Go on a long car ride and look at the phone lines that seem to stretch forever. You’re traveling seventy miles per hour, but each pole seems to be one step ahead of you. You become convinced they occupy every region of the earth. But according to the Federal Communications Commission, there are still small portions of the United States that don’t have access to “plain old telephone service” (POTS). To this end, the FCC has allocated $4 billion dollars a year to ensure that every area in the United States has access to telephone service.
According to a study by the Alliance for Generational Equity, the FCC is purportedly wasting hundreds of millions of dollars of its Universal Service Fund (USF) on these costly telephone subsidies each year. The study held that in some rich areas of the country, subsidies of up to $23,000 per line per year were being levied. The FCC has responded to these objections by claiming that the study is outdated, because it has reformed the fund so that each phone line subsidy is capped at $3000.
Today, 99.9% of U.S. households have access to mobile voice service, and 99.5% have access to wireless broadband. The authors of the AGE study conclude that the USF assumes that plain old telephone service is "(a) a necessity, and (b) often unavailable, and thus (c) worthy of generous public subsidy has been swept aside by simple market evolution." The first assumption suggests that plain old telephone service is no longer a necessary component of America's telecommunications infrastructure, considering VoIP and mobile alternatives. The second assumption calls into question the entire premise of the USF, and is buttressed by the accompanying statistics that underline the proliferation of alternative phone channels. The final assumptions considers the market pressures that have forced mobile providers to beat the FCC to providing phone service to underrepresented areas.
Ultimately, the study concludes that "economic welfare would increase if the entire $9 billion per year USF program were eliminated." The study raises many interesting questions about the future of telephony in the United States, and some of IP telephony's benefits come into sharp focus when paired alongside the costly landline services described in the study. One of the primary benefits of using an IP PBX is that it lacks the cumbersome and expensive physical hardware that has apparently resulted in billions of dollars of waste at the federal level.
Sometimes it’s hard to envision the magnitude of wasted money when we consider a single business; tens of thousands of dollars are important to any business’s bottom line, but when we see the aggregate accumulation of this wasteful spending, it’s staggering. Now that 99.5% of U.S. households have access to wireless broadband, utilizing IP telephony seems like a more reasonable alternative to traditional telephone lines, and perhaps the government will take note of these cheaper forms of communication.