Posted on 10/31/2011 11:33:43 AM PDT by Shout Bits
While many consumers reasonably assume that government regulators protect and work for their interests, the reality of today's regulatory regime is far more complicated and sometimes corrupt. All too often, the relationship between regulators and industry is too cozy, and government regulation becomes a crutch for political insiders and a barrier to competition. Sadly, the one party not at the regulatory banquet is the consumer. No better example is that of the recent FCC decision to repurpose its Universal Service Fund as an internet build out fund, the Connect America Fund.
The FCC has a long history of driving up consumer prices to benefit rich and connected companies. Older consumers may remember the days when long distance rates varied by time of day, with prices jumping fivefold Sunday evenings. AT&T would admonish its customers to call grandma early on Sunday before prices spiked. The fact is that long distance costs basically the same as local call to provide, as evidenced by every major mobile provider including long distance for free. The price difference was a construct created solely by the FCC. When Judge Greene broke up AT&T, its executives foolishly fought to keep the long distance business because the FCC had artificially made it the profit center. The slow decline of AT&T, ending with its acquisition by one of the companies it once considered ancillary trash, demonstrates that the market eventually bypasses regulatory interference. Market competition from cell phones and internet telephony eventually reduced AT&T's value to nothing more than its brand name.
In 1996, Congress tasked the FCC with revamping a fund that mostly provided Puerto Rico with cheap phone service into a nationwide subsidy to equalize the cost of urban and rural phone service (phone service costs much more to provide in the country). The fund did not alter the exceptionally generous, even corrupt, subsidies to small rural companies; this new fund was for large companies that mostly served big cities. The supported areas were not really impoverished farm land, but most often rich suburban estates and tony vacation hamlets. The various Baby Bell companies like Bell South or SBC fought vigorously for what they thought would be billions in free money. The handful of people who still receive a bill from these companies can still see a charge for Universal Service Fund. While consumers certainly paid into the fund, nobody was particularly happy with its results. As cell phones and internet telephony began to dominate local phone service, it became clear that few wanted a land line, especially in the suburban and vacation cities this fund was designed to subsidize.
So an expensive government program that ultimately benefited rich suburban customers at the expense of relatively poor urban customers had run its course. The FCC had the broad authority to declare that basic service was universally available at reasonable rates without the fund and end the tax on the urban poor. Of course, the government never gives money back, so the FCC repurposed the fund to now provide high speed internet to the same wealthy suburban and vacation home customers. Again, remember that country farmers are covered by a separate fund that more than adequately provides them high speed internet.
High speed internet is a growth and profit center; it does not need a subsidy. Suburbanites already have basic DSL speed internet, just not quite fast enough to satisfy the FCC's delicate sense of fairness. Of course you don't hear the multi-billion dollar Baby Bells fussing over another subsidy, even if nobody needs it. Again, the relatively poor urban customers are subsidizing HD video quality internet for the relatively rich suburban dwellers and their vacation second homes. The only real beneficiaries are the internet providers who will get free money to build networks that consumers probably could afford anyway. Of course the FCC's intervention in the free market will drive up overall costs, but the consumer was never at the table to begin with. Naturally, those that might want to later compete using technologies such as LTE wireless will have a hard time overcoming the politically connected companies that got free money to build out their networks. The FCC's M.O. is to lock in technologies and entrench favored companies at the expense of the consumer.
Good for the poor? No. Good for the truly rural farmers? No. Good for Ted Turner's Montana ranch and Aspen second homes? Yes. Good for Fortune 500 companies that are already profitable? Yes, very. The FCC is yet another example of a rogue regulatory agency that the US does not need. Consumers can do very well without this type of protection.
Shout Bits is available on Facebook: http://www.facebook.com/pages/Shout-Bits/191627784211089
I don’t understand the technical aspects of this and I agree that anything Obama has a hand in is guaranteed to be corrupt.
Whatever the reason, living here in rural America, I can say for certain that no one is making any real effort to supply us with broadband service. I have been waiting for it for maybe 10 years and still nothing in sight.
There are a couple of satellite services but I have checked on them and they are both expensive and deliver what must be awful service as they are rated one star out of five from the reviews I have read.
I keep reading of schemes to make it available such as supplying it through the electrical grid but nothing ever happens.
Meanwhile while nearly everyone I know has all the bells and whistles I sit at my desk waiting for just about every single website to take it’s time to load. Many things I simply cannot do or use.
I live in eastern New Mexico, approx 150 miles from Albuquerque, or Amarillo, and almost a 100 miles from anywhere else.
The only internet connection available is by satelite. Because we live in a canyon, the only satelite service available is through a small company. Since we don’t have TV, we don’t mind the cost. The service is excellent. We rarely have a break in signal due to weather, and then only a few minutes.
Who is your telephone provider? Unless it is one of the big companies, this program will not benefit you.
i have Empire Telephone and have fiber to my house...
Mine is Century Link which I think is a pretty large one.
I can’t get cell phone service either.
I got a pretty good sounding offer in the mail and decided to try it. Sure enough they mailed me a phone with instructions how to do everything.
I never could get the thing to work and one of the reps finally figured out I was out of their range. He said all I had to do was move 5 miles South. I decided I had rather cancel the service.
Odd thing is they never asked for the phone back. When I phoned and asked what to do with it, I was told to just take it to a recycling center. I decided to just keep it tho I guess it is of no use.
I use Boost mobile, but still get spotty reception out here west of Ocala, FL. We live in a very rural area with only AT&T/Bellsouth as our phone/internet provider (no cable). We have their maximum DSL, 6.0 Extreme. A whole, whopping (up to) 6 meg DL and an incredible half meg upload speed!! Perfect for the average family with 3 PC’s, a laptop and a gaming console all trying to grab a slice of bandwidth! (/sarc). Others only a few miles away have a different ISP and get twice the BW at very little cost increase (about $5/month).
Century Link operates both rural and non-rural carriers. If you used to be Qwest, most likely the new fund might help you.
The article’s point is not that a few people won’t get some better service, it’s just that the vast majority of them do not need government handouts. Middle class entitlements and other programs are wrong.
Empire is a rural telecom, which explains why you get better service. The FCC will subsidize any and all expenditures by these companies, even when unnecessary. Rural customers actually get better service and pricing than non-rural customers.
Mine has changed names about a dozen times. I do think it was Centel before the last name change.
ya mean the federal govt actually did something for me for once??? guess i won't hold me breath till that happens again...
Century Link operates rural and non-rural carriers. Yours is probably rural, so the new internet program does not affect you.
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