NCPA - National Center for Policy Analysis


February 4, 2010

If you're using a telephone, you're an enabler for Washington's uncontrolled spending habit.  A cryptic line variously labeled as a "Federal Universal Service Fee" or "Universal Connectivity Fee" lurks within the monthly bill for most communications services.  This tax feeds nearly $7.7 billion into the Universal Service Fund (USF) every year.  It's time to end this tremendous waste of money, says the Washington Times. 

The USF was created to establish essential communications links for low-income residents in underserved areas.  As with many such well-intentioned federal ideas, however, the program has grown into something that helps well-connected business more than it helps the needy get connected, says the Times: 

  • Rural phone companies that provide "high-cost" wireline service land more than $4 billion a year.
  • Why U.S. taxpayers should subsidize rural service today is a bit odd, considering that 96.2 percent of us have access to phone service.
  • Additionally, wireless and satellite-based communications options can cheaply and efficiently provide service in rural areas without the "last mile" expense of running physical wires down every dirt road.  

Another $2 billion of USF money goes to E-Rate, a program originally created to "wire every classroom" with Internet access.  It sounded like a good idea at the time -- but the current availability of cheap wireless solutions demonstrates that the government may have been too quick to lay those wires. 

Technology has advanced a bit since the days of Alexander Graham Bell.  However, the law's measure of success has not.  The goal should be to foster efficient communication, not tether people to wires at any cost.  The reality is that the free market has done more to make communication more available and affordable than any government program could ever hope to do, says the Times. 

Source: Editorial, "Kill the Universal Service Fund," Washington Times, February 4, 2010. 

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