In its present form, the administration of universal service is in serious trouble. Recent congressional hearings have cast an unfavorable light on the FCC s creation of a series of non-profit corporations to administer the universal service programs. Currently, litigation in the 5 th U.S. Circuit Court of Appeals is trying to determine if anyone other than Congress can assess and collect taxes specifically to pay for universal service. Furthermore, the General Accounting Office deemed that the FCC violated the law when it established these corporations. If the FCC succeeds in all of its legal challenges, it will find itself responsible for a multi-billion dollar program that the president s budget estimates will more than quadruple in the next five years.
Universal service is costly and inefficient.
The fuse has already been lit for this political time bomb. Unlike the excise tax, the universal service shell game is almost entirely hidden from consumers. As an alternative, the FCC should excuse itself from the messy business of administering tax and social welfare policies. Universal service subsidies, if they have any merit, should be debated publicly and passed by Congress. All the FCC should do is ask for direction and then wait until Congress provides a practical answer with specific guidelines.