Text 29295, 270 rader
Skriven 2007-07-22 14:40:00 av Jeff Binkley (1:226/600)
Ärende: Owl Goe tax
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I have long riled against this Owl Gore tax.  I say repeal it and make 
it go away.

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http://biz.yahoo.com/ap/070722/telephone_tax.html?.v=4

AP
Big Subsidies for Big Phone Companies
Sunday July 22, 1:20 pm ET 
By John Dunbar, Associated Press Writer  
AP IMPACT: Federal Program Enriches Cell Phone Companies That Operate in 
Rural Areas 


WASHINGTON (AP) -- A decade-old telephone tax intended to help bring 
affordable service to rural areas has instead turned into something 
quite different: a bottomless and politically protected well of cash for 
cell phone companies that do big business in rural America.
ADVERTISEMENT
  
 
 
Over the past four years, there has been nearly a tenfold increase in 
government-ordered subsidies paid to a few "competitive" providers -- 
cellular phone companies paid by the fund to offer service in rural 
areas where an existing carrier already receives a subsidy.

The Universal Service Fund has collected $44 billion over its 10-year 
lifetime from a surcharge on the phone bills of nearly every American.

Regulators and lawmakers have long viewed the fund as inherently flawed. 
Even a member of the federal-state board that runs the program calls it 
"bizarre." But efforts to change it have been derailed repeatedly by 
companies that benefit from the largesse and by supporters in Congress 
who represent sparsely populated states.

Now there are new calls for change, driven by the dramatic increase in 
money flowing to the cellular companies competing for rural business. 
Payments have gone from $131 million in 2003 to an expected $1.1 billion 
this year, according to an Associated Press analysis.

Increased demands by these carriers recently pushed the fee paid by 
telephone customers to the highest level in program history. The Federal 
Communications Commission will decide soon whether to cap payments while 
it considers options for long-term changes -- again.

The subsidy's roots

The Universal Service Fund was created by Congress in 1996 as part of an 
overhaul of the nation's communications laws designed to create 
competition.

Specifically, Congress ordered that consumers -- including those in 
"rural, insular and high-cost areas" -- have access to 
telecommunications and information services at rates comparable to those 
charged in urban areas. That was to be financed by a fee added to long-
distance bills. The charge may only be a few dollars per month, but it 
adds up fast.

In 2006, the fund collected $6.6 billion, money that flows to four 
programs. About $1.7 billion paid for schools and libraries to connect 
to the Internet; two smaller funds subsidized telephone service for the 
poor and rural health care facilities.

The largest chunk -- about $4.1 billion last year -- flows to the aptly 
named "high cost" program, the source of the current controversy. That 
money is paid directly to telephone companies that do business in mostly 
rural areas where the cost of delivering service is high.

In the early years of the fund, subsidies went almost exclusively to old-
fashioned wired phone companies -- large and small -- that had served 
rural areas for decades. To spur competition, Congress wanted to make 
subsidies available to other companies.

Initially, the lure of a handout wasn't enough to attract new entrants. 
But the dramatic growth of the cellular telephone industry changed all 
that.

Wireless providers discovered that the subsidy -- based on what the 
wired companies were getting per customer -- would cover their costs and 
then some.

A "no losers support system"

Critics say the cellular companies are enjoying a windfall because their 
networks are much cheaper to build and maintain than miles of wires and 
telephone poles. They say logic dictates the subsidy should be based on 
actual cost.

Making the system more expensive, companies are compensated on a per-
subscriber basis. Each time a cell phone company signs up a new 
customer, it collects a subsidy.

If the customer keeps his land line, the fund pays a subsidy to both 
carriers. If the customer opts to drop his land line and keep his 
cellular phone (the goal of competition), the per-subscriber subsidy for 
the land line carrier actually goes up, keeping the overall subsidy 
unchanged. In some high-cost areas, the subsidy can amount to several 
hundred dollars per customer per month.

Since the cellular competitor's rates are based on the incumbent's per-
customer subsidy, the cell company gets more money, too. And so does 
every other cellular competitor that does business in the area. In some 
places there are two, three or more.

"This is the essential irrationality of the system, says Billy Jack 
Gregg, a consumer advocate and member of the federal-state board that 
helps set fund policy. "It makes no sense to subsidize multiple carriers 
in a high-cost area."

Gregg has testified to Congress that the "bizarre" program amounts to a 
"no-losers support system" in which participants are paid "for all lines 
they serve in high-cost areas, no matter how duplicative or costly this 
additional support may be."

Mississippi tops the list

Mississippi's competitive cellular carriers received more than $314 
million from 2003 through the first four months of 2007, the most of any 
state, according to an AP analysis of more than 20,000 disbursement 
records.

Second was Puerto Rico, at $236 million, Kansas third at $139 million. 
At the bottom of the list, receiving no funding for competitive 
carriers, were South Carolina, Rhode Island, Ohio, Massachusetts, Idaho 
and Delaware.

The most highly compensated company, according to AP's analysis, was 
Little Rock, Ark.-based Alltel Communications Corp. Alltel collected at 
least $386 million over the study period for wireless services. Second 
was Western Wireless Corp., bought by Alltel in 2005, with $274 million.

Those two companies, combined with Midwest Wireless, also bought by 
Alltel, account for 30 percent of all funds paid to competitive carriers 
over the study period.

Of the $2.45 billion that has been paid to competitive carriers from 
2003 through April 2007, 75 percent of the cash went to 10 companies, 
according to AP's analysis.

Alltel, which recently announced the sale of the company, reported a 
$230 million profit in the first three months of 2007, a total boosted 
by the $65 million to $70 million in universal service funds the company 
says it receives each quarter.

"We are the largest wireless recipient of (universal service funding) 
because we are the largest rural carrier," company spokesman Andrew 
Moreau told the AP in an e-mailed response to questions.

Next on the list of recipients is AT&T Inc. with $239 million, followed 
by U.S. Cellular Corp. at $212 million and Mississippi's Cellular South 
Inc. with $156 million.

Problems are no surprise

The system's potential flaws have been well documented since it was 
created.

The federal-state board recommended in 1996 that the subsidy be limited 
to a single connection per household, but the FCC at first disagreed.

By November of 2002, however, the agency took notice of the growing 
problem and asked the joint board how to fix it. The board again 
recommended, in February 2004, a one-line-per-household solution. But 
before the FCC could act, a handful of senators from rural states used 
their budget power to block implementation.

A trade group that represents rural carriers singled out Sens. Byron 
Dorgan, D-N.D.; Conrad Burns, R-Mont., and Ted Stevens, R-Alaska 
(representing the 48th, 44th and 47th most-populous states, according to 
the Census Bureau) for playing instrumental roles in blocking the 
provision.

The maneuver occurred during a House-Senate conference committee hearing 
on Nov. 22, 2004. The same scenario played out a year later, with rural 
telephone company trade groups again singling out Dorgan and Stevens for 
their "extraordinary efforts" to block the FCC from enacting the 
changes.

Dorgan has received $15,000 from Western Wireless Corp.'s political 
action committee (now part of Alltel) making him the former rural 
cellular company's favorite senator at the time. The senator's 
leadership PAC picked up an additional $8,000.

Dorgan and Stevens say they oppose the primary line restriction because 
it would put rural businesses at a competitive disadvantage to their 
urban counterparts.

The core challenge for Congress is the law itself, which is vague 
regarding what specific services should be subsidized.

"What is it we're willing to pay for?" Dorgan asks. "That's why there 
needs to be some sort of resolution for what is the Universal Service 
Fund and what it should cover going forward."

Big contributions from a small company

In Mississippi, the top recipient of cash among cellular providers is 
Cellular South Inc., a 900-employee private company, whose executives 
have been prolific in their giving. Officers of the company and its 
corporate parent have dealt at least $142,550 in contributions to 
federal campaign committees, according to records.

Favorites include Mississippi Republican Rep. Charles E. "Chip" 
Pickering and Sen. Trent Lott. Pickering is a former member of Lott's 
staff and helped shape the 1996 telecommunications law, according to his 
congressional biography.

The company's executives also gave heavily to the successful 
gubernatorial campaign of Republican Haley Barbour in 2003. Barbour is a 
former lobbyist who worked on behalf of BellSouth Corp. (now part of 
AT&T) and the U.S. Telecom Association.

Sherry P. Stegall, senior vice president at Cellular South, noted in an 
e-mail to AP that the company's political activity "pales in comparison 
to larger carriers." She said Cellular South has received no windfall.

The company is required to "reinvest all support" from the fund and file 
quarterly reports with regulators. For every dollar the company receives 
from the fund, it has invested $1.20 in developing its networks, she 
said.

With the contribution percentage from consumers having recently reached 
an all-time high and costs continuing to spiral, the sustainability of 
the fund is in doubt, and pressure is on the FCC and Congress.

The FCC is considering a recommendation by the federal-state board to 
cap funds paid to competitive carriers. There is considerable opposition 
among members of Congress, including Stevens and Pickering, and rural 
wireless carriers.

"It would be a Band-Aid or stopgap that would prevent us from getting to 
the comprehensive reform," Pickering said in an interview. He supports 
funding for wireless carriers because, he says, they are the most 
efficient providers when it comes to serving rural areas.

The joint board is considering long-term change. But with so many vested 
interests involved, progress has been difficult. "They tend to checkmate 
each other," board member Gregg said. He likens the fund to "a machine 
that somebody's created but nobody can find the 'off' switch to."

AT&T, even though it collects huge subsidies for both its wired and 
wireless operations, supports a temporary cap and the creation of pilot 
programs to fund cellular and broadband services.

FCC Chairman Kevin Martin, a persistent critic of the universal service 
system, says the challenge is to keep everyone connected and move toward 
offering more advanced services like broadband. "But we've got to do 
that in an efficient way," he says.

Martin has been pushing a "reverse auction" approach that he says would 
accomplish that. Potential providers would bid against one another to 
offer a set of services, with the low bidder winning the subsidy. An 
auction would end the inefficient practice of subsidizing multiple 
carriers in a single rural area, he argues.

Alltel has indicated it would support a reverse-auction trial. The 
company would also support a separate fund for wireless services. 
Verizon Communications Inc. is a major proponent of the concept.

But Martin acknowledged the idea hasn't yet caught on among lawmakers. 
"I'm always optimistic," he said.


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