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

November 24 • 11:36 AM

Feeling—Not Being—Wealthy Cuts Support for Economic Redistribution

Study suggests it’s relative wealth that leads people to oppose taxing the rich and giving to the poor.


November 24 • 10:00 AM

Why Are Patients Drawn to Certain Doctors?

We look for an emotional fit between our physicians and ourselves—and right now, that’s the best we can do.


November 24 • 8:00 AM

Why Do We Elect Corrupt Politicians?

Voters, it seems, are willing to forgive—over and over again—dishonest yet beloved politicians if they think the job is still getting done.



November 24 • 6:00 AM

They Steal Babies, Don’t They?

Ethiopia, the Hague, and the rise and fall of international adoption. An exclusive investigation of internal U.S. State Department documents describing how humanitarian adoptions metastasized into a mini-industry shot through with fraud, becoming a source of income for unscrupulous orphanages, government officials, and shady operators—and was then reined back in through diplomacy, regulation, and a brand-new federal law.


November 24 • 4:00 AM

Nudging Drivers, and Pedestrians, Into Better Behavior

Daniel Pink’s new series, Crowd Control, premieres tonight on the National Geographic Channel.


November 21 • 4:00 PM

Why Are America’s Poorest Toddlers Being Over-Prescribed ADHD Drugs?

Against all medical guidelines, children who are two and three years old are getting diagnosed with ADHD and treated with Adderall and other stimulants. It may be shocking, but it’s perfectly legal.



November 21 • 2:00 PM

The Best Moms Let Mess Happen

That’s the message of a Bounty commercial that reminds this sociologist of Sharon Hays’ work on “the ideology of intensive motherhood.”


November 21 • 12:00 PM

Eating Disorders Are Not Just for Women

Men, like women, are affected by our cultural preoccupation with thinness. And refusing to recognize that only makes things worse.


November 21 • 10:00 AM

Queens of the South

Inside Asheville, North Carolina’s 7th annual Miss Gay Latina pageant.


November 21 • 9:12 AM

‘Shirtstorm’ and Sexism in Science

Following the recent T-shirt controversy, it’s clear that sexism in science persists. But the forces driving the gender gap are still being debated.


November 21 • 8:00 AM

What Makes a Film Successful in 2014?

Domestic box office earnings are no longer a reliable metric.



November 21 • 6:00 AM

What Makes a City Unhappy?

According to the National Bureau of Economic Research, Dana McMahan splits time between two of the country’s unhappiest cities. She set out to explore the causes of the happiness deficits.


November 21 • 5:04 AM

Sufferers of Social Anxiety Disorder, Your Friends Like You

The first study of friends’ perceptions suggest they know something’s off with their pals but like them just the same.


November 21 • 4:00 AM

In 2001 Study, Black Celebrities Judged Harshly in Rape Cases

When accused of rape, black celebrities were viewed more negatively than non-celebrities. The opposite was true of whites.


November 20 • 4:00 PM

Women, Kink, and Sex Addiction: It’s Not Like the Movies

The popular view is that if a woman is into BDSM she’s probably a sex addict, and vice versa. In fact, most kinky women are perfectly happy—and possibly healthier than their vanilla counterparts.


November 20 • 2:00 PM

A Majority of Middle-Class Black Children Will Be Poorer as Adults

The disturbing findings of a new study.


November 20 • 12:00 PM

Standing Up for My Group by Kicking Yours

Members of a minority ethnic group are less likely to express support for gay equality if they believe their own group suffers from discrimination.


November 20 • 10:00 AM

For Juvenile Records, It’s ‘Justice by Geography’

A new study finds an inconsistent patchwork of policies across states for how juvenile records are sealed and expunged.


November 20 • 8:00 AM

Surviving the Secret Childhood Trauma of a Parent’s Drug Addiction

As a young girl, Alana Levinson struggled with the shame of her father’s substance abuse. But when she looked more deeply into the research on children of drug-addicted parents, she realized society’s “conspiracy of silence” was keeping her—and possibly millions of others—from adequately dealing with the experience.



November 20 • 6:00 AM

Extreme Weather, Caused by Climate Change, Is Here. Can Nike Prepare You?

Following the approach we often see from companies marketing products before big storms, Nike focuses on climate change science in the promotion of its latest line of base-layer apparel. Is it a sign that more Americans are taking climate change seriously? Don’t get your hopes up.


November 20 • 5:00 AM

How Old Brains Learn New Tricks

A new study shows that the neural plasticity needed for learning doesn’t vanish as we age—it just moves.


Follow us


Feeling—Not Being—Wealthy Cuts Support for Economic Redistribution

Study suggests it's relative wealth that leads people to oppose taxing the rich and giving to the poor.

Sufferers of Social Anxiety Disorder, Your Friends Like You

The first study of friends' perceptions suggest they know something's off with their pals but like them just the same.

Standing Up for My Group by Kicking Yours

Members of a minority ethnic group are less likely to express support for gay equality if they believe their own group suffers from discrimination.

How Old Brains Learn New Tricks

A new study shows that the neural plasticity needed for learning doesn't vanish as we age—it just moves.

Ethnic Diversity Deflates Market Bubbles

But it's not in the rainbow and sing-along way you'd hope for. We just don't trust outsiders' judgments.

The Big One

One in two United States senators and two in five House members who left office between 1998 and 2004 became lobbyists. November/December 2014

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