Federal Communications Commission Modernizes Rural Healthcare Universal Service Fund

On December 21, 2012, the Federal Communications Commission released a Report and Order adopting new rules creating the Healthcare Connect Fund, which modernizes and reforms the existing universal service program for rural healthcare. The newly created Healthcare Connect Fund aims to improve access to broadband at rural healthcare providers (HCP) to improve the efficiency and effectiveness of healthcare in these communities.

The rules adopted in the Report and Order build on the Commission’s rural healthcare pilot program, which Chairman Julius Genachowski lauded as proving the ability of telemedicine to simultaneously improve patient care while also minimizing costs. Informed by these pilot programs, the new Healthcare Connect Fund will help expand access by HCPs to the robust broadband connections they need in order to implement telemedicine.

Funding will be provided to both nonprofit and public HCPs. Applications may be submitted by an individual rural HCP or by a consortia of HCPs. Consortia can include both rural and urban HCP, as long as the majority of the consortia are rural providers, and provided that the non-rural HCPs use funds to increase their broadband access for purposes of participating in the consortium, not merely to pay for existing broadband capacity.

In the Report and Order, the Commission states that it assumes that the majority of funds will be used to purchase broadband services from commercial providers, but the rules do allow consortia to build their own infrastructure if it is shown to be the most cost-effective option after the completion of a competitive bidding process. The rules adopt a $400 million annual funding cap, with no more than $150 million being spent annually on directly-owned infrastructure costs. All fund recipients are also required to pay 35% of the total project budget. In addition to equipment and services for broadband, the Report and Order also confirms that the program funds can also support cost of membership fees and broadband services to connect to nonprofit research and education networks, such as Internet2 and National LambdaRail.

Applications for new funding will be accepted beginning in 2014. The full Report and Order, as well as separate statements from each of the Commissioners, is available here.

For more information, contact Ross Buntrock, Alan Fishel, Jeffrey Rummel, David Carter, or Stephen Thompson.