The Dangers of Big City Subsidies
by Susan Crawford
Posted May 14, 2018
America, alone among developed nations, never thought of basic telecommunications services as a public service, to be built and controlled by the government. Instead, we have traditionally relied on private companies to serve all Americans at a reasonable cost. In the past, in order to keep the price of local telephone services low and to ensure that everyone in rural areas had communications service, the federal government imposed fees on long-distance telephone service, to subsidize service for low-income and rural customers. Now, following an astounding wave of consolidation and deregulation, we have the worst of both worlds: mostly unregulated private monopolists, selling expensive, mostly second-class data services to the rich and looking to the state to pay them to provide internet access services to everyone else.
Chairman Pai seems to have one theme when it comes to subsidies: Treat giant companies well, and hope that they’ll do Americans a favor by selling them some form of service. From the perspective of the shareholders of AT&T, Verizon, CenturyLink, Comcast, and Spectrum—the Big Five telecommunications companies that dominate internet access in America—this makes perfect sense. Costly infrastructure investment that drives up the companies’ debt levels is irrational. More…