“The tax is on consumers,” Brookings Institute vice president Joe West told The Daily Caller News Foundation. “But the tax revenue goes to the businesses to subsidize their coverage.”
The Federal Communications Commission has made universal Internet access a top priority — even, critics say, if it comes at the expense of other customers.
Under the Connect America Fund, the FCC will reconfigure the preexisting Universal Service Fund (USF) to create subsidies for companies to develop the infrastructure to get people online in rural areas where it is more expensive to provide broadband.
The FCC remarked in a blog post Friday, “Ultimately, the consumers who pay for universal service, consumers who directly benefit from expanded rural networks, and all who value a vibrant, ubiquitous broadband network are the winners in the changes we’re implementing today.”
Under the Telecommunications Act of 1996, the USF was created with the goal promoting “the availability of quality services at just, reasonable and affordable [telecommunication] rates for all consumers.”
The USF charges higher rates in urban areas in order to provide affordable rates to rural consumers. While it is considered an assessment or fee, the FCC essentially taxes urban residents on their phone bills for the benefit of more rural communities.
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