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Should universal service be scrapped?
July 16, 1998
Web posted at: 9:00 AM EDT
by David Rohde, columnist, Network World
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From...
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(IDG) -- It's a good thing fax machines can't read what's coming over
them. If they did, the fax machine in our Washington, D.C.
bureau would shut down from shock and embarrassment.
We've received endless faxed denunciations from Capitol Hill
blaming just about everyone - AT&T, the Bells, Al Gore,
"special interests" and the Federal Communications Commission
- for user surcharges to pay for universal service.
What if the whole mess turns out to be Congress' fault? Most
users are stuck with a 4.9% surcharge for interstate voice and
data traffic because carriers don't want to eat the cost of new
programs such as subsidized Internet access at schools and
libraries.
A new study from the Cato Institute argues the problem isn't
figuring out who should pay. The real problem, according to
study author Lawrence Gasman, is the whole concept of
universal service. Congress should just get rid of it. Among
Gasman's arguments:
- The idea that universal service dates back to the
Communications Act of 1934 is a myth. That law didn't
use the term and did not require subsidies for rural phone
lines or residential telephony in general. That idea grew up
in the 1950s and was finally codified in the Telecom-
munications Act of 1996.
- It's not fair to blame the FCC exclusively for the huge
financial scope of the E-rate program. In the 1996 law,
Con- gress ordered regulators to ensure that schools get
"special rates and other concessions" for "advanced
telecommunications and information services."
- It's no wonder new local carriers compete for large
customers in urban areas, not small customers in rural
areas. Who could beat the phone companies' already
subsidized rates?
- Politicians stoking fears about "information have-nots" are
putting communications technology on a pedestal where it
doesn't belong. "Poor people can afford less than rich
people, whether the commodity in question is
telecommunications or anything else," Gasman said.
- Finally, Gasman argued that making a big deal about
Internet access in schools may defeat the very equalizing
purpose it's supposed to serve. "Several recent studies
suggest that Internet access may increase the gap between
low- and high-achieving students because the resource is
most eagerly used by white males."
I'm not sure the government's hang-up about providing universal
service is all bad. After all, a public network is more useful the
more people you can get on it. You should know the Cato
Institute is a libertarian think tank whose studies always seem to
line up just enough facts to favor government nonintervention.
Gasman's arguments are yet another corrective against politicians
who insist they have to "do something" about information
technology without thinking through the consequences. Gasman's
study avoids regulatory jargon in favor of clear presentation.
Check out the study at www.cato.org/pubs/pas/pa-310.html.
Rohde is Network World senior editor, Carriers & ISPs.
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