July, 2008

Universal Service Reform: Start With Accountability

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Earlier this year, the Federal Communications Commission (FCC) sought public comment on several proposals from the Federal-State Joint Board on Universal Service to reform the high cost universal service program that subsidizes phone service in rural areas.

The proposed reforms raise many significant policy questions. Should the size of the subsidies be capped? Should the FCC stop subsidizing competing phone companies in locations where there are not sufficient customers to support one? Should the commission use "reverse auctions" to award subsidies to the party that offers to serve an area at the lowest subsidy? Should mobile phone and broadband service become part of the universal service bundle supported by federal subsidies?