Universal Service Fund should be changed or dropped

Monday, January 15, 2007

The Universal Service Fund may have been a good idea when it was established in 1999, but eight years is a lifetime in the high-tech world of telecommunications.

Established to keep the state in line with the federal Telecommunications Act of 1996, Nebraska's fund is designed to make sure everyone in the state has access to telephone service.

That's a noble cause, and no small undertaking, especially in areas like parts of the Sandhills, where cattle far outnumber people. It's just not economically feasible for a conventional landline telephone company to string wires miles and miles just to reach one customer.

To subsidize such service, Nebraska phone users pay 5.75 percent of basic telephone rates and any additional services such as call waiting and pagers, as well as all in-state long-distance calls, into the fund.

So, since July 2003, Nebraska has collected more than $178 million for the fund, and, in 2005 alone, Qwest received $26 million, and 24 other companies received at least $200,000 from the state fund that year.

Since July 2003, however, some 50 to 55 percent of the Universal Service Fund's income has come from cell phone users, who are not dependent on the landlines the program is meant to subsidize. Not dependent, that is, except for the cellular telephone companies that still connect their towers to landlines and deliver calls over the traditional network.

If universal service is the true goal of the fund, is investing in landlines the best use of the tax?

One has to look only as far as third-world countries, where cellular telephone use is growing exponentially, thanks to the relatively low cost of erecting towers as compared to landlines.

And, there is no reason low-income Nebraskans who now received subsidized telephone service could not just as well receive the service wirelessly.

It's akin to rural power districts, who have found it more economical to provide solar power equipment to farmers for specialized purposes such as pumping water for cattle in remote locations, than to build power lines to that location.

Far from the premium service it once was, cellular telephone service is competitive with conventional service to the point that many residents have cellular service for their only telephone.

We tend to agree with State Auditor and former State Sen. Mike Foley. "We're in a sense subsidizing yesterday's technology with today's technology," as he told The Associated Press.

The Universal Service Fund should be abandoned or revamped to keep up with today's economic realities.

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