Assessing the State of the Universal Service Fund

Abstract

The basic tenet of universal service — that the government should assist those who struggle to access the network — has long been a cornerstone of American telecommunications policy. This mission takes on greater significance in the digital age, when internet access is important for not just communication but also employment, commerce, education, and countless other activities.

Unfortunately, while the Universal Service Fund’s goals are sound, there is significant room for improvement regarding modernizing these programs for the digital age. This is particularly true of Lifeline, which has been repeatedly criticized as ineffective, incomplete, and unnecessarily paternalistic. The committee should also consider re-evaluating E-Rate in light of the mixed evidence of its effectiveness. Through trial and error, the High Cost Fund has made a more successful transition to the broadband era and has yielded important lessons that the program should retain going forward.

Keywords: Universal Service Fund, Lifeline, broadband

JEL Classification: K10, K20, K23