One might assume that when the economy has been stuck in slow or slower for years that elected officials could at least easily agree to eliminate wasteful spending. Sadly, that assumption is wrong.
In 2001, the Rural Utility Service (RUS) Broadband Loan Program kicked off as a government means to encourage broadband build-out to rural areas where it was not yet available. However, rather than the money flowing to places where there was no broadband, it was often directed to places where private broadband providers were already operating. In other words, the federal government was providing the money to start a new operation to compete with the private sector.
Shocking? The US Department of Agriculture’s inspector general, which oversees the program, documented this wasteful and economically harmful history in not one but two different reports. Despite the reports, and testimony on Capitol Hill, to this day the program still allows for loans in places where even multiple competitors are providing service.
Compounding the issue is that some of these same rural carriers then take universal service funds, or USF (a tax on telecommunications companies, which is passed through to consumers to pay for universal service to all schools, libraries, etc.) So taxes collected from taxpayers to directly pay off loans given by the government specifically to fund government-selected competitors to private investment.
How does this end? A new piece of legislation, the so-called “Farm Bill,” is moving through Congress and would direct money only to places where at least 75 percent of households do not have broadband access, and the fewer households with access in that area, the higher up the priority list they go.
And to address the USF abuses the FCC has moved to reduce wasteful support to rural phone companies, but even then it handed them certain benefits not available to other service providers.
Sounds like a reasonable way forward—protections to curb government abuses in funding government-sponsored competition with the private sector.
Yet the rural telecommunication’s providers and their Capitol Hill protectors are seeking to postpone the FCC protections and may be looking to weaken consumer protections in the Farm Bill. They should remember that one thing is true on every farm—pigs get fat, but hogs get slaughtered.