AT&T grudgingly accepts $428 million in annual government funding

AT&T has struck a deal with the US government to get nearly $428 million per year to bring 10Mbps Internet service to parts of rural America after protesting that it shouldn't have to provide speeds that fast.

The money comes from the Connect America Fund, which draws from surcharges on Americans' phone bills to pay for rural Internet service. AT&T accepted the money even though it argued last year that rural customers don't need Internet service better than the old standard of 4Mbps downstream and 1Mbps upstream. The FCC ignored AT&T's protests in December, raising the Connect America Fund download standard to 10Mbps while leaving the 1Mbps requirement unchanged.

Eight months later, AT&T is now willing to provide at least 10Mbps/1Mbps service to 1.1 million rural homes and businesses in 18 states in exchange for "$427,706,650 in annual, ongoing support from the Connect America Fund," yesterday's FCC announcement said. The FCC said this will bring broadband to 2.2 million customers, apparently assuming an average of two people for each home and business.