Universal Service Fund: now with less incompetence!

The Federal Communications Commission's Universal Service Fund is cleaning up its act. And not only that, it looks like we've been a tad unkind to the benighted program in the past.

Turns out that what seemed like a pretty devastating audit of one of the USF's main programs was way off in its calculations. Here's the short version of that story. The USF, paid for by small tithes on your phone bill, runs four programs: a fund that subsidizes the phone bills of the poor; a program that subsidizes the computer/network needs of schools and libraries; another that underwrites broadband for rural health care facilities; and a division that offers financial support to rural carriers. That last program is called the "high cost" fund. It helps with the challenges that rural carriers face in trying to provide service to relatively few consumers in spread out areas. Unfortunately, past audits of the fund have concluded that its high cost title has a second, less desirable meaning -- a scarily huge error rate in payouts to carrier recipients: 16.6 percent, according to a review that the FCC's Inspector General released three years ago. A subsequent assessment warned that the program overpaid carriers by almost a billion dollars from July 2006 through June 2007. But the Universal Service Administrative Company's new Annual Report includes a re-check of those numbers that calls them way too high. Not 16.6 percent for that first assessment, USAC says, just 2.7 percent. "USAC anticipates similar results in the final reports on the second and third rounds of the FCC OIG USF audit program," the Annual Report also notes.