Today there are more than 25 different federal programs that give financial support for telecommunications services. The new Clinton proposal expands a system of cross-subsidies that no longer makes sense at a time when the traditional phone company is not the only source for communications services. The president s plan taxes long-distance telephone service and discounts local telephone service. In order for the subsidies to flow from one class of consumers, through the long-distance carriers, and through the local carriers, to another class of consumers, strict restrictions are required on the type of service a firm can offer. However, the stated goal of Congress and the FCC is to allow more choices for consumers, in all types of service including services that are not based on the traditional telephone network like cable, satellite, and wireless.
Universal service is a shell game.
Consumers pay all manner of fees, taxes, and charges based on FCC regulations. Then discounts as well as artificially inflated rates are passed on to select groups of consumers. Sadly, rather than allowing the natural forces of competition and innovation to spread new communications technologies across the country, this spring Clinton and the FCC continue to offer new ideas on how to tax consumers use of communications services. Government officials should leave well enough alone. It took only 35 years for the telephone and 16 years for the personal computer to become as common.