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Corporate America tells White House it doesn't like FCC regs, but benefits from one

Corporate America's long list of "Policy Burdens Inhibiting Growth" include several regulations in place or in motion at the Federal Communications Commission. But even as they criticize certain policies, the biggest communications companies are also benefiting from at least one policy: a federal phone subsidy.

In a letter sent on June 21 to Peter Orszag, outgoing head of the Office of Management and Budget, the Business Roundtable and the Business Council listed net neutrality, data roaming on wireless networks, reclassification of broadband and a federal rural phone subsidy program as "policy burdens" that don't work and hurt businesses.

And the letter criticizes the Universal Service Fund, the $8 billion annual subsidy, that the leaders of both groups, including Business Roundtable Chairman Ivan Seidenberg, say is wasteful:

The federal Universal Service High Cost Fund currently costs telecom consumers and businesses approximately $4.5B per year. The fund rewards inefficiency, discourages competition and broadband deployment, and unduly benefits specific companies rather than consumers. The majority of high cost funding is distributed to incumbent wireline local exchange carriers without any serious demonstration of need and with little or no accountability as to how the money is used. The cost of this subsidy system is borne by consumers and businesses through steadily increasing USF surcharges which effectively inflate their cost of acquiring telecom services.

Verizon Communications, of which Seidenberg also oversees as CEO, received $1.2 billion from the USF fund. And AT&T got $1.3 billion between 2007 and 2010. The telecom giants were the biggest recipients of funds. They both support reform of the fund but have nonetheless received support from the program that is paid for by a line-item charge to consumers on phone bills.

The business groups also don't like the "bill shock" inquiry taking place on cellphone carriers by the FCC. And the biggest threat they highlight is reclassification of broadband as a telecom service. The biggest telecom and cable companies filed comments Thursday criticizing the proposal for what they said would have a chilling effect on investment. Google and the Open Internet Coalition, which includes Skype, Facebook and public interest groups, are supporting the move.

By Cecilia Kang  |  July 16, 2010; 8:00 AM ET
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