Death and taxes

Chart of FUSF rates from 1998 to 2012, rising from four percent to fifteen percent

The Federal Universal Service Fund fee has spent the last decade climbing upward without any apparent end in sight. This next quarter it is set to drop a little, but this isn’t an indication of a change in the overall trend: upward. A Sonic.net Fusion customer pays roughly $2.40 monthly toward the Federal Universal Service program today.

The goals of universal service are laudable. In particular, connecting schools which lack adequate broadband access and computers can only pay dividends through better education. However, the Universal Service fund and E-Rate programs have seen plenty of waste, fraud and abuse. Tens of millions of dollars have been misspent under the E-Rate program. And, three US carriers have received subsidies (pg32) of over $10,000 for every home phone line per year!

This program cannot continue to grow without an upper bound. The first two years of the FUSF program were reasonable and consistent, with a contribution factor of around 4%. Then, as the scope of the program increased, and as carriers learned how to dip deeply into the system, costs began to rise.

The FCC is working to reform the programs, with a cap on the size of the program. But, I believe we should push for rates to return to much lower levels. The reforms of the universal service system address support levels, price caps and inter-carrier billing methods. Hopefully as these changes are finally implemented, we will begin to see a more consistent rate. Reversing this chart is long overdue.