Wireless providers to pay the Danegeld

by Andy Oram

Related link: http://www.ispworld.com/isp/newsletter/executive/strategy_041802.htm

Mailing lists are abuzz with the news that

wireless Internet providers may have to pay fees to support plain old telephone service

Not long ago (1996, to be exact, when the Telecommunications Act was passed), the ethos was that users of standard telephone service would subsidize Internet access for the needy. The universal service fund was the (awkward) mechanism by which revenues from local telephone service would support Internet access at schools, libraries, and medical clinics in poor areas.

Now it's the other way around. Local phone companies get to collect fees from Internet providers. (So we will never be rid of the Dane.) And among the providers on the hook, so to speak, is the industry that is currently the most innovative, forward-thinking--and fragile: small wireless Internet (Wi-Fi) providers.

The universal service fund comes into play, but here in the sinister role of robbing from the poor and giving to the rich. Officially, of course, fees from the fund go to subsidize service in needy areas. But in reality they go into one large pot of revenues for the local phone company, out of which it pays its obligations.

The FCC is threatening here to go against three decades of their own policy decisions. The three famous Computer proceedings at the FCC protected the young Internet industry from undue regulation and fees during a historically important period. The equally promising and strategically critical field of digital wireless may not get the same protection, if the FCC acts as described in the article.

And how are the Computer proceedings being used during this rule-making? (Try reading the
for yourself; it's full of references to legal documents and concepts, but also has a reasonable amount of plain language.) These historic rulings, which were used to provide a safe haven for new, shaky industries, are now the justification for protecting old monopolies from competition. Alice has passed through the looking-glass, and the Red Queen's race that independent Internet and telecom providers have been running for years may soon be lost.

Should all broadband providers pay into the universal service fund?