FCC Rural Phone Subsidies Reach As High As $3,000 Per Line 372
jfruh writes "The FCC's Universal Service Fund has a noble goal: using a small fee on all U.S. landlines to subsidize universal phone coverage throughout the country. But a recent report reveals that this early 20th centuryy program's design is wildly at odds with 21st century realities: Its main effect now is that poor people living in urban areas are subsidizing rich people living in the country. The FCC says that it's already enacted reforms to combat some of the worst abuses in the report — like subsidies to rural areas that add up to $24,000 per line — but even the $3,000 per line cap now in place seems absurd."
FCC (Score:0, Interesting)
Start doing studies. It is simply not that expensive to run and maintain cable, not even in rural areas.
The urban poor subsidized the rich for a while now (Score:5, Interesting)
That's not unique to phones. It also applies to highways, minor airports, housing tax incentives, and a number of other "American Dream" elements that really have nothing to do with having a successful society.
Re:The urban poor subsidized the rich for a while (Score:2, Interesting)
Airports and housing incentives may not be necessary for rural areas, but a certain base level of road infrastructure is absolutely necessary. It even makes sense for urban areas to subsidize roads in rural areas.
After all, how the hell else is the food going to get from the fields to the cities?
The cost of doing the old business (Score:5, Interesting)
In the early 90s, an older couple in Eastern Kentucky decided to break down and pay for a landline telephone. GTE offered to drag them a line for $5000 or so (I forget the exact amount). Outraged, they appealed to the Kentucky Service Commission. The Commission discovered that GTE was going to have to pay almost $25k to get the line to them, and was already eating much more of the cost than could be demanded under the law. The couple chose not to get their phone line.
A friend of my father ran a lucrative contracting business that bid on GTE contracts. He kept mule drivers under contract, because they were often the only way to drag poles around certain parts of the Appalachians.
These days, this exact same couple would be able to pay $40 to $80 a month to get a cell phone. The tower will be a couple of hills over, with a microwave feed back to the home network and a small diesel generator on-site. For the cost of one phone line, an entire area can get phone and internet service.
The same economics are working in India and Africa. Excluding possibly power, there will be significant portions of the world that will never, ever be wired.
Re:FCC (Score:0, Interesting)
It is simply not that expensive to run and maintain cable, not even in rural areas.
It is simply not necessary to run and maintain cable in rural areas. The active hardware for a point-to-point 24GHz Ubiquiti backhaul link costs a bit more than $3,000. That's good for 1.4Gbps over 8 miles (13km). The band is unlicensed, just like wifi. Coax and/or wifi to the houses and you're done.
With that technology most of the rural bandwidth problem should be solved. Certainly with as much USF money the FCC has sloshing around it should be.
and vice versa (Score:4, Interesting)
It also works the other way around: rural folks subsidizing ridiculously overpriced housing, education, public safety, and other services that the "urban poor" use. Many of the "urban poor" are likely poor because they are "urban" in the first place. And what about the rural poor who really do need these subsidies?
That's the whole problem with all these "great society" programs: nobody really knows what the money should be spent on. Once you go down this road, you lose yourself in ever more complex and wasteful schemes of economic central planning, rent seeking, and outright corruption.
Bullshit study (Score:5, Interesting)
I work for a telco. We're required by law to provide phone service to everyone... period. In some counties we're required by law to keep 911 service working regardless of if they residents even want a phone, or even if the building is abandoned! We've got houses on top of mountains, we've got houses at the bottom of the grand canyon on Indian reservations that require microwave dishes to link the bottom of the canyon with the top. Or techs have to hitch rides on helicopters to service some of these people. The vast majority of whom are not rich at all. Rich people like to live in the countryside around cities or small towns, not in the Appalachians where these subsidies have the greatest affect.
Not that all the government subsidies are perfect. The most recent, the Rural Broadband initiative, is total pork. But the standard tax on lines that allows rural customers to get basic phone service? No, that's probably one of the most important programs in US history. If hadn't been enacted most of the country (geographically) would still be without service. If they were to drop it all together, rural customers would get cutoff almost immediately. We're talking entire towns. And before you start talking about cellphones, how do you think all the cellphone providers get their data links for those towers? The phone companies.
Re:The urban poor subsidized the rich for a while (Score:2, Interesting)
Yeah? How you going to do all the bustling economic activity in the dark? The bulk of the hydro electric dams are out in the rural areas, as are fossil fueled power plants. Not to mention all your fresh water comes from rivers and aquifers generally supplied by rainfall in rural areas and mountains. Every city has an area around it that supplies basic necessities to keep the city alive. The larger the city, the further its tendrils have to reach to keep it running and livable.
If the complaint here is that rural areas are being unfairly subsidized, well that's fine, but... HELLO FARM BILL! The only reason urban areas have any affordable food available is because the government subsidizes farms to keep the cost of produce down.
Re:Please explain... (Score:2, Interesting)
Actually, I moved to a more rural area. And I don't think I should have to contribute to that.
No, it's your logic that's foolish. "Spreading around" doesn't give people more, it gives people a lot less, and it discourages people from making rational choices.
I prefer no subsidies at all. I prefer that people pay for the actual cost of things, because that's the only way they are going to make sound economic decisions that help everybody be wealthier.
Re:"Rich people" "Rural areas" (Score:3, Interesting)