‘Like Taxing Horseshoes’: Landlines Wane, Sap US Broadband Aid

As more Americans cut the cord on traditional landline phones, a government program that subsidizes internet service to poor communities is in danger of collapsing because it relies on taxes from dwindling long-distance calling fees. That’s prompting calls to shore up the more than 20-year-old Universal Service Fund by tapping technology companies that profit from the growing use of broadband. The fund, which distributed $8.3 billion last year, helps connect schools, libraries and rural health care facilities. It also provides a connection subsidy for roughly 7 million poor households. But over the past two decades the use of old-fashioned phone service has plunged and the revenues against which the levy could be charged dropped to $30 billion, from about $80 billion, according to Carr. That’s led to an increase in the rate of the tax, which has soared to more than 30% from 5.7% in 2000 and is typically passed along to the shrinking pool of landline users. “We’re taxing the telephone networks to pay for the broadband network,” said Federal Communications Commissioner Brendan Carr. “That’s like taxing horseshoes to pay for highways.”