Study: Half of telecom subsidy goes to phone company overhead

Half of the subsidies allotted to phone companies through the Federal Communications Commission's (FCC) "High-Cost" Universal Service Fund (USF) go to the general operations of phone companies, rather than to paying for phone lines, according to a study released on Wednesday. 

Fifty-nine cents of every dollar paid out through the fund go to general phone company operations, according to Scott Wallsten, vice president for research at the Technology Policy Institute, a think tank.

In the author's words, the money is going to "inflated overhead expenses." 

No matter the size of the firm, "more than half of all high-cost funds end up paying for goods and services that are unrelated to the goals of the program," Wallsten said.

Wallsten advocates for aggressive USF reforms, a project the FCC has undertaken this year. He wants the FCC to to focus more on low-income assistance instead of high-cost areas.

"The current universal service system is broken," Wallsten said. "The widespread belief among policymakers that it should evolve from subsidizing voice to subsidizing broadband presents an unprecedented opportunity for reform. We should not let this opportunity pass us by."