FCC Wants $25 Million for Cell Phone Subsidy Program 'Fraught with Fraud'

The new FCC rules also allow for low-income families to apply for free or reduced-price broadband service, which Genachowski says is "rapidly becoming a necessity, not a luxury." The pilot program will provide $25 million to test out how the program will work.

Downes says it's nice to aspire to universally available broadband, but not without a congressional order. By charging telecom companies to pay into the Universal Service Fund, the FCC is levying a de facto tax, he says.

"I compliment the chairman on his vision on this. It's a very important goal [to increase broadband services]," he says. "But to the extent to which he's introducing new programs and spending money they don't have, that's where I'd part company with him."

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