The Digital Edge Blog

The United States wants everyone to be connected…

That’s the theory at least.

There’s long been a tax on traditional telephone service to help make that a reality. The monies collected under this tax go into what is known as the Universal Service Fund (USF) - a fund established to subsidize telecommunication services to rural areas of the country as well as to schools and libraries. Since its inception a little over 20 years nearly $60 billion has gone in to this fund.

But you wouldn’t know it from the results…

If you look at the numbers in reports from the FCC, substantial sums have been spent on this program. But according to an analysis by Daniel Berninger, VP and Senior Analyst at Tier1 Research, subscriber growth is tiny. The net result is that each additional line added under the USF between 1996 and 2005 has cost a wopping $16,000. That is simply unbelievable.

What started out as a noble aspiration of connectivity for all has lost its way in a maze bureaucracy and political lobbying. It’s a program more focused on preserving the status quo and plowing money back into the pockets of the traditional carriers then on actually connecting the people it is chartered to connect.

It’s time to push reset and start this one over…

It is in the national interest to preserve the objectives of this program, but it needs to be totally gutted and refocused. There should be only one goal for this rebuilt Universal Service Fund.

Universal internet connectivity…

Every other goal of the program will spring naturally from that. Money should be spent to deploy technologies like WiMax that can cost effectively address data connectivity needs in demographically sparse areas. VoIP should be the foundation of all telephony and voice services under the program - POTS lines should explicitly be excluded. A WiMAX like infrastructure could allow for both home based and mobile voice services, while also providing basic web connectivity and even the delivery of the “must carry” list of broadcast television channels.

I am sure that the big telcos that currently benefit from the Universal Service Fund will fight any substantive changes tooth and nail, but there are some cases where the government needs to take the lead and simply do what is right regardless of political consequence.

This is one of them…

After the initial build out, it’s possible that the fund could be scaled back to focus on a more narrow, tactical mandate, or eliminated all together as an open IP based infrastructure drives costs down and competition up.

Hopefully, this would end up leaving the folks in urban areas clamoring for the same benefits their rural bretheren would be enjoying through their open infrastructure. If it did, it could help us reach the tipping point that topples the antiquated gatekeeper/monoply based telecommunications infrastructure we have today, and replace it with an IP based one that is open and competitive.

One we can build a 21st century society on.

Getting us to that point should be the real goal of “Universal Service”…