The monopoly bit is a subsidy, sure there are strings attached but they could also be attached to using government land like roads. Afterall good luck building a network without crossing a road.
I don't agree with Kushnick, my point is if a company advertised bubblegum for 50c and charged 90c when you got to the store it's illegal false advertizing. The telecom industry is vary much in favor of being able to do the same kind of price manipulation.
PS: Subsidizing undeserved or low population areas is paying for the last mile, it's not like they don't get to charge the new customers.
> The monopoly bit is a subsidy, sure there are strings attached but they could also be attached to using government land like roads.
The rate regulation and universal service requirement more than outweigh the advantage from the monopoly. At the end of the day, regulated local monopolies make lower returns than unregulated companies.
> PS: Subsidizing undeserved or low population areas is paying for the last mile, it's not like they don't get to charge the new customers.
That money doesn't come out of the government's pocket. It comes from a tax on the company: http://en.wikipedia.org/wiki/Universal_Service_Fund#Backgrou... ("As of the first quarter of 2013, the USF fee, equals 16.1 percent of a telecom company's interstate end-user revenues. As of the second quarter of 2013, the USF fee is 15.5 percent.") Second, the telecom company is not allowed to charge the new customers the cost of actually providing the service.
I don't agree with Kushnick, my point is if a company advertised bubblegum for 50c and charged 90c when you got to the store it's illegal false advertizing. The telecom industry is vary much in favor of being able to do the same kind of price manipulation.
PS: Subsidizing undeserved or low population areas is paying for the last mile, it's not like they don't get to charge the new customers.