USF: Still There, Still Looking Like A Big Waste

from the money-pit dept

The good old Universal Service Fund is back in the news again. Phone customers pay a fee into the USF with every bill, and state and federal governments then distribute that money as subsidies to phone companies, supposedly to defray the cost of providing service in hard-to-reach and rural areas. But it's been repeatedly illustrated that USF money is distributed in curious circumstances, and dubious quantities, doing little to dispel the idea that all it really does is provide another revenue stream for telcos. The AP has done some nosing around USF records and highlighted a few different angles. They lead with the idea that cellular subscribers pay an inordinate amount of fees, but they bury the real point: that there's little to no oversight of how USF money is spent once it's paid out to phone companies. For instance, in Texas, the formula used to calculate subsidies hasn't changed since 1997, and neither has the list of areas considered rural. Clearly technology has changed in the past ten years -- and it's absolutely certain that development has transformed many previously rural areas. In California, areas that are eligible for subsidies were determined in 1996, using 1990 census data -- and includes such downtrodden, out-of-the-way areas as Malibu, the Sacramento suburbs, and parts of the San Francisco Bay area. Phone companies say the USF delivers significant benefits, not just to rural customers, but even to those who pay into the fund, because it expands the number of people they can call on the phone. That's a pretty weak argument, and if it's one in which the phone companies absolutely believe in, they should have no problem with steps to increase the transparency and accountability of the USF, with a view to reducing the amount consumers have to pay in -- since, after all, they're just subsidies that should reflect the actual cost of providing service in areas that truly need it. But given the way they hoard USF payouts, and the shady actions of some telcos to replace USF fees they were no longer required to charge with made-up fees, we won't be holding our breath.