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Comment by cannonedhamster | Hacker News Reader

Thee whole purpose of monopolies an the actual subsidies that they take with glee is to cover these costs. I completely disagree, Congress should compel these people to provide what they stated. If Romania can provide fiber for their rural populations for cheaper than we have there's no excuse for not being able to provide internet in the United States for all but the most remote locations.

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Congress banned monopoly cable franchises in 1992. These companies have no legal protection from competition that would justify a mandate. They also don’t generally receive subsidies. The universal service fund only recently started offering subsidies for broadband. (Obviously, if a company elects to take those subsidies, it should build the infrastructure they say they will build.) And at least for larger providers, the “subsidy” really isn’t a subsidy. The money just comes from a special tax on the industry, so for say AT&T, the “subsidy” is really coming out of their own pocket.

As to Romania—that country has vastly lower broadband penetration in rural areas (where more than half the population lives) than the US: https://www.broadbandtvnews.com/2018/05/22/romanian-broadban.... Also, costs are not easily comparable across countries. The vast bulk of costs of building fiber in the US is labor costs, both for initial build and for ongoing maintenance. Building infrastructure in a blank slate with developing country labor costs is a very different proposition than doing the same thing in the US. (It’s also why China can build tons of high speed rail while the California HSR project ran out of money before getting out of Fresno.)

You’re totally right that it’s much harder to run fiber across the US vs a much smaller country. However I don’t think you’re accurate on a few other points:

> the “subsidy” is really coming out of their own pocket

ISPs lobbied really hard during the 1996 rewrite of the USF so they could add the “Universal Access Fund” line item on your bill separately. So, by and large, it’s not coming out of their pocket.

> The universal service fund only recently started offering subsidies for broadband

Not sure what you’re referencing when you talk about subsidies, but the USAC website says that they offered $200m in 2000, and the number quickly goes into the billions from there.

https://www.usac.org/about/tools/publications/annual-reports...

The USF is charged to providers. Providers can seek to recover some of that through a USF line item on the bill, but that's just optical cover. The actual burden of the tax is split between the provider and customer according to the relative elasticity of supply versus demand: https://www.investopedia.com/terms/t/tax_incidence.asp. (While I'm not aware of a specific study on the issue, telecom service subject to the USF has low elasticity both on the supply side and demand side, so it's probably a reasonable assumption that AT&T is bearing a big chunk of the tax incidence.)

As to broadband subsidies: prior to 2011, the universal service fund only covered subsidies for broadband to schools and libraries, through the e-rate program. It wasn't until 2011 that the USF started subsidizing broadband generally through the Connect America Fund.

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