The US universal service fund is among the oldest and most inefficient, spending more on administration than comparators and not targeting the subsidies well. Our research has been cited in debates about improving it. The FCC under the Obama appointed Chair does not appear to be engaging in fundamental reforms, but is instead seeking to use the Fund as the main vehicle for executing its broadband plans. Instead of repurposing the existing funds, it is raising additional money by taxing customers of the telcos.
Chief among its goals, the F.C.C. wants future broadband investment to be focused on the areas where gaps in service remain. It will direct this investment in part through the Universal Service Fund, a program for telephone and Internet access, costing $8 billion annually, paid through a phone bill surcharge. Over time, the subsidies for Internet will increase and those for phone will dissipate, with the knowledge that people can make online calls.
“Some of the details are lacking, particularly on Universal Service Fund reform,” said Dan Mitchell, a vice president for the National Telecommunications Cooperative Association, a group that represents rural providers and worries that the proposals to change phone carrier costs will curtail the providers’ abilities to expand infrastructure.