The regulatorium in action:

A decade-old telephone tax intended to help bring affordable service to rural areas has instead turned into something quite different: a bottomless and politically protected well of cash for cell phone companies that do big business in rural America.

Over the past four years, there’s been nearly a tenfold increase in government subsidies paid to a handful of so-called “competitive” providers — cellular phone companies paid by the fund to offer service in rural areas where an existing carrier already receives a subsidy.

The Universal Service Fund has collected $44 billion over its 10-year lifetime from a surcharge on the phone bills of nearly every American.

Regulators and lawmakers have long viewed the fund as inherently flawed. Even a member of the federalstate board that runs the program calls it “bizarre.” But efforts to change it have been derailed repeatedly by companies that benefit from the largess, and by supporters in Congress who represent sparsely populated states.

— Federal fee on phones is windfall for cell firms, By John Dunbar, ASSOCIATED PRESS, Updated: 07/29/07 6:37 AM

The article goes on to say wireless telephone companies benefit the most because they can connect rural customers at much less cost than landline telcos can. But that’s not all. Continue reading →