Telco USF needs to end

When established, the USF’s purpose was to provide costly infrastructure to deliver fixed line voice service to rural America. The infrastructure has been paid for, the cost of providing service continues to decline, and the cost of the USF contunies to grow.

I rarely agree with Cnet’s Charles Cooper since he tends to like big government most of the time. You know there’s a problem when even he believes a government program is a out of control:

The FCC has a problem–new entrants are taking customers away from incumbents. Since the new entrant gets a subsidy when it steals a customer but the incumbent never loses a subsidy, competition paradoxically increases the total subsidy.

The obvious solution to this “problem” is to end this mindless pork barrel. At the very least, the FCC should cap the total subsidy and divide the subsidy according to the proportion of rural customers each firm serves. Congressman Joe Barton just introduced a bill to do at least this. Instead of following that logic, the FCC is proposing to cap payments to the successful new entrants, but to maintain fully the payments to the incumbents who are losing customers. The Barton bill actually adds another potentially beneficial step–using “reverse auctions” to drive down the subsidy dollars in each area.

Far better than even the Barton bill would be for Congress and the FCC to declare the high-cost universal service program a success and close it down. The entire program could be capped this year and then phased out over the next five years. A gradual elimination of the program would allow firms to cope with the transition, but it would mean a real transition. (Cnet)