Free Market and Taxpayer Advocacy Groups Urge Congress to Reform the Universal Service Fund

The Universal Service Fund (USF), which is supposed to bring telephone service to mainly rural areas, has its roots in decades-old laws that aimed to solve a problem that no longer exists. The Telecommunications Act of 1934 – yes, 1934 – aimed to subsidize the expansion of telephone service into rural America. The fund’s new goal is to shift the focus of universal service from telephone to Internet service. But Americans should be careful not to assume that refocusing a New Deal program on modern technology will promote innovation or efficiency. Unless we are careful, it might do little more than perpetuate an aging entitlement program by giving it a high-tech paint job.  On September 21, 2011 the Taxpayers Protection Alliance joined with Americans for Tax Reform, the National Taxpayers Union, and Americans for Prosperity to urge congress to make sure that any USF reform focus on reducing costs (read full letter here).

The full text of the letter:

Dear Members of the U.S. House and Senate:

We write to urge you to contact the Federal Communications Commission regarding the out-of-control growth of the Universal Service Fund (USF), which the FCC is now in the process of reforming.

The cost of the USF has doubled from $4 billion to $8 billion over the last decade, and is set to double again in the coming years if nothing is done to cap or reduce the fund.

While it may be a positive step that the FCC is considering changes to the USF that would have it evolve from telephony to broadband, if that change merely expands the program it could cause the fund to balloon even larger in size and impose even higher costs on consumers. We firmly believe that any “reform” worthy of its name must deal with costs and accountability and cap the fund.

Presently, the FCC has a de facto tax-and-spending power outside of Congress’s appropriations process. It can raise or lower “fees” and redirect those funds in any manner it sees fit. This year, universal service “fees” hit a new high – a full 15.5% of consumers’ long-distance charges.

The FCC must bring the USF, especially its “High Cost Fund,” under control. At a minimum, the USF should be capped. Far better would be to reduce the USF’s High Cost Fund substantially in the next few years.

We urge you to communicate to the FCC that USF reform must focus on reducing costs. If the FCC fails to control costs, we recommend Congress consider appropriate legislation to do so. The FCC should not be exempt from the same belt tightening faced by the American people.

Sincerely,

Phil Kerpen, Americans for Prosperity

Kelly William Cobb, Americans for Tax Reform

Pete Sepp, National Taxpayers Union

David Williams, Taxpayers Protection Alliance