Hillicon Valley is reporting that the FCC apparently has scrapped the idea of including broadband services in the base of telco revenues against which funding for its broadband Universal Service program, known as the Connect America Fund, would be collected.

A spokesperson for FCC Chairman Julius Genachowski told Hillicon Valley the commission proposed the approach at the suggestion of Republican commissioners and members of Congress and that Genachowski was always skeptical of the idea. Robert McDowell, the only Republican on the commission when the proposal was made earlier this year, told the reporter he never suggested taxing broadband Internet access.

Today’s voice-focused Universal Service program, which will transition to a broadband program, is funded as a percentage of long-distance revenues – an approach that has become increasingly unfeasible as long-distance revenues shrink. A notice of proposed rulemaking to expand the contribution base, made back in April, requested comment on a variety of methods for collecting broadband program funding. Some telephone companies recommended an approach that would have based funding on broadband revenues but apparently would have allowed the carriers to include the cost of that funding as a line item on customers’ bills as is done with today’s voice-focused program – and judging by the opposition that arose, the FCC appeared to be seriously considering that option.

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Although the FCC has established a budget for the broadband program based on virtually the same funding level as that of today’s voice-focused program, which will be phased out, the plan drew opposition from several different corners – including the Fiber to the Home Council, the Free Press and others.

If broadband revenues cannot be tapped to support the broadband program, the FCC may have to rely on alternative collection methodologies, such as making assessments on a phone-number basis, including other non-broadband revenues such as text messaging in the contribution base, or continuing to make assessments based on long-distance revenues.

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