Rural carriers fighting for universal service fund

We’ve talked about the universal service fund (USF) on Prepaid Reviews a few times in the past. This is mainly because a few of our pay as you go cell phone providers have taken advantage of it. In April Tracfone announced that it would use the USF in 10 states. Before that, US Cellular used the fund to move into West Virginia. Today we’re hearing, via RCR News, that rural wireless carriers have filed with the U.S. Court of Appeals to stay the recently-installed cap on the USF.

The cap was imposed by the FCC at the behest of the nation’s larger carriers. They and their subscribers are the ones who bankroll the USF, and they felt that many companies were making waste with the fund. So, instead of attacking the problem at its root, they put a band-aid on it by implementing a cap.

Clearly, no one wants waste. But does capping a useful fund really accomplish the ultimate goal of the program? It comes down to a market principle: It costs more to build out wireless networks in rural areas. Large corporations deem it unworthy of building, since it wouldn’t generate ample profit. So these areas are neglected. The USF aims to subsidize the networks in rural areas, so residents can enjoy the wireless coverage the rest of the country has.

It looks like the rural carriers are asking the FCC to lift the cap by September 22. I doubt that happens. So it looks like it’s off to court we go.

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