Sunday, August 26, 2012

Universal Service, the FCC, and a Rip Off

The FCC has issued an NRPM for re-arranging and expanding the Universal Service Tax to now cover Internet Broadband Services. For wireless and land lines services it is almost $15.00 per line per month now! And where does the money go? Much of it goes to rural telcos who charge low rates but get exorbitant profits! This process distorts the market and should not only not be expanded but should be eliminated.

In 1997 I published a paper arguing for the elimination of Universal Service. It had some legs but given the entrenched interests making money off of this and the general lack of independence of the FCC it went no where. But now with the current Administration this becomes a backdoor tax to pay back friends. We will now be taxing Internet purchases as well as Internet access. This tax will result in further market distortions.

It is a shame that we have so poor a group of folks at the FCC but perhaps it is the White House issuing orders.