IPUrbia

Conveniently soon after spinning off virtually all of their rural telco operations, Verizon is petitioning Congress and the FCC for an overhaul to the Universal Service Fund (USF) which levies taxes to pay subsidies to rural carriers.

Verizon is arguing that the advent of wireless carriers has created a situation where multiple wireless carriers and the rural ILEC are often competing for the same (small) rural market, and the drain on USF funds has lead to a 142% increase in the program over the past 8 years, to a total of $4.1 billion.

While I think that the USF does need to be overhauled, Verizon is definitely trying to leverage the political clout of USF for their own purposes. The facts quoted are, at best, exaggerated. While there are rural areas with “three, four, or even wireless carriers receiving universal funding”, many rural markets have no wireless carriers drawing on USF funding and are still greatly under served. While it is true that the cost of basic telecommunications service has gone down, the aggregate spend of most telecommunications providers has gone up due to new services, chiefly Internet access. Given the Administrations agenda of making broadband as widely available as possible, this argument is especially disingenuous.

The implementational details are mixed:

Tauke said Verizon supports reforms of how funds for the high-cost program are collected and dispersed. The former would be based on telephone numbers, so the fund is supported by all voice customers; the latter would include a “reverse auction,” or competitive bidding mechanism, through which the carrier with the lowest bid would gain the support.

The reverse auction does potentially have some merit, although the need for it is greatly exaggerated. The collection based on telephone numbers, however, shows Verizon’s intent and is just pure regulatory nonsense aimed squarely at undermining voip services who have generally have a much higher DID (telephone number) to subscriber ratio. In the end, Verizon is looking again for Congress and the FCC to fight their competitors for them. The best critique of their strategy was given by their spokesperson regarding the USF but applies much more appropriately to Verizon’s own political wranglings:

“In fact, these programs are often an impediment to the kind of transformation consumers and the marketplace require.”

Indeed they are.