Shocker: More Than Half The Money Paid Into High Cost Universal Service Fund Not Going To Provide Universal Service

from the how-do-you-spell-boondoggle? dept

Thu, Feb 24th 2011 1:19pm — Mike Masnick

For years, we've pointed out that the "Universal Service Fund," is a huge boondoggle. Basically, we all pay a tax on our phone bills that's supposed to go towards this "universal service fund," which telcos are supposed to use to provide phone service to rural areas. But, as we've been pointing out for over a decade there's little evidence that's what happens. There's almost no oversight of the program, and there are many stories of waste and abuse. The latest, in a long line, is that 59 cents of every dollar that goes to the big telcos from this USF... does not go towards universal service. Instead, the telcos just take that money and do other stuff with it. So, basically, this is a way for the telcos to hide much higher rates through a bogus government "tax," that isn't used for its expressed purpose. That seems like a class action lawsuit waiting to happen.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: boondoggle, telcos, universal service fund

20 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Jason, 24 Feb 2011 @ 1:28pm

USF to change to provide Internet
Correct me if I'm wrong but isn't it now being changed to instead provide Internet to rural areas? Do you think it would be easier to track how it's being used since it's easy to know if you have Internet or not or are they just going to waste it.
[ link to this | view in chronology ]
- TeleTips Network (profile), 24 Feb 2011 @ 2:02pm
  
  Re: USF to change to provide Internet
  @Jason.
  
  Just globally replace "phone service" with Internet Access". The article then becomes a forecast rather than a retrospective.
  [ link to this | view in chronology ]
- Trails (profile), 24 Feb 2011 @ 2:25pm
  
  Re: USF to change to provide Internet
  And yet knowing whether you have phone service is a complex and difficult conundrum?
  [ link to this | view in chronology ]
Mike42 (profile), 24 Feb 2011 @ 2:01pm

Rural Areas?
No, the telco's use the money to finance their lobbying efforts.
Where do you expect the money to come from? Their own corporate coffers? Pshaw!
[ link to this | view in chronology ]
- Anonymous Coward, 24 Feb 2011 @ 2:17pm
  
  Re: Rural Areas?
  God I love ignorant speculation on TD!
  [ link to this | view in chronology ]
  - Qritiqal (profile), 24 Feb 2011 @ 2:22pm
    
    Re: Re: Rural Areas?
    God I love ignorant lack of humor on TD!
    [ link to this | view in chronology ]
  - Anonymous Coward, 25 Feb 2011 @ 7:36am
    
    Re: Re: Rural Areas?
    We know. YOU provide most of it!!
    [ link to this | view in chronology ]
- Christopher (profile), 24 Feb 2011 @ 2:39pm
  
  Re: Rural Areas?
  Might be an attempt at humor, but this is actually VERY true. The USF does NOT dictate that it has to be for X thing and by giving the private internet companies this money, allows them to defund their part of projects to an extent and put that money into lobbying people in Congress.
  
  Simply put: DON'T GIVE THE MONEY TO PRIVATE COMPANIES! It's time for the government to do the building up of the internet backbones ourselves and then lease out access to these companies.
  [ link to this | view in chronology ]
  - Desco (profile), 24 Feb 2011 @ 3:44pm
    
    Re: Re: Rural Areas?
    "Simply put: DON'T GIVE THE MONEY TO PRIVATE COMPANIES! It's time for the government to do the building up of the internet backbones ourselves and then lease out access to these companies."
    
    Yes, because the government never funnels money meant for something good into the general funds and blows it on other crap. Social Security... Medicare... Pensions....
    [ link to this | view in chronology ]
TQ1, 24 Feb 2011 @ 2:45pm

Gov't Control?
So, we should let the Government build a better internet backbone? Sure they created it, but like everything else, it was Private Ingenuity that built it up to what it is today. Look at the USPS. Is the Government running that service efficiently? No, get the government out of our communications and let the private sector build a better mousetrap.
[ link to this | view in chronology ]
- The eejit (profile), 24 Feb 2011 @ 3:05pm
  
  Re: Gov't Control?
  Holy fuck, are you a moron? The USPS has never let me down, whereas FedEx and UPS have. The private banks nearly bankrupted the world. Patents are moving towards the point of actively harming the US economy. And the stupid are being allowed to govern.
  
  I think there are more serious problems than this, but this should be outright illegal.
  [ link to this | view in chronology ]
- pixelpusher220 (profile), 24 Feb 2011 @ 3:09pm
  
  Re: Gov't Control?
  "Look at the USPS. Is the Government running that service efficiently?"
  .
  Uh, the USPS has a whole world of responsibilities that private companies do not. Coupled with the fact that their prime service (mail delivery) is being usurped by another entity (the internet), it's quite hard to run a service with a mandated price structure.
  .
  If the USPS were run like a business, it would charge you based on where you are sending something, AND it wouldn't send things to quite a few places at all simply because it wasn't economical.
  .
  Either you have universal service or you don't. The private sector does not provide universal service unless forced; i.e. cable franchises.
  [ link to this | view in chronology ]
- Haapi, 24 Feb 2011 @ 3:35pm
  
  Re: Gov't Control?
  Neither UPS nor FedEX would survive (be profitable) delivering the volume of mail, including junk mail, that the USPS delivers. Package delivery is gold compared to bulk junk and even 1st class. That being said, why doesn't the USPS charge more for that bulk junk mail and break even?
  [ link to this | view in chronology ]
  - Haapi, 24 Feb 2011 @ 3:37pm
    
    Re: Re: Gov't Control?
    Other comments made the point better.
    [ link to this | view in chronology ]
  - Anonymous Coward, 24 Feb 2011 @ 10:26pm
    
    Re: Re: Gov't Control?
    I think much of the reason is simply that the USPS has a monopoly on mailbox delivery. This gives them economies of scale that the private sector can not benefit from due to the legal inability to deliver mail into your mailbox.
    
    It's much easier for the USPS to deliver mail to you when they are delivering it to your neighbors as well. It's hard for them to deliver it to your neighbors if your neighbors aren't home or if they have to knock on a door every time they need to deliver mail, in opposed to simply dropping it in your mailbox.
    
    One would have to compare U.S. mail delivery systems to mail delivery systems in other countries. From what I hear, even in China the mail delivery system is much better.
    [ link to this | view in chronology ]
    - Anonymous Coward, 24 Feb 2011 @ 10:33pm
      
      Re: Re: Re: Gov't Control?
      (In other words, the USPS gets paid for mail delivered to you and your neighbor, so they can better afford to get mail to you. Since the private sector can not deliver mail into your mailbox this causes them to lose many customers and the result is that they have to go out of their way to deliver mail to many of their customers without being allowed to benefit from the economies of scale and the money they can make by delivering mail to the neighbors of those customers. To compensate they must charge everyone more since the high fixed costs of going to a customers neighborhood can not be much more easily covered by delivering mail to those customers neighbors as well).
      [ link to this | view in chronology ]
      - Anonymous Coward, 24 Feb 2011 @ 10:43pm
        
        Re: Re: Re: Re: Gov't Control?
        "can not be much more easily covered by delivering mail to more of those customers neighbors as well"
        
        It's also worth noting that, from what I read, all of the mail delivery innovations (ie: electronic tracking) were developed by the private sector and copied by the USPS (so much for patents protecting those who actually innovate). The USPS hasn't innovated at all, they have no incentive to, the government gives them such a huge government imposed advantage that they don't feel the need to innovate.
        
        Those who compete on a level playing field always have incentive to innovate and advance themselves because if they don't they know that their competitors will eat them alive. Those who benefit from a govt imposed competitive advantage hardly ever innovate, why should they?
        [ link to this | view in chronology ]
Anonymous Coward, 24 Feb 2011 @ 4:40pm

The telcos are doing a great job with little or no help from taxpayers. They deserve more help and money from the public at large in order to get the job done. Stop belly-aching and mind your own beeswax.
[ link to this | view in chronology ]
Thomas (profile), 24 Feb 2011 @ 4:47pm

USF pays for important things...
like bonuses, drugs, hookers, and vacations for telco executives. Was the money supposed to be used for something else? I thought USF stood for Useful Slush Fund.
[ link to this | view in chronology ]
Anonymous of Course, 25 Feb 2011 @ 11:04am

Telco crooks
After becoming annoyed at the third world reliability of my land line I dropped the long distance calling service. When I found a LD connection fee was still included in my monthly bill I called and asked why I was being charged this fee.
I was told it was required by the FCC, by a telco call center supervisor. The fee was intended to help mom and pop telco's who had to connect to big telco lines. The only thing the FCC stipulated is the fee limit of $6.50. Of course the fee was $6.50.
A small thing but when added to the billions of tax payer dollars pocketed by these thieves that were provided for broadband service expansion it's very annoying.
[ link to this | view in chronology ]