Re: Government competition

[Brett Glass <brett@lariat.org>]

At 01:34 PM 12/10/98 -0500, Eric M. Bennett wrote:
 
>Businesses cannot maximize their profit if they have no concern for the
>adequacy or completeness of their services.  Unless they're monopolies,
>like AT&T was or like the Post Office is.

This is not true of telephone service. Without mandates for universal
service (and universal service subsidies), many areas wouldn't be
served at all.

The approach currently used for telephone service -- a "universal service
fund" -- is one of three ways one can go if one wishes to see universal
service in any realm, be it mail delivery, telecomm, or whatever. Under
the current scheme, a universal service fee (really, a tax) is collected
by private entities (the phone companies) and redistributed among them
according to a government-imposed formula.

The problem with this approach is that the companies are constantly
wrangling over how much of it they get, and are constantly trying to
skew things in their own favor. To make sure the system is fair,
they should really be out of the loop.

The second approach is a government monopoly -- like the US Postal
Service. This ensures a certain level of universal service, but
competes unfairly with private enterprise.

A third approach is probably better than either. Instead of creating
a government monopoly or trusting private entities to collect and
redistribute money, require universal service but let the private
entities set their prices according to the same rules used elsewhere.
(In a regulated industry, this would be based on profits, costs,
rates of return, etc.) Then, tax the public (and, yes, CALL
it a tax so as not to be dishonest) and give users direct subisidies
to cover higher costs.

This approach is honest and open. The public KNOWS it's being taxed,
and the tax isn't disguised as some kind of fee imposed by the
service provider. Prices can reflect reality. And the universal
service money doesn't pass through the hands of the private
providers at all.

If we're going to redistrbute wealth -- as goods OR as services --
let's make it obvious that this is what we're doing, and cut out
potentially abusive middlemen.

--Brett Glass