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COMMUNET Home

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COMMUNET  July 1998, Week 1

COMMUNET July 1998, Week 1

Subject:

"true to form"

From:

Curt Priest <[log in to unmask]>

Reply-To:

Community and Civic Network discussion list <[log in to unmask]>

Date:

Tue, 7 Jul 1998 10:30:49 EDT

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (79 lines)

The Cato Institute has a strong "right wing" reputation
which this announcement only reinforces.

Regards,

Curtiss

Date:    Mon, 6 Jul 1998 09:28:11 -0400
From:    "Tom W. Bell" <[log in to unmask]>
Subject: Cato releases Universal Service study

The Cato Institute has released a new study by Lawrence Gasman entitled,
"Universal Service: The New Telecommunications Entitlements and Taxes."
You
can find a copy at <http://www.cato.org/pubs/pas/pa-310es.html>.

"Universal service regulation poses a threat to the stated goals of the
supporters of universal service, namely the development of an advanced
communications infrastructure for the United States," according to author
Lawrence Gasman.  He notes that legislators debating universal service
provisions of the Telecommunications Act of 1996 "barely addressed
whether
there is a real need for any universal service subsidies.  There is not."

In "Universal Service: The New Telecommunications Entitlements and
Taxes,"
Gasman examines the social, economic and political justifications for the
program and concludes that "universal service subsidies are not justified
by
economics, by any reasonable principle of justice, or by common sense."

The 1996 act gave extraordinary power to the FCC raise billions of
dollars
for universal service through surcharges imposed on everyone's phone
bill.
Beneficiaries include schools, people living in rural areas, and
low-income
users.  But Gasman points out that "the leap from the importance of
telecommunications to the need for subsidies to prevent the emergence of
information have-nots is not based on any evidence or logic."  Today,
93.9
percent of all U.S. residences have telephone services and for the
poorest
households the figure is 87.1 percent.

The 1996 act also targets aid at rural areas because they are high-cost
areas when it comes to installing communications infrastructure.  But
Gasman
asks, "why is anyone living in a rural area entitled to phone service at
others' expense?"  Rural telephone subsidies "are not even remotely
targeted
to low income rural residents, let alone the truly needy. . .Housing
usually
costs less in rural areas; why should the renters or purchasers of
expensive
urban housing subsidize phone service for those who enjoy the low costs
of
rural living?"  In practice, Gasman argues, the subsidies will discourage
the development of innovative technologies that provide telecom services
in
rural areas at lower cost.

The policy question is much the same when considering subsidies to
schools.
"Why should technology purchases get special subsidies when school books
and
other educational tools generally do not?  Yet textbooks are of
unquestioned
usefulness in schools, whereas the educational impact of the Internet is
questionable."

* * *

Tom W. Bell
-----------
[log in to unmask]
http://members.aol.com/tomwbell/Homepage.html
Director, Telecommunications and Technology Studies, Cato Institute

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