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For the past 15 years, the American telephone system has been moving from private socialism toward some economic model that nobody seems to understand yet.
The old Ma Bell monopoly, put together by J.P. Morgan
when AT&T got rolling at the turn of the century,
operated on the socialist principle of from each
according to his ability, to each according to his
needs.
Business is the biggest user of long-distance, so long-distance rates were set much higher than costs. That surplus subsidized the AT&T subsidiaries, like Mountain Bell, that delivered local service.
Not all local phone companies were part of AT&T, and
those companies, many of them rural independents, could
draw on the settlement and separations fund.
The
result, as one rural phone company executive explained,
was that you really had to work at it to lose money
then. You could borrow money at 5 percent from the Rural
Electrification Administration, and AT&T guaranteed you
a 12 percent return on your assets.
Those days are gone, but the problem of serving high-cost rural areas remains. It costs pretty much the same to string a mile of phone line in the metropolis or in the boonies, but the urban mile might serve several hundred customers, whereas the rural line could have only one customer every two or three miles.
The subsidies used to be hidden, but they'll be explicit
this fall, when the Colorado Public Utilities Commission
will impose a 4.3 percent surcharge on all phone bills,
with the money going to a Universal Service Fund
to
keep rural telephone service somewhat affordable.
These subsidies probably wouldn't be controversial if the money went to phone service for a few hardscrabble farms that sat far from paved roads.
But such farms are just a fraction of modern out-state Colorado. Increasingly, that rural resident who wants phone service has a 5,000-square-foot trophy home on a secluded 40-acre domain adjoining federal land, and he wants about six private lines for faxes and computers so he can keep up with the office, wherever it is. Further, he may occupy that house for only a few weeks each year.
Why should hand-to-mouth phone customers on Capitol Hill
in Denver pay to support affordable
service for the
conspicuous-consumptives in the resort belt who could well
afford unsubsidized telephone service?
Good question, and I don't envy the regulators as they try to sort this out. What they need, and what we don't have in this state, is a political philosophy to guide the decisions.
Since we're electing a new governor this year, perhaps Colorado's telephone service can become an issue, and candidates might adopt one of these tenets:
· Open Market. Any subsidy mechanism is inherently unfair, and further, it stifles technological innovation. Why invest in copper when we've got satellites and cellular, along with AT&T buying into cable companies?
High prices provide opportunities for entrepreneurs to find cheaper and better ways. Subsidizing existing technology discourages innovation.
· Phone Stamps. This would work like food stamps. That state would issue a subsidy, based on income, that can be spent only on telephone service, wherever the customer is.
This would solve some political problems with the current subsidy mechanism, but create others -- for one thing, a major administrative burden.
· Unity. Colorado is one state and should be connected, even if some people benefit unfairly and others get shafted.
A Republican might well run on this one, pointing out that his party gladly subsidized railroad construction in the 19th century with the noble goal of binding the nation together, with the desirable side-effect of elevating real-estate prices across thousands of square miles.
A similar approach to telephone service, guaranteeing it would be cheap and abundant no matter how remote the locale, would make scores of platted subdivisions immensely more valuable, and their developers must be smart enough to see this connection when it's time to make campaign contributions.
All these approaches have their merits and drawbacks; no solution is ideal. So we really need a political decision, and that's what elections are for -- assuming we can get this issue on the public agenda this fall, rather than the usual blather about family values or how the candidate's great-great-grandpa planted the family roots here when he homesteaded in 1863.
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