Heartland Institute Reacts to FCC’s USF Reform Plan

Published October 6, 2011

Federal Communications Commission Chairman Julius Genachowski today released his plan to reform the Universal Service Fund (USF). Among other reforms, Genachowski wants to shift the purpose of the USF from subsidizing rural phone service to building out broadband – including wireless technologies such as WiMAX and LTE.

The following statements from telecommunications experts at The Heartland Institute may be used for attribution. For further comments, refer to the contact information below or contact Tammy Nash at [email protected] or 312/377-4000.

“After years of charging premiums on your phone bill so they could inefficiently dole out subsidies to phone companies, the USF is in desperate need of reform. Genachowski’s proposal for Universal Service reform sadly only shifts inefficiency from one place to another, picking winners and losers, and further expanding the role of the FCC in telecommunications.

“The usefulness of the Universal Service Fund – if ever there was one – has long since passed, and real reform means cutting the program down in size. There is one thing the FCC and Chairman Genachowski can do to ensure more universal access to telephony services: cut the USF thereby cutting user fees for those essential services and decreasing prices for all consumers.”

Marc Oestreich
Legislative Analyst for Technology Policy
The Heartland Institute
[email protected]

“The FCC reform of USF is more akin to rearranging the deck chairs on an ocean liner populated by millions of U.S. consumers already paying through the nose to subsidize rural deployment of phone and Internet services. The USF currently represents a 15.3-percent surcharge on the interstate long-distance portion of consumers’ monthly phone bills, and administrative costs account for up to 78 percent of every USF dollar directed to rural programs. As much as reforming the USF is highly laudable, eliminating it completely makes more sense for consumers.”

Bruce Edward Walker
Managing Editor, InfoTech & Telecom News
The Heartland Institute
[email protected]

The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.