By Jeremy Morris, Associate Editor, USDR.
The widely publicized flap over the less than $120 a year the federal government permits each year per person for subsidized Lifeline wireless phone service (the so-called “Obama phone”) is obscuring a much bigger problem in the Federal Communication Commission’s Universal Service Fund: massive waste and abuse of up to $24,000 per phone line per year for subsidies intended for underserved rural areas, but actually going into such wealthy enclaves as the Hawaiian island of Maui, the ski resort area of Breckenridge, CO., and gated golf course communities outside of Scottsdale, AZ.
That’s according to a new study by George Mason University Professor Thomas Hazlett, a former chief economist at the FCC, and Scott J. Wallsten, vice president for research and senior fellow, Technology Policy Institute and senior fellow, Georgetown University Center for Business and Public Policy. The Hazlett-Wallsten report will be released at 1:30 p.m. EDT Wednesday (July 10, 2013) by the independent and nonprofit Alliance for Generational Equality (AGE).
Though now overshadowed by media attention to the so-called “Obama phone” portion of the USF aimed at qualified low-income Americans, the “High Cost” Fund serving remote areas is actually considerably larger and has a long history of well-documented waste and abuse.
The Hazlett-Wallsten report will show that the FCC has frittered away more than $60 billion since 1998 for “High Cost” phone subsidies to extend service to, at most, one-half of one percent of U.S. households – at an astronomical cost of over $100,000 per home. According to the new report, 10 small telephone carriers in Alaska, Arizona, Colorado, Hawaii, Michigan, Oklahoma,Texas, and Washington were paid sky-high subsidies of more than $10,000 per line in a single year, including one company inWashington State that raked in nearly $24,000 per line in federal subsidies for 16 telephone lines in and around a resort lake town.