07-23-2007, 07:52 AM
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Contributing Editor
Join Date: Feb 2007
Posts: 3,111
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US telecommunications industry regulation needs a serious rethink
If you've read my rant on phone subsidies, you'll know where I stand on this issue - consumers are getting a raw deal due to uncompetitive practices endemic in the industry. Turns out, some of it is actuall federally mandated:
http://news.yahoo.com/s/ap/20070722/ap_on_bi_ge/telephone_tax
Here's the short version. The Universal Service Fund was set up in 1996 to help encourage rural access to telecommunications. Funding is through a surcharge on long distance calls, and the money goes to helping rural scholls and libraries get internet access, help the poor gain access to telecoms, help fund rural healthcare and compensate carriers for costs arising from establishing rural networks. Sounds good in theory, doesn't it?
Here's where it gets bizarre - compensation is paid irrespective of how many carriers are present in a locality, and compensation is on a subscriber basis. To top it off, the compensation is based on wired/fixed line network establishment costs - wireless carriers get more on a net basis because their network setup costs are way cheaper (think the difference between setting up base stations, as opposed to miles of telephone wire and poles). How much does this compensation cost? $4.1 billion in 2006.
This amounts to giving a free ride to anybody willing to build a rural network, all at the expense of the consumer. Worse, reform of the system is being blocked by senators with vested interests. I'm staggered.
__________________
"A planner is a gentle man, with neither sword nor pistol.
He walks along most daintily, because his balls are crystal."
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07-24-2007, 07:04 AM
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Pontificator
Join Date: Apr 2004
Posts: 1,108
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Re: US telecommunications industry regulation needs a serious rethink
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Originally Posted by Nurhisham Hussein
This amounts to giving a free ride to anybody willing to build a rural network, all at the expense of the consumer.
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I think you overstate this. Yes, USF compensation should take into account how well served a community is already, but if you think that we out here are drowning in telecom networks, you'd be very mistaken. In fact, there's just three: the wired network owned by Frontier Communications, along with Verizon Wireless and DCS Cellular One's cell networks. Frontier is, actually, pretty good: I get DSL from them despite being well past the red line. Verizon is, well, Verizon, and CellOne has decent coverage but terrible data service. The only reason I use them is because I'm a T-Mobile subscriber, and they're the only GSM network in reach.
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07-24-2007, 07:46 AM
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Contributing Editor
Join Date: Feb 2007
Posts: 3,111
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Re: US telecommunications industry regulation needs a serious rethink
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Originally Posted by ADBrown
I think you overstate this.
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I don't doubt that this works in certain localities, but...
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Originally Posted by ADBrown
In fact, there's just three...
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...why should all three be subsidised? At the same time? And if there were four, or five or six...all of'em would get the subsidy. That makes little sense. AllTel made $386 million off these subsidies in the last four years, and it's all coming out of consumer pockets.
__________________
"A planner is a gentle man, with neither sword nor pistol.
He walks along most daintily, because his balls are crystal."
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