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CAGW Commends Decision on Cap of High-Cost Fund for USF

Business Wire, May 2, 2008

Decision is effective measure to create more sustainable long-term fund to support greater access

WASHINGTON -- Citizens Against Government Waste (CAGW) today commended the Federal Communication Commission (FCC) for its decision on reform of the Universal Service Fund (USF) and applauded the agency's efforts to cap the out-of-control subsidies that consumers are financing.

"The decision announced today by the FCC moves toward a USF policy that will more efficiently provide access to underserved areas and save taxpayers money," said CAGW President Tom Schatz.

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The USF was originally intended to provide financial incentives to companies to increase phone service to rural and urban areas, but has seen those subsidies skyrocket in recent years. Studies have shown that companies that are subsidized provide no more service than those firms that are unsubsidized.

According to Reuters, "In recent years, the cost of the rural subsidy program has ballooned, boosting the surcharge rate to 11 percent, up from about 5.5 percent in 2000. The subsidies are increasing at a rate of roughly $150 million per year and could reach as high as $1.4 billion by 2009 if left unchecked."

"It is time to put this subsidy in check while still serving the needs of rural America," concluded Schatz.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

Business Services Industry

CAGW Commends Decision on Cap of High-Cost Fund for USF

Business Wire, May 2, 2008

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