"The Joint Board’s proposal is an Excellent First Step in Addressing the Costly Growth In High-Cost Subsidies," Writes Wallsten in Filing, States that FCC Could Help Consumers by Adopting Cap on Funding
WASHINGTON D.C. - June 21, 2007 - Scott Wallsten, Senior Fellow and Director of Communications Policy Studies at The Progress & Freedom Foundation (PFF) filed comments today with the FCC supporting a cap on the high-cost support funds that Competitive Eligible Telecommunications Carriers (CETC) receive. In the filing, Wallsten urges the Commission to recognize that resources are scarce and funds must be allocated carefully.
"Subsidies to CETC’s have increased from about $500,000 in 1999 to nearly $1 billion in 2006 and are expected to exceed $1.1 billion in 2007," said Wallsten. "This inexorable growth in expenditures paid by inefficient taxes on telecommunications services is increasingly costly to consumers and to the economy."
To deal with the issue, the Federal-State Joint Board on Universal Service has proposed an interim emergency cap on the amount of high-cost support that CETC’s may receive. A cap, Wallsten comments, is a necessary but not sufficient reform. True reform requires creating a system in which subsidies go only to areas that would not otherwise be served and in the amounts necessary to provide service.
Nevertheless, "while additional reforms are necessary," he wrote, "because taxes on telecommunications services are inefficient, any avoided growth in the program corresponds to higher economic welfare."
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.