Congressman Lee Terry (R-NE) and Congressman Mike Ross (D-AR) are encouraging their colleages to co-sign a letter urging Federal Communications Commission Chairman Julius Genachowski to reinvent the Universal Service Fund that subsidizes telephone service in rural areas served by small telecommunications common carriers.
The USF is an inefficient subsidy mechanism that may no longer be necessary. The Government Accountability Office made a similar observation in a 2008 report to Congress.
While considering legislation codifying universal service, the Senate Committee on Commerce, Science, and Transportation anticipated that competition and new technologies would reduce or eliminate the need for universal service support mechanisms. However, rather than decreasing, the cost of the high-cost program has grown substantially to $4.3 billion in 2007, increasing nearly 153 percent between calendar years 1998 and 2007. This significant growth has raised concerns about what the program is accomplishing, whether it has clear objectives, and whether it has effective controls over expenditures. (footnote omitted.)
Corporate entities that receive these subsidies have successfully resisted necessary reforms for years. Now they are alleging that rural areas will be left behind if the USF is not re-purposed to subsidize broadband. This is an alarmist prediction.
Broadband service providers have built terrestrial networks capable of serving 96% of U.S. households in the past 10 years or so. These networks continue to expand as technology continues to improve. FCC Commissioner Robert M. McDowell has noted, for example, that “the number of unserved households dropped almost in half from 8.8 million to 4.6 million” between December 2008 and June 2010.
If subsidies are no longer necessary for voice or broadband services as a result of technological innovation, then they are nothing but corporate welfare.
Congress ought to conduct hearings for the purpose of determining whether subsidies for broadband are necessary at all, or whether USF is a candidate for elimination. Is this what Terry and Ross want to avoid? The Terry-Ross letter urges the FCC to act “swiftly yet carefully.” Other than the fact there will be an election in 2012, what’s the urgency? Good public policy does not seek to avoid scrutiny.
Former President Ronald Reagan warned that the “nearest thing to eternal life we will ever see on this earth is a government program.” Whether Congressman Terry and Congressman Ross realize it or not, they are helping a government program that has been widely criticized for years as both wasteful and obsolete achieve immortality.