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> We" (the government) didn't build it or pay for it. This is not and has not ever been true. Here [1] is an open auction with ~$2 billion in federal aid atta

> We" (the government) didn't build it or pay for it. This is not and has not ever been true. Here [1] is an open auction with ~$2 billion in federal aid attached - "a total of $1.98 billion for 10 years." This was last updated just over a week ago. I would dig further back for other subsidies, but it is not necessary. Through tax breaks and subsidies we (the government, tax payers, etc) have certainly aided infrastructure build out for telecom cos. [1] https://www.fcc.gov/caf2-auction https://www.fcc.gov/caf2-auction

rayiner 9y ago
The Connect America Fund is funded through a special tax on telcos: https://en.wikipedia.org/wiki/Universal_Service_Fund#Connect_America_Fund https://en.wikipedia.org/wiki/Universal_Service_Fund#Connect.... It's likes taxing cell phone companies to provide free phones for low-income people. Yes, some cell phone companies will end up getting "subsidies" but companies like AT&T (or Apple) would be net payors. And whether or not you call that a "subsidy" in rural areas, everywhere outside of rural areas it's the opposite of "subsidized." The taxes that pay for CAF make service in urban areas more expensive, thus decreasing demand and revenue. Municipalities also treat telecom service as a revenue source (a tax of 5% of gross revenue is typical). And there's all the extra obligations, like build-out requirements. There was some tax dollar funded subsidies in the ARRA, but it's a vanishingly small fraction of the trillion+ dollars invested in telecom infrastructure in the last few decades.
- Rebelgecko 9y ago
  > The Connect America Fund is funded through a special tax on telcos Is this one of the taxes that they just throw straight onto my monthly bill?
  - rayiner 9y ago
    One, companies can’t just pass on taxes like that. If they add a surcharge, that increases the price of the product, which reduces demand. You can’t pull yourself up by your bootstraps: you can’t increase your revenue by having the government add a tax to your product and kick it back to you, maybe unless you sell heroin or something. (But then you could just raise the price without the pretense and people would pay it.) Two, AT&T is paying the tax, but the government is mostly kicking the subsidies back to small rural telcos and coops. Telcos with more urban footprints, like AT&T, subsidize telcos in high cost rural areas. So calling CAF a subsidy to AT&T really makes no sense. It’s like saying Apple would love the government to slap a 5% tax on iPhones and kick the money to providers of low cost phones. Even if Apple could increase prices to compensate, and get some of those subsidies for the iPhone SE, it’d still be worse off than without the “subsidy.”
- jessaustin 9y ago
  Oh please. Incumbents love USF, just like they love all other goofy surcharges. That's whey they invented them in the first place. Sure, their customers pay more than those of their competitors, but through their complete domination of PUCs and FCC they get to decide exactly how the programs are administered. As if they actually needed more barriers to entry for any potential competition, the rules of these programs are continually adjusted to fit exactly what incumbents are doing anyway, while imposing ruinous costs on competitors.
  - rayiner 9y ago
    Pure fantasy. AT&T got $1.3 billion from the USF in 2007-10. https://www.fiercetelecom.com/telecom/at-t-verizon-are-rolling-universal-service-fund-dough https://www.fiercetelecom.com/telecom/at-t-verizon-are-rolli.... About $450 million per year. The FCC doesn’t disclose USF contributions by company, but you can guess: https://apps.fcc.gov/edocs_public/attachmatch/DOC-303886A3.pdf https://apps.fcc.gov/edocs_public/attachmatch/DOC-303886A3.p.... Total reported telecom revenue is about $300 billion per year during that period. AT&T averaged $120 billion per year in revenue during that period (about 40% of the industry). (This is probably an overestimate because AT&T’s revenue includes non-telecom revenue.) During that period, USF revenues were $7-8 billion per year. 40% of that is like $3 billion. Even if I’m wrong about AT&T’s revenue share by a factor of 4 AT&T still pays in much more than it gets out.

rayiner 9y ago

The Connect America Fund is funded through a special tax on telcos: https://en.wikipedia.org/wiki/Universal_Service_Fund#Connect_America_Fund https://en.wikipedia.org/wiki/Universal_Service_Fund#Connect.... It's likes taxing cell phone companies to provide free phones for low-income people. Yes, some cell phone companies will end up getting "subsidies" but companies like AT&T (or Apple) would be net payors. And whether or not you call that a "subsidy" in rural areas, everywhere outside of rural areas it's the opposite of "subsidized." The taxes that pay for CAF make service in urban areas more expensive, thus decreasing demand and revenue. Municipalities also treat telecom service as a revenue source (a tax of 5% of gross revenue is typical). And there's all the extra obligations, like build-out requirements. There was some tax dollar funded subsidies in the ARRA, but it's a vanishingly small fraction of the trillion+ dollars invested in telecom infrastructure in the last few decades.

Rebelgecko 9y ago
> The Connect America Fund is funded through a special tax on telcos Is this one of the taxes that they just throw straight onto my monthly bill?
- rayiner 9y ago
  One, companies can’t just pass on taxes like that. If they add a surcharge, that increases the price of the product, which reduces demand. You can’t pull yourself up by your bootstraps: you can’t increase your revenue by having the government add a tax to your product and kick it back to you, maybe unless you sell heroin or something. (But then you could just raise the price without the pretense and people would pay it.) Two, AT&T is paying the tax, but the government is mostly kicking the subsidies back to small rural telcos and coops. Telcos with more urban footprints, like AT&T, subsidize telcos in high cost rural areas. So calling CAF a subsidy to AT&T really makes no sense. It’s like saying Apple would love the government to slap a 5% tax on iPhones and kick the money to providers of low cost phones. Even if Apple could increase prices to compensate, and get some of those subsidies for the iPhone SE, it’d still be worse off than without the “subsidy.”
jessaustin 9y ago
Oh please. Incumbents love USF, just like they love all other goofy surcharges. That's whey they invented them in the first place. Sure, their customers pay more than those of their competitors, but through their complete domination of PUCs and FCC they get to decide exactly how the programs are administered. As if they actually needed more barriers to entry for any potential competition, the rules of these programs are continually adjusted to fit exactly what incumbents are doing anyway, while imposing ruinous costs on competitors.
- rayiner 9y ago
  Pure fantasy. AT&T got $1.3 billion from the USF in 2007-10. https://www.fiercetelecom.com/telecom/at-t-verizon-are-rolling-universal-service-fund-dough https://www.fiercetelecom.com/telecom/at-t-verizon-are-rolli.... About $450 million per year. The FCC doesn’t disclose USF contributions by company, but you can guess: https://apps.fcc.gov/edocs_public/attachmatch/DOC-303886A3.pdf https://apps.fcc.gov/edocs_public/attachmatch/DOC-303886A3.p.... Total reported telecom revenue is about $300 billion per year during that period. AT&T averaged $120 billion per year in revenue during that period (about 40% of the industry). (This is probably an overestimate because AT&T’s revenue includes non-telecom revenue.) During that period, USF revenues were $7-8 billion per year. 40% of that is like $3 billion. Even if I’m wrong about AT&T’s revenue share by a factor of 4 AT&T still pays in much more than it gets out.