Pols love the toll booth model

I've often argued that politicans love the idea of alowing, even mandating tighter controls on the internet and supporting the established Telco's and Cableco's, letting them be the operators of the toll booths on the turnpike.

Here's WSJournal on the same re: USF
Note that it isn't just the subsidy to rural phone service providers, it's the principal of having a conduit for funds that the politicans can tap.

Bad Subsidy Call
June 23, 2006; Page A10

On Wednesday, the Federal Communications Commission voted to require Internet telephone companies to contribute to the Universal Service Fund (USF). The move means higher phone bills for Internet telephone service as providers pass this new cost on to customers. But it also means that a Republican-run regulatory agency is expanding a federal subsidy that should have been phased out long ago.

The concept of "universal service" dates back more than 70 years to a time when stringing wires together to bring telephone service to loosely populated areas was expensive. The goal was to keep local phone rates low and increase subscribers. This policy long ago fulfilled its purpose: By the mid-1990s, nearly 95% of U.S. households had a telephone. A competitive telecom marketplace with proliferating wireless technologies and multiple service providers had developed.

Nevertheless, the USF lives on. What's worse, the FCC has now determined that Internet telephony should be roped in to this anachronistic regulatory framework. FCC Chairman Kevin Martin says this levy is necessary for parity purposes. But the best way to produce a level telecom playing field isn't by burdening new technologies with old regulations. It's by phasing out such regulations for everyone.

The USF has become a tool for redistributing wealth from urban phone customers to their rural counterparts, says Randolph May, a former FCC lawyer who now heads the Free State Foundation think tank. The irony, says Mr. May, "is that the subsidies tend to flow from more densely populated areas like New York or Baltimore to less densely populated areas. So, in effect, you've got many places where poor people are subsidizing rich people in Aspen." Given that near-universal service now exists, why not subsidize only those low-income customers who truly need it?

The main beneficiaries of the status quo are rural telephone companies, some of which receive as much as 70% of their revenue from the USF. More than a thousand such entities still exist nationwide, and they have powerful allies in Congress, especially Senate Commerce Chairman Ted Stevens of Alaska. We knew many in Washington were eager to classify the Internet as nothing more than a glorified telephone subject to the usual telecom taxes and rules. But we were hoping a Republican-controlled FCC wouldn't let that happen.