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FCC Rural Phone Subsidies Reach As High As $3,000 Per Line
jfruh writes "The FCC's Universal Service Fund has a noble goal: using a small fee on all U.S. landlines to subsidize universal phone coverage throughout the country. But a recent report reveals that this early 20th centuryy program's design is wildly at odds with 21st century realities: Its main effect now is that poor people living in urban areas are subsidizing rich people living in the country. The FCC says that it's already enacted reforms to combat some of the worst abuses in the report — like subsidies to rural areas that add up to $24,000 per line — but even the $3,000 per line cap now in place seems absurd."
That's not unique to phones. It also applies to highways, minor airports, housing tax incentives, and a number of other "American Dream" elements that really have nothing to do with having a successful society.
It depends on what they are including in that cost and how they are amortizing it. For instance setting up a local relay station for a small town including buying land, building the structure, outfitting it with equipment, etc, can represent a significant one time cost.
"That's not unique to phones. It also applies to highways, minor airports, housing tax incentives, and a number of other "American Dream" elements that really have nothing to do with having a successful society."
So it's not socialism? Damn!
It's rural areas being a drain on the nation's resources. They're anti-tax but demand huge government spending, just for them.
I grew up in a fairly rural area. It's sort of like an onion.
At the very center of the cities are poor people, there's middle class urban dwellers surrounding them with a few high-wealth neighborhoods. Around them are poor people that live on the edge of the city. Around them are the middle-class suburbs. Further out are some higher wealth suburbs. Once you get past the suburbs, more poor people. Get out to the small villages and there's some middle and lower-middle class. Rural areas near these small villages have a healthy mix of wealthy and middle class. But you get way out there in bumfuck and it's all dirt poor people. Of course, there's exceptions at every level. There's going to be eccentric millionaires who want to live way out in the boonies, but they're largely outnumbered by the people living in shacks (and yes, America still has plenty of people living in shacks in the woods).
Its main effect now is that poor people living in urban areas are subsidizing rich people living in the country.
Uhhh, I grew up way out in farm country in Ohio. I have lived in five different major metro areas. The people in the country are not rich. What kind of bullshit psy-ops lobby-funded advertising is this, and why is it being parroted blindly here? Let's just do a quick bullshit check. One web search, second hit, talks about a study done in Oregon:
In 2011, the (per capita personal income) in non-metro counties was $31,383 and in the metro counties it was $39,267; a difference of $7,884 (25 percent). The difference was due primarily to the difference in earnings from work.
Obviously that's just one data point, feel free to do more comprehensive research yourself. I'll tell you from personal experience; people in the country make less money on average than people in the city. This report is some assholes like the Koch brothers, a lobby called "Alliance for Generational Equity," trying to create infighting so they can drown the government in the bathtub. Let's not start being their lickspittle mouthpieces, parroting their easily debunked lies.
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I really wish that the press releases of shadowy "think tanks" (and consulting firms, for that matter) were treated with a little less credulity and more scrutiny. This study was published by a group calling itself the "Alliance for Generational Equity". Who are these people and who do they represent? We don't know. I did some Googling to see if I could find out more about them, but didn't find much. No Wikipedia article, nothing on SourceWatch. Nothing about their funding sources appears to be public. How do we know this "think tank" isn't just another sockpuppet of the Koch Brothers?
I was able to find some information about Thomas Hazlett, one of the authors whose name is on the study. He's a professor at the GMU Law School, which is not an encouraging sign (that law school is a notorious den of right-wing crackpots). Hazlett is also against net neutrality. This man is not on your side; he's a shill for rich plutocrats. Listen to anything he has to say at your peril.
1. When having a phone became a 'right'
It became a right when having a phone was a necessary step in getting a job, something we consider fundamentally necessary to taking part in modern society.
2. Why people have to have phone that requires 90% or more of the country to pay for it because of where they choose to live
Cart before horse problem. Their families lived there, then phones became necessary.
3. Why I should pay more because someone wants to live in a rural area where they can't make any money and don't have phone service. And where storms can bring down phone lines causing thousands of dollars in repair costs for a phone they don't pay for.
The same reason you pay more so someone else doesn't get robbed or shot. Enlightened self interest isn't a complex idea.
4. Why they can't move
Why don't you move to where they are to lower the cost per person of the line? Oh now moving is a huge onus to place on someone?
5. Why, after all of the above, if they don't have skills, can't live off the land, can't get a job, can't move, and are poor, we don't relocate them someplace else since they must already be living on the government dole. When you don't make your own way and don't contribute to society, you don't get to decide the rules that govern how you receive free money and other things.
Because they actually earn more than they cost, as part of a complex interconnected society, and their location may be important to maintaining the support network for the country's agricultural base? Who knows? You're criticizing totally anonymous people we don't even remotely know individually, which turns out to be easy.
Land line is most certainly required in rural areas if for nothing else than emergency services. When you are 20 minutes to an hour away from a medical facility you don't want to run into a situation where you can't get a cell signal or the cell service is down. I would wager 95% of rural residents pay for a copper wire even if they don't use it so they have it in an emergency. At least all the ones I know do.
OK, you can keep your broadband. Us country folk will keep all the lumber, minerals, and produce.
Yeah yeah, and we'll keep all the money, finished goods, and medicine(or at least the intellectual backing thereof). Or... it could be we live in a complex interconnected society, and every discussion of fairness doesn't need to slide into "well our subculture is better than yours".
1. It's part of the national infrastructure, just like roads and electricity and the USPS (although that one is becoming a bit outdated). The more widespread communication is, the better the country as a whole becomes.
2. This is the same argument used against... everything. The country works because the masses subsidizes the niches. I'm sure you use plenty of things that are subsidized by people that don't use them. Got kids in a public school? Landowners subsidize that even if they don't have kids. Drive on a public road? People who don't own cars subsidize that. The list goes on.
3. People can't make money in rural areas? Apparently you have no concept of telecommuting, farming, logging, etc. As for the rest of 3, refer to 1.
4. Why don't you move? You're likely not living in the most efficient place possible either. Also, moving can be damned expensive. Personally, I live where I do because I enjoy the area
5. If you actually read the summary, you'd realize they're talking about rich people in the country being subsidized by poor people in the city. Maybe you should move to somewhere with better literacy rates, it might rub off on you. But hey, it explains your signature.
Certainly not to the same extent, no.
According to the Institute on Taxation and Economic Policy, a Washington, D.C.-based research organization, Washington families living at the federal poverty level pay 17 percent of their incomes in state and local taxes, whereas the highest-income families pay 3 percent.
Anybody paying for phone service pays for this subsidy via the USF. http://en.wikipedia.org/wiki/Universal_Service_Fund
It's also worth noting that because of the way that the poverty level is calculated, people that are in urban areas don't qualify when they would be pretty well off in more rural areas, if they were making the same amount of money. Which makes subsidies to the poor at the federal level disproportionately favor the freeloading states over the states that actually contribute to the pot of money being used to provide the subsidies.
In the early 90s, an older couple in Eastern Kentucky decided to break down and pay for a landline telephone. GTE offered to drag them a line for $5000 or so (I forget the exact amount). Outraged, they appealed to the Kentucky Service Commission. The Commission discovered that GTE was going to have to pay almost $25k to get the line to them, and was already eating much more of the cost than could be demanded under the law. The couple chose not to get their phone line.
A friend of my father ran a lucrative contracting business that bid on GTE contracts. He kept mule drivers under contract, because they were often the only way to drag poles around certain parts of the Appalachians.
These days, this exact same couple would be able to pay $40 to $80 a month to get a cell phone. The tower will be a couple of hills over, with a microwave feed back to the home network and a small diesel generator on-site. For the cost of one phone line, an entire area can get phone and internet service.
The same economics are working in India and Africa. Excluding possibly power, there will be significant portions of the world that will never, ever be wired.
Not true.
The rich do not become rich by spending. Sure it probably is true that a larger portion of expenditures are subject to sales tax for the wealthy. But, ultimately, a smaller portion of their income is spent rather than invested.
And no, I don't give a rat's ass about them investing their money. Especially given that there's no guarantee that the investments will benefit me or other Americans. And their tax rates are lower than they are for people that are less well off.
There's a difference between an unfair burden to subsidize the wealthy(which doesn't describe all of the use of this program) and considering those living in a region to be worthless. I don't really think that anyone was leveling that accusation. I grew up rural, became urban, and that's life. At least we can all agree that suburbs are worthless, right?
It also works the other way around: rural folks subsidizing ridiculously overpriced housing, education, public safety, and other services that the "urban poor" use. Many of the "urban poor" are likely poor because they are "urban" in the first place. And what about the rural poor who really do need these subsidies?
That's the whole problem with all these "great society" programs: nobody really knows what the money should be spent on. Once you go down this road, you lose yourself in ever more complex and wasteful schemes of economic central planning, rent seeking, and outright corruption.
As a % of income, rich people pay maybe 1% sales tax, while poor people pay 5-10% sales tax or more.
% of income is a worthless metric. If your income is 95% spent on subsistence, even a 2% tax is onerous. If your income is spent 5% on subsistence and 95% on savings and non-essential expenses, even a 20% tax may not be onerous (except emotionally).
I hope no one needs help in figuring out which of the above are rich and which are poor.
But... reading the paper I smelled a preconceived agenda. The paper was sponsored by Americans for Generational Equity an ostensibly bipartisan group concerned with the fact that the "Pig in the Python" is getting closer to the snake's cloaca. And the group worries that said meal is (or soon will) be providing less nourishment than it takes to digest it. Read: The Boomers are greying and will suck the life out of the country before they become python excrement. Think of the children.
A look at the group's composition reveals a majority of Republican notables with a sprinkle of moderate Democrats. The FCC is a bipartisan body and fairly judicious by nature IMHO. I have to wonder what is really going on here. There are hundreds of more fruitful places to look fo WF&A. As for real waste? Check out the US military.
"No fear. No envy. No meanness." Liam Clancy
I work for a telco. We're required by law to provide phone service to everyone... period. In some counties we're required by law to keep 911 service working regardless of if they residents even want a phone, or even if the building is abandoned! We've got houses on top of mountains, we've got houses at the bottom of the grand canyon on Indian reservations that require microwave dishes to link the bottom of the canyon with the top. Or techs have to hitch rides on helicopters to service some of these people. The vast majority of whom are not rich at all. Rich people like to live in the countryside around cities or small towns, not in the Appalachians where these subsidies have the greatest affect.
Not that all the government subsidies are perfect. The most recent, the Rural Broadband initiative, is total pork. But the standard tax on lines that allows rural customers to get basic phone service? No, that's probably one of the most important programs in US history. If hadn't been enacted most of the country (geographically) would still be without service. If they were to drop it all together, rural customers would get cutoff almost immediately. We're talking entire towns. And before you start talking about cellphones, how do you think all the cellphone providers get their data links for those towers? The phone companies.
If they can't figure out how to make their lifestyle choices cost effective, then perhaps they need to learn how to be self reliant.
Farming is not cost effective. The self reliant method would be for them to stop farming and move into the cities with you, where you can buy all your food from Mexico and China while American fields sit fallow. And then, in the next famine brought about by climate change, you and your family starve to death because America is no longer self reliant for food.
I don't like the idea of subsidizing rich people who want to live in the country, but the idea of subsidizing farmers so that American food products are cost effective (without the troublesome alternative, tariffs on imported foods) makes perfect sense, and part of that includes ways to let farmers collaborate and communicate. How else are they going to access farmersonly.com?
It doesn't hurt to be nice.
And the poor pay 0 federal tax, or even get a few grand back, while the "rich" (everyone who makes more than you) pay 10-40% of their income. So?
Gamingmuseum.com: Give your 3D accelerator a rest.
You know, I can't take responsibility for people who are foolish enough to play the lottery with their last dollar. That's not a tax, unless you want to consider it a tax on stupidity. Stop being stupid, and the tax is no longer levied. The PA lottery sends proceeds to programs for seniors, so if you proposed to eliminate it you'd be accused of ageism anyway. Government is the problem.
Guess who keeps raising the taxes on alcohol and tobacco? What was the first tax Obama raised when he came into office? Government is the problem.
Claiming that renters (there are renters outside the city, BTW) are paying property tax is also as dumb as claiming that when I take out a loan or use a credit card, I'm paying the bank's taxes. Again, if property taxes are too high and forcing up rents, guess whose fault that is again?
There is a cap on the SS tax because there's a cap on benefits. But I don't expect the Slashdot leftist to believe in fairness as much as the "fair share".
Gamingmuseum.com: Give your 3D accelerator a rest.
It's not considered evil. It's considered immune to a sales tax, or any other form of consumption tax.
"Capital gains" are taxed differently than "income". This leads to a situation where our tax policy ends up being quite regressive, in that the wealthy are paying lower tax rates than the poor. If this is truly what we want as a society, we should campaign to have the "income" tax brackets reflect this. However, I don't think you'd have much popular support for a policy that takes the tax brackets and flips them around so that the rate goes down as income goes up. That means that our tax policy is not only regressive, but it's also sufficiently misleading to have won the support of the electorate despite being against their own interests.
I'm not sure where you got the idea that investments are "evil". GP was merely stating that money that is invested is not spent, and therefore is not impacted by a sales tax. This is only "evil" if you believe that it is a moral imperative to pay sales tax. Reading comprehension FTW.
Chuuch. Preach. Tabernacle.
It's all part of the current zeitgeist that seeks to portray rural Americans as some sort of evil alien life form, totally unrelated to us good people who live in cities and ride bikes on the bike trails. Who cares if the stereotypes are accurate? That's not the point.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
Start doing studies. It is simply not that expensive to run and maintain cable, not even in rural areas.
Where I live (semi-rural outskirts of a major metro) the labor to string cable costs $1/foot and burying cable costs $8/foot. (source is a comcast field engineer) My nearest neighbor lives 600 feet away and the length of the line between my house and then next one is about 1200 linear feet due to how the line is routed. For someone on a farm this could easily be 3000+ linear feet. So there is your $3000 right there without even getting into the cost of the wire itself, the switchgear, signal boosters, customer service, engineering and the rest.
Now I have no idea if the subsidies provided are appropriate to the actual cost but it is genuinely expensive to run cable to rural locations.
And who's paying them ~$100,000 a year?
http://www.guidestar.org/organizations/26-2171390/alliance-generational-equity.aspx
Their web site www.truslseniors.org is down
Another question is, who the fuck is C. McClain Haddow, the guy who's running Alliance for Generational Equity?
http://reporting.sunlightfoundation.com/lobbying/client/alliance-for-generational-equity
Mother Jones has a hint.
The Artful Codger
Trashing the AARP with Grandma Green.
By Michael Scherer
July/August 2005 Issue
http://www.motherjones.com/politics/2005/07/artful-codger
The real pedigree of the group Green represents is hidden under layers of PR and politics. The Seniors Coalition was cofounded in 1989 by conservative activist Dan C. Alexander Jr., three years after he was sent to prison for arranging construction kickbacks as an Alabama school-committee member. Today, its top outside lobbyist is C. McClain Haddow, a former Health and Human Services official who spent time in prison with Alexander for failing to file a timely ethics waiver when he gave his wife a government contract. Haddow has also lobbied for generic-drugs manufacturer Mylan Pharmaceuticals.
The organization’s Washington activities regularly blur the needs of seniors with the agendas of corporate donors. After it took money from Microsoft in 1999, the coalition lobbied on antitrust litigation, and after it took money from Lottery.com in 2000, it lobbied on a bill that would restrict Internet gambling. Money also poured in from the American Petroleum Institute and the American Public Power Association—just as the coalition spoke out against the Kyoto Protocol and lower gas-mileage standards.
The Seniors Coalition is especially tied to the drug industry. PHRMA, the pharmaceutical industry’s trade group, gave the organization $2.2 million between 1999 and 2000 (the only two years for which full financial disclosure is available). Other drug industry sources funneled the group an additional $300,000 during that time. But Tom Moore, the coalition’s chief operating officer, writes in an email that only 22 percent of his organization’s funding comes from industry, and that the group “retains its complete independence in developing [its] legislative agenda.”
http://en.wikipedia.org/wiki/Astroturfing
There is some interest group behind this that is going to save a lot of money if they eliminated the Universal Service Fund (which has its pros and cons), and this outfit is crying crocodile tears over the urban poor. Or generational equity. I'd take them more seriously if they were up front with their real agenda.
Claiming that renters (there are renters outside the city, BTW) are paying property tax is also as dumb as claiming that when I take out a loan or use a credit card,
You got this one wrong. You have to examine the incidence of taxation. The property owner has to pay taxes but he pays this by passing the cost on to the people renting the property. The actual tax incidence is on the renters, not the landlord. The amount of the tax is irrelevant in this case in determining who is the one ultimately burdened with the tax even if the amount of the tax is just one penny.
For the same reason this is why gasoline taxes are fundamentally a regressive tax (hurts the poor more than the rich). The oil companies do not absorb the cost, they merely pass it along to their customers, more of whom are poor than are wealthy.
There is a cap on the SS tax because there's a cap on benefits.
That would be a more credible argument if they amount paid in equaled the amount paid out in benefits to each beneficiary. Most beneficiaries receive more in payments than they pay to social security. And let's be frank, there is a cap on SS tax because the wealthy are a powerful lobby and have undue influence when it comes to financial legislation. Your argument is just some sugar to help get rid of the icky taste of reality.
Especially since they get 83% of their first 20,000 too.
The money is taxed much more than twice.
For a company's worth to increase, someone must've given them money. They must've earned that money to begin with. The money was taxed then as well. The money is taxed not twice, not three times, but continuously.
And that's not a problem. The problem is when a person (corporate or corporeal) is taxed twice.
The corporation is taxed on net income. The corporation is taxed once.
Stockholders are taxed for any dividend they receive from the corporation. They are taxed once as well.
If stockholders choose to sell stock (sell more than they buy), then any gains are taxed there. Once.
Going by your logic, the money is being taxed infinitely many times. First at the corporate rate, then at the capital gains rate, then at the sales tax rate (when investors spend it), then again at the corporate rate (when corporations make profits), forever, as long as it keeps circulating. While this is true, it's far from insightful. Nobody cares when "money" is taxed, they only care when they themselves are taxed.
Chuuch. Preach. Tabernacle.
The guys producing the food win. As much as ag subsidies piss me off, a reliable food supply is the first order of business for any society.
Socialism: a lie told by totalitarians and believed by fools.