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AT&T, Verizon get most federal aid for phone service

AT&T and Verizon Communications were the biggest recipients of federal support from an $8 billion phone subsidy program, according to data released Thursday by the House Energy and Commerce Committee.

Over the past three years, AT&T received $1.3 billion in funds to deploy phone lines to rural areas. Verizon got $1.27 billion in the same 2007-09 period.

Lawmakers and public interest groups are questioning the use of those federal funds, much of which appears to go to wireless services areas where telecom companies would be even without support. And they say the fund needs to be overhauled to focus on expanding broadband connections.

“Subscribers now pay close to 14 percent of their long-distance phone bills to subsidize scores of telephone providers in each geographic market, while other providers are serving the same markets without a penny of support,” Rep. Joe Barton (R-Tex.) said in a statement.

The committee's ranking member said the Federal Communications Commission, which oversees the fund and supplied the committee with the data, should be focused on reforming the fund instead of pushing to assert more authority over broadband by redefining Internet access as a telecommunications service.

“It is inexcusable that the FCC chairman is trying to reclassify broadband service under the pretext that the commission lacks authority to implement aspects of the national broadband plan, when he should instead be focusing on bipartisan aspects of the plan that he clearly has authority to move on, such as reducing antiquated voice service subsidies,” Barton said.

Last year, Verizon tapped the most money from the Universal Service high cost fund, mostly because of its acquisition of Alltel.

CenturyTel received $931 million, Alltel received $747 million, and Telephone and Data Systems received $661 million from 2007 through 2009.

Derek Turner, director of policy at the public interest group Free Press, noted that many of those company – including AT&T and Verizon – appeared to use the money for wireless networks. Those companies would have served areas where they received federal subsidies even without the government support, he said.

“The USF process at the FCC doesn’t ask if money is actually needed to ensure access to those areas,” Turner said. “Some areas have as many as19 carriers serving it with USF funds. That is scarce money that could be used for broadband.”

And some projects appear too expensive for the number of people served. Westgate Communications in Washington state, for example, runs 17 separate phone lines at a cost averaging $17,000 per line.

By Cecilia Kang  |  July 8, 2010; 5:31 PM ET
 
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Comments

Why am I paying to subsized other's internet access? If they want faster, cheaper internet they should move to a more urban area. I guess the telcom lobbyists are doing their jobs.

Posted by: neil64 | July 9, 2010 4:38 AM | Report abuse

neil64 wrote "Why am I paying to subsized other's internet access? If they want faster, cheaper internet they should move to a more urban area. I guess the telcom lobbyists are doing their jobs."

Neil, if you want fresh farm eggs, bread and milk you should move to a more suburban area!

Posted by: fumango1 | July 9, 2010 7:04 AM | Report abuse

@fumango1: If you want perpetual welfare, become a farmer.

We have socialized farming, and socialized internet access for the socialist farmers who hire illegal aliens in mass numbers without penalty. In the meantime, real Americans who actually work for a living see farmers feeding at the public trough.

Too much rain? More farm welfare.

Too little rain? More farm welfare.

Too hot? More farm welfare.

Too cold? More farm welfare.

Prices too high? More farm welfare.

Prices too low? More farm welfare.

Too many illegal aliens working on the farm? More farm welfare.
Not enough illegal aliens working on the farm? More farm welfare.

Not enough internet access so that Elmer Fudd can't go online to see if his welfare check from the Department of Welfare/Agriculture has arrived? More farm welfare.

The sun comes up in the morning? More farm welfare.

The sun sets at night? More farm welfare.

Posted by: Garak | July 9, 2010 8:16 AM | Report abuse

"We have socialized farming, and socialized internet access for the socialist farmers who hire illegal aliens in mass numbers without penalty. In the meantime, real Americans who actually work for a living see farmers feeding at the public trough."

They see it that way because they are resolutely ineducable.

In case you haven't noticed, the family farm is going extinct. They've been holding concerts to try to raise money to help families stay in business, that's how much welfare they get.

Meanwhile, the mega-corportations that misinformed envious right wing blue collar workers enable by falling for that "freedom" crap are raking in all those dollars.

This is quoted directly from the ultra-conservative Heritage Foundation:

"Under this mistargeted system, agriculture policy has become America's largest corporate welfare program.

"According to the Environmental Working Group, two-thirds of all farm subsidies go to the top 10 percent of subsidy recipients while the bottom 80 percent of recipients receive less than one-sixth of farm subsidies. A full 60 percent of America's farmers do not qualify for any assistance.

...

"Among these beneficiaries are fifteen Fortune 500 companies, including Westvaco, Chevron, and John Hancock Mutual Life Insurance, which receive as much as 58 times as much as the median annual subsidy of $935.8."

See http://www.heritage.org/Research/Reports/2002/02/Farm-Subsidies-are-Americas-Largest-Corporate-Welfare-Program

So before you go off half cocked picking on the family farmer, you need to get yourself educated. They are real Americans working for a living, despite the lies you've been spoon fed. They are the heart and soul of this country, the people who put food on the table that's actually worth eating.

Posted by: trippin | July 9, 2010 9:24 AM | Report abuse

@trippin: Elmer Fudd can be a corporate farmer as well as an individual farmer. And the justification for farm welfare is to save the "family farm." As is the justification for repealing the inheritance tax.

Funny how you never see Elmer Fudd and other "family farmers" protesting against welfare for corporate farms.

I'm no more half-cocked or uneducated than those who complain about "welfare queens" or the unemployed living off unemployment compensation. How many "family farmers" protested against those statements?

Certainly the corporate farmers don't need subsidized internet access. They have their own private networks. This is just about giving Elmer Fudd the welfare lifestyle he deserves.

Posted by: Garak | July 9, 2010 10:28 AM | Report abuse

Hey Palin, any complaints about this form of Socialism?

Posted by: truth1 | July 9, 2010 10:45 AM | Report abuse

I suspect you'd be hard pressed to find any internet facilities deployed in rural America that did not pass AT&T's economic screening for profitability. A thorough audit ought to be done.

Posted by: carmineappice | July 9, 2010 11:40 AM | Report abuse

The phone companies did not invent these stupid taxes, Congress did. The Universal connectivity fee on every phone bill supports getting phone services to rural areas. The big telecoms do NOT make money serving those areas so the government (socializes) incents them to spend money where they otherwise would not. I am all for repealing all of these idiotic taxes and letting the free market dictate where and how much companies spend on their infrastructure.

Posted by: jlarranaga | July 9, 2010 12:39 PM | Report abuse

One more sign that our government has become completely corrupted by money. Americans starve and lose their homes while our government shovels out wheelbarrows full of free cash to the phone companies and the financial industry. This is just sickening...

Posted by: jerkhoff | July 9, 2010 1:55 PM | Report abuse


How the business community consider the Obama administration is "ANTI-BUSINESS" when Verizon and AT&T gets BILLIONS to build out their broadband infrastruture???? AIN'T THIS SOCIALISM!!!!???

Posted by: demtse | July 9, 2010 5:50 PM | Report abuse

Wouldn't it be GREAT if our government held our corporations to a standard of "common good" that is mentioned in almost all corporate charters, granted (GRANTED) by the U.S.A., rather than "incentivize" them by throwing our tax dollars at them?


I don't see any reason why our government demand rural service from telcos and ISPs, and the "incentive" should be the renewal of their charter to do business in our country.

Posted by: lquarton | July 10, 2010 4:38 AM | Report abuse

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