Out of Control Policy Blog

Itís not like government never gets pared back

I've noted how the federal government only recently decided it didn't need an underground helium reserve.

Now this:

    The Spanish-American War may have ended over a century ago, but anyone in the U.S. with a telephone line is paying a 3 percent "luxury" tax created to fund the conflict in 1898.

    That's a situation that a number of Republican senators would like to change. This week, they introduced a bill to repeal the Spanish-American War levy.

But now some rural lawmakers have their eyes on broadband:

    Many broadband customers will pay new universal service taxes akin to those on their telephone bills if Congress bows to suggestions from rural legislators.

    The suggestions came as lawmakers started debating changes to the Telecommunications Act of 1996, which created the framework for the Universal Service Fund, overseen by the Federal Communications Commission.

    The USF currently collects a fixed percentage of revenues from long-distance, wireless, pay phone and telephone companies so that it can pass on subsidies to low-income customers, high-cost areas, and rural health care providers, schools and libraries. Most companies come up with their share, set for this quarter at 10.2 percent, by charging their customers a fee.

    The USF should continue to be "industry funded," but the base of contributors should be expanded to "all providers of two-way communications, regardless of technology used, to ensure competitive neutrality," a bipartisan coalition of rural legislators said in a June 28 letter to the U.S. House of Representatives Energy and Commerce Committee, which will be drafting the rewrites. That means companies providing broadband services such as VoIP over telephone wires would also have to pay into the fund.

And what about the USF? Sure it helps some people get service, but at a cost of $1,500 to 11,000 per new customer per year. Might be cheaper just to move those people to the nearest city.

Ted Balaker is Producer


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