The Price of Rural Living

by on November 1, 2004 · 6 comments

The universal service tax on long-distance calls is expected to increase. The Wall Street Journal reports that the Universal Service Administrative Corp. will ask regulators to increase from 8.9% to 12.5% the percentage of long-distance revenues that phone companies must hand over to the universal service fund. I’m not happy to hear this, and I suppose the USAC is just doing its job, but this increase highlights just how bloated this creature of the 1996 Act is becoming. But I’m truly becoming more and more incensed at the way that politicians are playing the “rural” card in telecom policy.


I’m willing to bet that If I were to take a poll of all the people living in rural areas and asked them this one question, they’d mostly respond in the positive: “Should people pay for the costs of the services they use, no matter where they live?” What I’m getting at is it’s not the people in rural America clamoring for subsidized phone service or fiber-to-the-home or whatever the next great communications technology might be, it’s the politicians. The amount of pork that a politician can bring home to his or her state for crying “rural” is immense – in fact, say the word “rural” right now out loud – it sounds a lot like the sound a pig would make (especially when emphasizing the “rur”).

I feel for people who might have to pay $100 for telephone service. But since when did rural mean poor? That’s the problem with the current system – it assumes that we need to subsidize all of rural America, even affluent golfers in Houston. It subsidizes companies, not individual people on a needs-basis.

The bigger (but politically absent) picture is that just like some things cost a lot in the city, other services will cost more in rural areas. Where you live is a choice. There’s a price to pay for the peace and quiet of rural living – and that is, er, peace and quiet.

  • http://librarian.net jessamyn

    This may not be true where you live, but in Vermont rural means poor. Being poor also means NOT being able to choose where you live because you have limited ability to be able to afford to move. Moving is not impossible, but moving away from your social safety net community means you’d have to rely on government programs or services in a new location, so I’m sure you can see some value to rural folks staying put. I’m in favor of providing basic services to rural communities as we did with the Rural Electrification Program. People in outlying areas could not have, could never have, afforded to bring in their own electricity. Since this was back when farming was more of a large-scale American industry, and one that could not be moved in to the city, this was seen as a public good. Farmers can do their work more cheaply and easily with electricity, prices can be stabilized or lowered, baseline standards of living are available to all Americans. To me, the baseline standard is basic phone service, electricity and — lately we’ve been seeing — internet service at non cuthroat pricing. Big corporations would like you to believe that it’s also fiber-to-the-house and HDTV which I call bullshit on.

    Out here we don’t even have cell service in a lot of places which is fine and dandy for me because I think anyone griping about cell phone service probably could afford to live someplace closer in to conventional power-and-services grids, but as soon as you make the phone bill out here $100/mo then you get wide swaths of this state where people will not have telephones at all any more. This then means it’s harder for them to get and keep work, and “change their station” in life in any appreciable way. Then you have people working in rural low-paying but important jobs like farmers, postal employees, foresters, water managers, librarians, educators, local government etc. for whom $100 phone bills would immediately eat up 5% of their salary. People stop paying for phone service and the telcos stop providing it at any cost and you’ve basically said “screw you” to rural America. It’s certainly one way to wedge the small government issue but you’d reclaim more tax dollars focussing on repealing huge corporate tax cuts and incentive programs than you would with this type of telco reform.

  • http://librarian.net jessamyn

    This may not be true where you live, but in Vermont rural means poor. Being poor also means NOT being able to choose where you live because you have limited ability to be able to afford to move. Moving is not impossible, but moving away from your social safety net community means you’d have to rely on government programs or services in a new location, so I’m sure you can see some value to rural folks staying put. I’m in favor of providing basic services to rural communities as we did with the Rural Electrification Program. People in outlying areas could not have, could never have, afforded to bring in their own electricity. Since this was back when farming was more of a large-scale American industry, and one that could not be moved in to the city, this was seen as a public good. Farmers can do their work more cheaply and easily with electricity, prices can be stabilized or lowered, baseline standards of living are available to all Americans. To me, the baseline standard is basic phone service, electricity and — lately we’ve been seeing — internet service at non cuthroat pricing. Big corporations would like you to believe that it’s also fiber-to-the-house and HDTV which I call bullshit on.

    Out here we don’t even have cell service in a lot of places which is fine and dandy for me because I think anyone griping about cell phone service probably could afford to live someplace closer in to conventional power-and-services grids, but as soon as you make the phone bill out here $100/mo then you get wide swaths of this state where people will not have telephones at all any more. This then means it’s harder for them to get and keep work, and “change their station” in life in any appreciable way. Then you have people working in rural low-paying but important jobs like farmers, postal employees, foresters, water managers, librarians, educators, local government etc. for whom $100 phone bills would immediately eat up 5% of their salary. People stop paying for phone service and the telcos stop providing it at any cost and you’ve basically said “screw you” to rural America. It’s certainly one way to wedge the small government issue but you’d reclaim more tax dollars focussing on repealing huge corporate tax cuts and incentive programs than you would with this type of telco reform.

  • Braden

    I share Jessamyn’s concerns about not wanting to “screw” rural America. But I don’t understand how if we stopped taking taxpayer money from those that live in urban environments and giving it to people in rural areas, that this somehow is dissing rural residents.

    The disconnect here is one that affects all government welfare programs – it breeds a sense of entitlement. By removing an entitlement program, we’re not extracting a cost from the receiver of the entitlement, we’re just stopping the benefit. We need to dismantle universal service taxes entirely, or risk the sort of mission creep of any government program – “basic services” become high-speed broadband, cable TV, etc.

    At the very least, we should draw a line right now and say that subsidies will only go to basic telephone service so that one can call 911 in an emergency. Any service above and beyond a dial tone may very well be needed to stay competitive in the workforce, etc. (such as internet access) but is not the kind of service that government should subsidize. After all, we need cars to get to work and nice clothes to look professional at an interview and a host of other things to find and keep work but we don’t have a universal service tax on these items and a subsidy program to distribute it.

    Cell phone service is rapidly approaching the price of basic wireline connectivity, at least in urban and suburban areas. And wireless is the technology of choice in developing countries. Which highlights the problem with our current universal service fund – for too long it has been locked-in to one technology, wires, due to the regulatory capture of the USAC by the phone companies that receive the subsidy (remember – it’s companies that receive the universal service subsidy that then pass on the savings to consumers). This is why it’s unwise for any kind of “corporate welfare” – even that which portends to be doing a good social service – because it’s a roundabout means to achieving an end result. Absent this specific subsidy program, we’d have more competition in rural America for communications technology then we do right now (interestingly, it’s the $100 phone bill that would drive entrepreneurs and other smart people to thinking about ways to reduce this amount, and we’d have new technologies and ways of communicating entering the market – but subsidies that keep prices artifically low remove this incentive).

    Frankly, I’d prefer to have people be more mobile with where they live so that they can change life’s “station.” But I honestly don’t see how having a special tax on phone bills that goes to companies that serve rural customers (some poor, most not-so-poor, and some well-off) helps.

  • Braden

    I share Jessamyn’s concerns about not wanting to “screw” rural America. But I don’t understand how if we stopped taking taxpayer money from those that live in urban environments and giving it to people in rural areas, that this somehow is dissing rural residents.

    The disconnect here is one that affects all government welfare programs – it breeds a sense of entitlement. By removing an entitlement program, we’re not extracting a cost from the receiver of the entitlement, we’re just stopping the benefit. We need to dismantle universal service taxes entirely, or risk the sort of mission creep of any government program – “basic services” become high-speed broadband, cable TV, etc.

    At the very least, we should draw a line right now and say that subsidies will only go to basic telephone service so that one can call 911 in an emergency. Any service above and beyond a dial tone may very well be needed to stay competitive in the workforce, etc. (such as internet access) but is not the kind of service that government should subsidize. After all, we need cars to get to work and nice clothes to look professional at an interview and a host of other things to find and keep work but we don’t have a universal service tax on these items and a subsidy program to distribute it.

    Cell phone service is rapidly approaching the price of basic wireline connectivity, at least in urban and suburban areas. And wireless is the technology of choice in developing countries. Which highlights the problem with our current universal service fund – for too long it has been locked-in to one technology, wires, due to the regulatory capture of the USAC by the phone companies that receive the subsidy (remember – it’s companies that receive the universal service subsidy that then pass on the savings to consumers). This is why it’s unwise for any kind of “corporate welfare” – even that which portends to be doing a good social service – because it’s a roundabout means to achieving an end result. Absent this specific subsidy program, we’d have more competition in rural America for communications technology then we do right now (interestingly, it’s the $100 phone bill that would drive entrepreneurs and other smart people to thinking about ways to reduce this amount, and we’d have new technologies and ways of communicating entering the market – but subsidies that keep prices artifically low remove this incentive).

    Frankly, I’d prefer to have people be more mobile with where they live so that they can change life’s “station.” But I honestly don’t see how having a special tax on phone bills that goes to companies that serve rural customers (some poor, most not-so-poor, and some well-off) helps.

  • Ray

    for the people who do not live in rural america, I do, our phone serve are high. and we pay the special tax to. $50 worth of special tax. we have the same compaines that you have.

  • Ray

    for the people who do not live in rural america, I do, our phone serve are high. and we pay the special tax to. $50 worth of special tax. we have the same compaines that you have.

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