A small rural telephone company in southern Oklahoma has been named to a national list of top recipients of support from a federal phone surcharge on customer bills.
Terral Telephone Co. had about 250 customers in southern Jefferson County near the Oklahoma-Texas border. It was No. 8 on a list of per-line costs in 2010 for support from the federal Universal Service Fund.
Terral received more than $2 million in 2010 from the federal Universal Service Fund, translating into a cost-per-line of more than $8,242, according to researchers for the Alliance for Generational Equity. The Las Vegas group is active in research on telecom and consumer issues.
The federal Universal Service Fund began in 1996 to boost access to telephone and Internet services across the country. It's funded by fees added to customer bills by wireless and landline telephone companies. The fund collects about $8 billion each year.
Universal Service Fund fees go to several federal programs, including a high-cost fund for rural service and Lifeline, a program that helps low-income households afford landline and wireless phones. Other programs support telecom services to schools, libraries and hospitals.
Terral's per-line cost reimbursements from the high cost portion of the Universal Service Fund grew from $6,228 in 2005 to $8,242 in 2010, the report said. The average per-line payout to rural phone companies from the program in 2010 was $580.
Topping the list was a phone company in Washington, with per-line costs of $23,491 for 16 customers around a resort lake town. The report's authors conceded that the top 10 companies on their list were outliers. But they said the program's high cost is an example of bad policy that subsidizes voice services to rural areas when wireless and satellite services are available to almost 98 percent of rural populations.
“This is a textbook example of how not to run a government subsidy program,” said report co-author Scott Wallsten, a fellow at the Georgetown University Center for Business and Public Policy and former economist at the Federal Communications Commission.
Terral charges residential and business customers between $14 and $16.50 each month for basic service.