Actually, the USF fee that's assessed on every phone bill you pay (in the U.S.) was originally supposed to be used to connect schools, libraries and municipal b

Actually, the USF fee that's assessed on every phone bill you pay (in the U.S.) was originally supposed to be used to connect schools, libraries and municipal buildings both rural and urban areas with the understanding that once the fiber capacity was in place to service those institutions, the providers would supplement their income by connecting businesses and private residences. In the mid-to-late '90s, I was part of a team that built significant fiber-based distance learning systems in Kansas, Nebraska, Wisconsin, Texas and smaller installations in other states. The schools, a local fiber provider and our company cooperated to submit the grant proposal and the USF funds ended up offsetting enough of the equipment/infrastructure costs that the schools and SP could agree on a rate that the schools could afford. The last of our systems (that I was involved with) was installed in about 2000 but stopped the organization overseeing those services held applications for (from memory) about 18 months. I'm not aware of how the funds are distributed now (if at all) but I know for a while some of the schools we'd connected complained that they were no longer receiving their subsidies. I do know that the fee remained on my telephone bill. So the question is "why didn't the infrastructure installed using USF funds lead to lower prices for consumers?". I think the answer is that Internet pricing for home service in the U.S. is too lucrative - no guarantees on service (yes, you're quoted maximum through-puts but those can be affected by your neighbors) and relatively large bills. http://en.wikipedia.org/wiki/Universal_Service_Fund http://en.wikipedia.org/wiki/Universal_Service_Fund