How to Fix the Universal Service Fund

The Universal Service Fund (USF) is inefficient, ineffective, and funded by a regressive tax mechanism. Several reforms could improve the program:

• First, the FCC must require ongoing, independent, evaluation of the subsidy programs.
• Second, the FCC or Congress should impose a budget cap on the USF.
• Third, subsidies should be distributed by reverse auction.

[Rosston is Director of the Public Policy program at Stanford University and the Gordon Cain Senior Fellow at the Stanford Institute for Economic Policy Research. Wallsten is president of the Technology Policy Institute.]