The Universal Service Fund is a rather mysterious thing, its only visible effect for most people being the 10% or so tax on their phone bills that funds it. The idea behind the fund is that it's supposed to subsidize phone service in rural areas or to people who couldn't otherwise afford it, but unsurprisingly, taxpayers don't look to be getting much value for the $7 billion they pay into the fund each year. A new study says that the government is paying up to $13,345 per telephone line for subsidized USF service -- meaning it would be far cheaper to simply buy people cell phones to use and pay for the service. The study further underlines what others have said about the USF: it encourages inefficiency, acts as a barrier to competition and, ultimately, harms those it's supposed to help by stifling newer, better technologies that can provide better service, much more cheaply.
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