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The FCC needs to reform the Universal Service Fund program to extend support for broadband in high-cost areas.

The federal USF program does not provide explicit support for broadband. The USF Board recommended using a reverse auction mechanism to allocate its funds. Companies would compete to win funding to provide broadband services in rural areas, with awards going to the lowest bidder. The funding would consist of a one-time subsidy and the company would operate on limited contract (perhaps 5 or 10 years) and be required to meet minimum standards of performance. The one-time auctions would cover the higher capital costs and higher capitalized operating costs of service in rural areas. These auctions should be open to any provider using any technology.