[Updates below.]
Texans for Texas ain't afraid to engage in political doublespeak:
What is the TUSF? The Texas Universal Fund was established by the PUC to help telephone companies keep rates affordable in high-cost rural areas. While often referred to as a "subsidy", the TUSF fund is not taxpayer funded, it is funded entirely from assessments on telecom customers' bills. The assessment comes in the form of a 5.65% surcharge on taxable intrastate telecommunications services. The surcharge rate will drop to 5% in October 2006. In addition to keeping local rates affordable in rural areas, the TUSF also funds lifeline service to the poor, service for the hearing impaired and other programs.
Ah, so an "assessment" on certain "intrastate telecommunications services" isn't a tax and therefore doesn't create an additional financial burden for people to pay? Are the people providing those services required by law to hand over that "assessment"? Do they face fines and jail time for not complying? I'll let the Public Utility Commission (PUC)
speak on this:
The law requires all telecommunications companies including local, long distance and wireless companies to contribute to the fund. Beginning January 1, 2001 the rate is set at 3.60 percent. Companies are not required to collect this charge from customers, but most of them do.
So the "contribution" doesn't necessarily have to come from end-users, but the telecom companies have to pay it. A cursory scan through Chapter 56 in the
Utilities Code didn't uncover specific penalties or punishments for noncompliance. However, when a law says "The commission shall adopt and enforce rules requiring local exchange companies to establish a universal service fund," I expect there to be regulatory and law enforcement threats to back up those requirements.
Here's how AT&T/SBC describe this "fee":
Texas Universal Service
Texas Universal Service: is a fund that allows affordable service to high-cost rural customers, funds the Relay Texas and Specialized Telecommunications Assistance program for the hearing-disabled, and funds telecommunications services discounts to low income customers (Tel-Assistance and Lifeline).
AT&T/SBC is my telephone provider and here is a snippet of my last bill from them.

I view this as essentially like a sales tax. Consumers are not "assessed" directly because that responsibility is imposed on the seller. However, retailers are highly unlikely to accept buyer payments that don't include sales tax. Similarly, if the payment I sent in for that last bill was $1.17 less than the total, the phone company would have kept that balance and transferred it to the next billing cycle. After a certain point, I'd be asked to pay the outstanding charge or face consequences such as termination of my account.
Let's be honest. This isn't an assessment or a fee or a charge. This is a tax.
Back to the TX4TX folks:
While the larger companies derive most of their revenues from the dense, lower-cost and business rich population centers, the small incumbent telephone companies get a much larger portion of their total revenues from the TUSF. For most of these small incumbents, the TUSF comprises twenty to sixty percent of their total revenues. A loss of these funds could literally put some companies out of business. A significant TUSF reduction could curtail the ability of others to invest in the critical infrastructure needed to support the types of services small-town Texas needs to conduct commerce and keep rural residents connected to the rest of the world. A reduction in the fund would most likely trigger local rate increases. As rural income levels trend lower than in urban areas, any rate increases will be more difficult for rural customers to absorb.
Moreover, while telephone service competition abounds in urban areas, the competitive landscape in rural Texas is more complex. Due to geography, much higher per-customer costs and fewer revenue-rich business customers, full-service telecom competitors often shun rural areas, leaving customers with fewer competitive options than their big city counterparts. While some competitive and wireless telecom competitors are certainly making inroads to selective rural markets, often the rural local phone company is the only reliable single source of affordable telephone, DSL and internet service.
"A loss of these funds could literally put some companies out of business."
And this is not a subsidy how?
Note the language here: it is identical in all essential aspects to the whole sordid Democrat/liberal argument for all manner of state economic interventions on behalf of the lower classes. Because poor and isolated people might be without some service, the state must force others to pay for the funds that underwrite their access to that service. Because there are fewer competitors in a specific area, the state must step in and help provide. Think of the rurals!
This is socialism. These are supposed to be conservative Republicans, supposedly advocates of limited government. Clearly, sympathy for their grandparents out in Roberts County and other low-population-density locations outweighs their commitment to principle.
Furthermore:
Finally, rural incumbent telephone companies cannot pick and choose which markets and customers to serve. As PUC-mandated providers of last resort, rural telephone companies must serve all customers within their franchise territory. And rates must be affordable.
The stupid fucking Texas government is helping to screw up the telecom market out there in the first place!!! How can you say or imply free markets failed when there wasn't one in the first place?
UPDATED 9/6/2006 9:50am
Corrected some grammatical problems.
Also, the Texans for Texas e-mail included a link to Coalition to Keep America Connected. From the front page:
When Congress updates our communications laws, we must ensure that a 'digital divide' does not emerge in America: Where some consumers have access to the latest technology, and others must rely on outdated systems. Where some have affordable rates, and others have to sacrifice necessities each month for service. Where some children experience the educational benefits of Internet access, and others are left behind. Every American deserves the same opportunity to enjoy the benefits that affordable technologies bring. The Coalition to Keep America Connected was created to ensure that affordability concerns never prevent Americans from being connected to one another. We believe that all consumers should have access to affordable telecommunications services and the latest technologies, no matter where they live.
This is feel-good politician-speak for asserting everyone has a right to telecommunications access. The assumption that people have a right to some service underlies most of the arguments made in favor of nearly every form of state intervention. It sucks to be without power; it sucks to not have reliable and safe running water; it sucks to have intermittent garbage pickup...and it sucks to be without a telephone. Because of this suckitude, people then leap to the conclusion people have a right to that service.
No.
What they either manifestly ignore or simply don't care about is that these services are not provided free of charge. They ultimately cannot be provided free of charge. The materials and the labor have to be purchased at some point. Imagine the complexity of a "basic" telephone connection:
- plastic and circuit boards for the phone itself
- wood, metal, and insulators for the telephone poles
- miles and miles of wire for the lines
- engineering and producing all three, as well as the switchboards to integrate it all together
- hundreds of man-hours of labor to erect the poles and string the wires
- knowledgeable, trained, and state-licensed electricians to supervise the connections
- vehicles to transport the line and pole workers
- support staff to keep them on task and working towards a coherent connectivity plan
- funding up front to pay for all this before the very first bill (or subsidy) is even collected
- agreements and standards-compliance with existing utility infrastructure to make sure everything works together
Now consider the additional weight placed upon these service providers: not only must they "keep America connected," but they also have to do so with a particular quality of connectivity and technology. Not just a ringer phone, but a wireless phone with Caller ID. Not just an Internet connection, but a broadband account.
I mention these providers must do this because the people asserting a right to a service imply the creation of a class of people who are forced to labor for the provision of that service. If I have a right to a DSL connection, local calls, and a cheap cell phone plan, then by the nature of a "right" it is a violation of my rights if I am not supplied with those services. People who take this stance are saying it is immoral and wrong for me to not have these services.
But who is the rights-violator in this instance? Let's say I live out in BFE. Are the executives in AT&T, Time Warner Cable, Sprint, Comcast, T-Mobile, and other telecommunications companies violating my rights by deciding to not extend their service plans to my region? Are they violating my rights by extending their service plans to my region, but at an increased price relative to the prices they charge in urban areas? Did these executives and the people who own the companies infringe upon my natural (and hell, even "Constitutional") rights?
This is as nonsensical as asserting I have a right to a car wash. It posits a claim on someone else's private property based on something so empty as need and national trend. I mentioned above that this is socialism; hell, it's positively Marxist once you strip away the fancy posturing. These people have a need; therefore, other people must be forced into alleviating that need.
It is possible to conceive of a purely voluntary system whereby telecommunications companies tell their normal customers something akin to the following:
We have decided, in the interests of expanding the cohesiveness and connectivity of the American community, to expand our services to those rural areas to which we currently do not offer service and reduce the price we charge to those people who qualify as not making enough money to afford our current plans. However, this is going to be an expensive, multi-year endeavor that, if all other considerations are left as they are, will eat into our profit margins and may complicate existing plans to upgrade our existing services.
Therefore, starting in a few months will be a small change to your bills. We will add a spot where you can elect to pay above and beyond what you owe to us. This donation will go towards paying the costs of achieving of the above goals.
You can donate as much as you want or nothing at all. We have chosen this route because we don't want to drive you away or impose an additional economic burden on your shoulders. Of course, this does not offer the same guarantee as a specific additional charge required of all our customers, but we will explain this to the people to which these new services will extend. If they agree to sign up with us, they will understand their service may depend on your generosity.
If you object to paying this additional fee, you are welcome to break your relationship with our company. If you have existing contracts with us, we will agree to waive the agreement so you will be free to close your account(s) and find another service provider.
To those staying with us, we will provide a monthly accounting of this additional charge to keep you abreast of events and show how this money is being spent or saved. Should you grow tired of paying the extra charge or think we are misallocating the funds, you can end our business relationship whenever you want.
Thank you for your consideration.
Or, in a different format:
We have decided, in the interests of expanding the cohesiveness and connectivity of the American community, to expand our services to those rural areas to which we currently do not offer service and reduce the price we charge to those people who qualify as not making enough money to afford our current plans. However, this is going to be an expensive, multi-year endeavor that, if all other considerations are left as they are, will eat into our profit margins and may complicate existing plans to upgrade our existing services.
Therefore, starting in a few months will be a small addition to your bills. This extra charge, estimated to be no more than a few dollars, will go towards the cost of expanding our rural coverage. It will also go towards underwriting the expenses of our poor clients. We've opted for this path because a voluntary donations system would not ensure a steady stream of revenue for the project and we think most of our customers will understand why we are doing this.
If you object to paying this additional fee, you are welcome to break your relationship with our company. If you have existing contracts with us, we will agree to waive the agreement so you will be free to close your account(s) and find another service provider.
To those staying with us, we will provide a monthly accounting of this additional charge to keep you abreast of events and show how this money is being spent or saved. Should you grow tired of paying the extra charge or think we are misallocating the funds, you can end our business relationship whenever you want.
Thank you for your consideration.
Regardless of the exact method, this would be the honest way to go about this. Intimidating and forcing people to be generous is hardly the right thing to do, whether or not the
"average Texan living in a rural area would pay an additional $151.01 each year to receive telecommunications services."