Menus Subscribe Search

Follow us


Hanging Up and Logging Into Universal Service

• February 09, 2011 • 4:54 PM

A federal program to provide phone lines to every cranny of the United States really ought to be focusing on broadband.

The Universal Service Fund, the $8 billion government subsidy program that helps bring telephone lines to hard-to-reach rural communities, has a lot of problems. It’s inefficient, it’s costly, it’s easily scammed by phone companies that pocket the program’s money.

“For example, the fund pays almost $2,000 per month — more than $20,000 a year — for some households to have phone service,” admitted Federal Communications Commission Chairman Julius Genachowski this week. In some parts of the country, the program pays for as many as four phone companies to serve the same rural area. And rules designed to encourage those companies to invest instead perversely reward them for losing customers.

But none of that even gets at the program’s truly big flaw — rural Americans don’t need old-fashioned copper-wire telephone lines any more. They need broadband.

“If you’re doing the wrong job, it doesn’t really matter whether you’re doing it well or not,” said Richard Bennett, a senior research fellow with the Information Technology and Innovation Foundation.
[class name="dont_print_this"]

Idea Lobby

THE IDEA LOBBY
Miller-McCune's Washington correspondent Emily Badger follows the ideas informing, explaining and influencing government, from the local think tank circuit to academic research that shapes D.C. policy from afar.

[/class]
The Universal Service Fund, with all its convoluted incentives, has been trying to solve the wrong problem for several years now. This week the FCC finally announced long-awaited plans to revamp it, with the goal of one day funneling all of its resources toward broadband instead of phone lines.

“While the world has changed around it, USF — in too many ways — has stood still, and even moved backwards,” Genachowski said in previewing the plans in a speech at the ITIF Monday. Without a better system, he said, we have a “rural-rural divide” in the country today, “where some parts of rural America are fully connected — sometimes with state-of-the-art broadband faster than anything available in many urban areas — while other parts of rural America are entirely left behind.”

The FCC, however, can’t just go into the program tomorrow and scratch out all the references to “telephony” and replace them with “broadband.” Federal telephone subsidies, originally created during the Depression (and financed today through a surcharge on everyone’s long-distance phone bill), have spawned a number of companies that have built their entire business model around USF funds. They won’t want to give up that money. And many rural Americans who don’t yet have the option of digital phone service, or voice-over-IP, still rely on the program.

“The hardest part of it is the transition. If you’re starting out with a blank piece of paper, and your mission was to develop a subsidy plan that provided 100 percent of Americans with some sort of access to broadband service, it wouldn’t be that hard to come up with a system of subsidies,” Bennett said. “The challenge that the FCC has is that they’re not starting with a blank piece of paper. What they have to do is to figure out how to build this new system, then transition to it without wrecking telephone service for the rural folks in the process.”

Ultimately, those rural families may get on Skype instead of a landline. But transitioning them there requires changes to physical telecommunications infrastructure, in addition to changes to the USF fine print and philosophy. And the U.S. has been shifting to the new technology slower than many other countries.

One ITIF study, cited Monday by Genachowski for its “scary” findings, ranked the U.S. sixth out of 40 industrial nations or regions in the world in innovation and competitiveness (as a measure of combined indicators like human capital, innovation capacity and IT infrastructure). But the study also found that all 39 of the other countries or regions have lately been making faster progress than the U.S. toward the “new knowledge-based innovation economy.”

“Moving forward slowly is moving backwards,” Genachowski warned, “when other countries are moving faster.”

Ideally, Bennett says, the FCC could aggressively try to transform the USF within five years.

“But I have absolutely no faith that it will be done in a completely streamlined and painless and utterly rational way,” he said. “It’s pretty much a sure bet that any government-regulated enterprise of this magnitude, there are going to be warts in it. But it’s just absolutely essential. It’s inexcusable to be spending the kind of taxpayer and rate-payer dollars that we are to support what’s basically an obsolete technology.”

More realistically, this may take 10 to 15 years — by which time, theoretically, broadband could be the new obsolete technology.

“We probably will be” looking at something new by then, Bennett conceded. “But there’s a pretty good bet that it won’t be the traditional phone network.”

 

“Like” Miller-McCune on Facebook.

Follow Miller-McCune on Twitter.

Add Miller-McCune.com news to your site.

Subscribe to Miller-McCune

Emily Badger
Emily Badger is a freelance writer living in the Washington, D.C. area who has contributed to The New York Times, International Herald Tribune and The Christian Science Monitor. She previously covered college sports for the Orlando Sentinel and lived and reported in France.

More From Emily Badger

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

October 23 • 12:00 PM

The Man Who’s Quantifying New York City

Noah Davis talks to the proprietor of I Quant NY. His methodology: a little something called “addition.”


October 23 • 11:02 AM

Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.


October 23 • 10:00 AM

The Psychology of Bribery and Corruption

An FBI agent offered up confidential information about a political operative’s enemy in exchange for cash—and they both got caught. What were they thinking?


October 23 • 8:00 AM

Ebola News Gives Me a Guilty Thrill. Am I Crazy?

What it means to feel a little excited about the prospect of a horrific event.


October 23 • 7:04 AM

Why Don’t Men Read Romance Novels?

A lot of men just don’t read fiction, and if they do, structural misogyny drives them away from the genre.


October 23 • 6:00 AM

Why Do Americans Pray?

It depends on how you ask.


October 23 • 4:00 AM

Musicians Are Better Multitaskers

New research from Canada finds trained musicians more efficiently switch from one mental task to another.


October 22 • 4:00 PM

The Last Thing the Women’s Movement Needs Is a Heroic Male Takeover

Is the United Nations’ #HeForShe campaign helping feminism?


October 22 • 2:00 PM

Turning Public Education Into Private Profits

Baker Mitchell is a politically connected North Carolina businessman who celebrates the power of the free market. Every year, millions of public education dollars flow through Mitchell’s chain of four non-profit charter schools to for-profit companies he controls.


October 22 • 12:00 PM

Will the End of a Tax Loophole Kill Off Irish Business and Force Google and Apple to Pay Up?

U.S. technology giants have constructed international offices in Dublin in order to take advantage of favorable tax policies that are now changing. But Ireland might have enough other draws to keep them there even when costs climb.


October 22 • 10:00 AM

Veterans in the Ivory Tower

Why there aren’t enough veterans at America’s top schools—and what some people are trying to do to change that.


October 22 • 8:00 AM

Our Language Prejudices Don’t Make No Sense

We should embrace the fact that there’s no single recipe for English. Making fun of people for replacing “ask” with “aks,” or for frequently using double negatives just makes you look like the unsophisticated one.


October 22 • 7:04 AM

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.


October 22 • 6:00 AM

How We Form Our Routines

Whether it’s a morning cup of coffee or a glass of warm milk before bed, we all have our habitual processions. The way they become engrained, though, varies from person to person.


October 22 • 4:00 AM

For Preschoolers, Spite and Smarts Go Together

New research from Germany finds greater cognitive skills are associated with more spiteful behavior in children.


October 21 • 4:00 PM

Why the Number of Reported Sexual Offenses Is Skyrocketing at Occidental College

When you make it easier to report assault, people will come forward.


October 21 • 2:00 PM

Private Donors Are Supplying Spy Gear to Cops Across the Country Without Any Oversight

There’s little public scrutiny when private donors pay to give police controversial technology and weapons. Sometimes, companies are donors to the same foundations that purchase their products for police.


October 21 • 12:00 PM

How Clever Do You Think Your Dog Is?

Maybe as smart as a four-year-old child?


October 21 • 10:00 AM

Converting the Climate Change Non-Believers

When hard science isn’t enough, what can be done?



October 21 • 8:00 AM

Education Policy Is Stuck in the Manufacturing Age

Refining our policies and teaching social and emotional skills will help us to generate sustained prosperity.


October 21 • 7:13 AM

That Cigarette Would Make a Great Water Filter

Clean out the ashtray, add some aluminum oxide, and you’ve (almost) got yourself a low-cost way to remove arsenic from drinking water.


October 21 • 6:00 AM

Fruits and Vegetables Are About to Enter a Flavor Renaissance

Chefs are teaming up with plant breeders to revitalize bland produce with robust flavors and exotic beauty—qualities long neglected by industrial agriculture.


October 21 • 4:00 AM

She’s Cheating on Him, You Can Tell Just by Watching Them

New research suggests telltale signs of infidelity emerge even in a three- to five-minute video.


October 21 • 2:00 AM

Cheating Demographic Doom: Pittsburgh Exceptionalism and Japan’s Surprising Economic Resilience

Don’t judge a metro or a nation-state by its population numbers.


Follow us


Earliest High-Altitude Settlements Found in Peru

Discovery suggests humans adapted to high altitude faster than previously thought.

My Politicians Are Better Looking Than Yours

A new study finds we judge the cover by the book—or at least the party.

That Cigarette Would Make a Great Water Filter

Clean out the ashtray, add some aluminum oxide, and you've (almost) got yourself a low-cost way to remove arsenic from drinking water.

Love and Hate in Israel and Palestine

Psychologists find that parties to a conflict think they're motivated by love while their enemies are motivated by hate.

How to Water a Farm in Sandy Ground

Physicists investigate how to grow food more efficiently in fine-grained soil.

The Big One

One company, Amazon, controls 67 percent of the e-book market in the United States—down from 90 percent five years ago. September/October 2014 new-big-one-5

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.