Board Releases Recommended USF Changes), the Bells currently pour the most money into the system, while rural LECs get the most out of it. To rectify that situation, wireless carriers – which get subsidies for every number they provision – would be moved to the Mobility Fund. The so-called “identical support rule” would be eliminated and money would be doled out on a project-by-project basis. It would, in most cases, represent the only USF money wireless carriers would be eligible to receive.

I just mentioned the USF in a recent blog post. So I won’t repeat the basics – but I learned in a recent article in CNN Money (FCC urged to limit rural phone subsidies) that the fund has collected $44 billion over its 10-year lifetime from surcharges on the phone bills of nearly every American. In 2006 alone, the fund collected $6.6 billion, which goes to four separate programs.

The FCC now has a year to act on the recommendations, so I suspect we’ll be hearing more about this in the next 12 months.