End the Universal Service Fund

Recently I attended a panel that covered, among other things the universal service fund. This fund, which you usually see as an add-on on your phone bill, taxes urban phone users (through their interstate carriers) to subsidize local phone service for the poor, the rural, schools and health care. Sounds noble, but it collected over 5 billion dollars in 2002, and now the question has come about how to apply it to the internet now that people are making phone calls over the internet.

The panel was asked to explain the purpose of the fund, and they cited the various reasons above. There are people who live very far from cities to whom it would not be economical to run phone wires to at their real cost, etc. I suggested the purpose of the USF was to transfer money to the states of senators who support it from the states of senators who don’t.

Established telcos, who pay into the USF (though often also get paid out of it) are pushing to apply it to VoIP telcos. They want barriers to entry against the upstart competitors.

Why the cynical view? As I noted previously in the blog, friends and I decided last month to bring internet and phone service to Burning Man, in the Black Rock desert, which is about as rural and remote as it gets in the lower 48 states. We did it just for a lark, on the budget of just a few private individuals — admittedly richer than average individuals, but nowhere near corporate budgets.

We were able to do that through the use of the tons of revolutionary low cost technologies that have appeared due to the deregulation of unlicenced spectrum and VoIP. And the cost of that is just getting lower every day.

The truth is, today you can provide phone service to the poor, and schools, and hospitals, and a great deal of the rural, for a lower price than the urban people were getting “cheap” phone service when it was decided to tax it. And that trend is going to continue, especially if more spectrum is opened up to unlicenced use or cognitive radio use.

I conceive of a relatively cheap solar powered box with motorized directional antennas which could be dropped by helicopter on ridgetops for about $3,000 (and falling.) Somebody on the ground would aim the antennas to build a redundant mesh, and data/phone could reach just about anywhere cheaply, except the most remote corners of Alaska and a few other places. This is just one plan. The reality is that the exponential progress of bandwidth and radio technologies will provide others. Instead of taxing the new technologies and those deploying them, free them to get real results.

Dave Hughes agrees with you

Also consider ending e-rate


He says the USF "forced the schools the last 8 years to purchase only broadband telecommunications services, not devices, which has meant, practically, that the same Telephone companies who collect $2.25 billion in 'Universal Service Funds' for E-Rate from every hapless rate payer, every year, turned around to bid to schools their broadband recurring-cost broadband services, which costs thousands a month, and which the schools have to go back and request the same amount of E-Rate funds every single year to the end of time."

Wireless is cheaper for schools too.

Broken Promise of Universal Service

The original idea of the USF was noble enough, but it's been twisted and manipulated until it's used for just about everything but universal service. There are communities in the US that still have no access to grid electricity, telephone, and can't even get a cell signal. Mostly these communities are populated by poor and uneducated people who've never even heard of so-called universal service. It's high time the fund was used for what it was intended and get these communities basic telephone service.

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His name is Brad Templeton. You figure it out.
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