February 4, 2007
Cell-phone taxes subsidize land lines, enrich telecoms
Cellular subscribers are paying hundreds of millions of dollars each year to subsidize land-line telephone service, enriching big telecommunications companies while providing little or no benefit to cell-phone users, reports The Washington Times in a special report.
"The subsidies are intended to reimburse the companies for providing traditional phone service in rough terrain and rural areas where stringing lines can be costly. But rampant development has transformed some of these backwaters into booming subdivisions, with no real adjustment to the distribution formula; others, such as the oceanfront celebrity playground of Malibu, are receiving subsidies simply because of their difficult topography.
Outdated formulas for tabulating the surcharges -- coupled with feeble government oversight -- have meant a windfall for phone companies, which are fighting to preserve them.
... Since 2003, 19 states together have collected more than $4 billion, an Associated Press investigation found. The burden is shared by cellular and regular phone customers alike. In some states, cell users appear to be footing more than half the bill. "
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