US caps universal service subsidies for mobile

US federal regulators have agreed to atemporary cap a subsidy programme that paid nearly US$1.2 billion (€775 million) last year to rural mobile phone operators, an Associated Press report said.

The Federal Communications Commission voted 3-2 along party lines to limit payments to mobile carriers from the Universal Service Fund, which is supported by a tax on the phone bills of most Americans, the report said.

The cap will remain in place until the Commission passes a comprehensive reform package, which is in the works.

The move is bad news for rural mobile carriers who rely on such payments for a substantial part of their revenue, but it benefits big operators companies like Verizon Communications and AT&T, whose customers are the largest contributors to the fund, the Associated Press report added.

Regulators hope the decision will slow the increase in fund charges on phone bills and ensure the programme is sustainable.

The fund was created by Congress in 1996 as part of an overhaul of the nation's communications legislation, which says all Americans should have access to telecoms services at comparable rates.