IEP Scholar Sarah Oh’s Paper on the Effects of the Discount Rate and Urbanicity on E-rate Funds

IEP Scholar Sarah Oh has written a paper entitled Effects of the Discount Rate and Urbanicity on E-rate Funds from 1998-2012. The abstract from the paper reads as follows:

Broadband in schools has been financially supported by the E-rate program for over fifteen years in the United States. Although prior studies have measured impacts  of demographic criteria on fund distribution, this study focuses on the discount rate and urbanicity type of schools and students on priority 2 internal connections funds from 1998-2012. Funds aggregated by state are regressed on average discount rates of fund recipients. Funds are also regressed  on  the  number  of  city,  suburb,  town,  and  rural  schools  and  students  per  state. Treatments are defined to include and exclude New York, California, and Texas, three states with the largest share of funds. The effect of the discount rate is statistically significant in both treatments. The effect of urbanicity is statistically significant for city schools and city students over all states, but this effect becomes insignificant when excluding New York, California, and Texas. A quasi-experiment on data from FY2010, a year when the FCC waived the discount rate criteria, also supports these results.


The full paper can be downloaded here:

Download (PDF, Unknown)

Hazlett and Wallsten Paper on USF Waste Covered by Marketwatch, Computerworld

A recent paper by IEP Director Dr. Thomas Hazlett and Scott Wallsten, senior fellow at the Technology Policy Institute, has been covered by the Wall Street Journal’sMarketwatch” and the online news-magazine Computerworld. The paper, “Unrepentant Policy Failure: Universal Service Subsidies in Voice & Broadband,” describes how the FCC’s Universal Service Fund levies a substantial tax on long-distance telephone service and enriches inefficiently small telecommunications firms, yet fails to make an even modest impact in improving access to phone and broadband service.

News coverage of the piece has largely focused on egregious specific examples of waste cited in the paper, such as the USF granting annual subsidies of over $20,000 for single phone lines. While noteworthy, Hazlett and Wallsten draw attention to the full extent of USF waste. The scholars estimate, for instance, that $64 billion has been spent on telephone carrier subsidies, extending voice services to, at most, one-half of one percent of US households. Despite recent cosmetic USF reforms, USF continues to incentivize inefficient behavior by telecommunications firms.