July 23rd, 2007
Mobile carriers making out from rural phone subsidy
The few cell phone companies that provide rural Americans with service are reaping the rewards of a growing government fund, leaving some politicians concerned about the effectiveness of the subsidies, reports the AP.
The Universal Service Fund has collected $44 billion over its 10-year lifetime from a surcharge on the phone bills of nearly every American. This fund pays cell phone companies to offer service in rural areas where an existing carrier already receives a subsidy.
The fund has been widely criticized for being flawed, but lobbying efforts by companies that benefit have thwarted efforts to change it. Cell carriers have managed to raise the fee paid by telephone customers to the highest level in program history. The FCC is considering capping payments.
“It makes no sense to subsidize multiple carriers in a high-cost area,” says Billy Jack Gregg, a consumer advocate and member of the federal-state board that helps set fund policy.
The FCC is considering a recommendation by the federal-state board to cap funds paid to competitive carriers. There is considerable opposition among members of Congress and rural wireless carriers.
“It would be a Band-Aid or stopgap that would prevent us from getting to the comprehensive reform,” Mississippi Republican Rep. Charles E. “Chip” Pickering said.
