"Doing Good" Versus "Feeling Good" in Government Telecom Policy

It bears repeating that the test of public policy to help people hinges on whether our policies actually succeed. It is not enough to "feel good." Our policies must also "do good."

Subsidies for use of telecom services, including broadband and voice, are common in part for reasons of social equity and also because communications networks have a network effect: the network is more valuable the more people who can use the network. So programs to fund rural broadband or provide assistance to low-income households are common. 

Ignoring the risk of waste or abuse, studies also suggest the difficulty of determining how effective the programs might be. How well the programs work is a recurring issue. 

Advanced communications networks also are viewed by governments as an economic development tool. For that reason, service providers also often get subsidies. 

Whether the programs should exist is rarely, if ever, an issue. Whether the programs work is more often the problem. One recurring issue is that the programs might not achieve their goals. 

Aside from mismanagement losses (waste, fraud or abuse), there is evidence that the targeted recipients would have purchased service for other reasons. Since the major internet service providers also offer their own programs for low-income households, it is by no means certain that the government efforts add as much as we might think. 

AT&T lifeline service, depending on a potential customer’s location, offers 10 megabits per second, for $10 per month; 5 megabits per second, for $10 per month; 3 megabits per second, for $5 per month; 1.5 megabits per second, for $5 per month or 768 kilobits per second, for $5 per month.

Lifeline internet access also is sold by Verizon, CenturyLink, Comcast, Cox Communications, Charter Communications, Suddenlink, Frontier Communications and others. Generally speaking, those services sell for about $10 a month.

ISPs have reasons for connecting low-income households, irrespective of the existence of government subsidies. Customer relationships are important as they create the opportunity for lifelong buying habits, for example. Existing relationships also make it easier to sell additional products.   

The issue then is whether funds supporting demand might be better spent increasing supply, especially of broadband capabilities rather than voice.