Heartland: Urban Poor Among Those Subsidizing Phones for Nation’s Wealthiest Locales

Researchers are skeptical of Federal Communications Commission reforms that attempt to end waste in a federal phone subsidy program.

Before the 2011 reforms, federal subsidies provided up to nearly $24,000 per year per phone line in certain high-income areas including the island of Maui in Hawaii, Colorado resorts, and gated communities in Arizona. The subsidies have been going to approximately one-half of one percent of the nation’s households. Maximum subsidies per line are smaller now but still far more than the actual costs to provide phone service.

Phone service is available anywhere in the country, without subsidies, for $600 per line per year, said Thomas Hazlett, one of two authors of the study, "Unrepentant Policy Failure: Universal Service Subsidies in Voice and Broadband," published by the Alliance for Generational Equity, or AGE.

“It’s very hard to believe that people in these very wealthy communities would be without phone service if it were not for poor people in urban areas subsidizing them,” said study coauthor Scott Wallsten. Read more.

This article appeared in Budget and Tax News, published by the Heartland Institute, July 16, 2013.