Study: Do USF funds benefit consumers?

Two studies by Criterion Economics are causing many to question whether universal service funds received by cell phone companies result in better wireless coverage. Wireless carriers are expected to receive more than $1 billion in subsidies from the Universal Services Fund. The subsidies have grown by more than 185 percent annually in recent years, however in May the Federal-State Joint Board proposed capping the subsidies at 2006 levels. The FCC is still considering a decision on that proposal.

Nevertheless, the Criterion study found that subsidized companies actually provide less coverage than unsubsidized companies serving the same areas. Specifically, in 800 study areas where carriers received USF funds, unsubsidized carriers covered 97 percent of the population while subsidized carriers covered 70 percent.

Of the 148 million people living in areas where wireless carriers receive subsidies, subsidized carriers provided unique coverage to only 2 percent of the population. Meanwhile unsubsidized carriers provided coverage to 44 million people who do not have coverage from subsidized carriers.

For more on the study:
- check out this press release

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