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This is a constantly repeated urban legend. The telcos never received anywhere near $300 billion in tax subsidies. It comes up constantly in threads like this, and the people claiming it can never back it up with actual data or proof of any sort, just vague statements.


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Not a tax subsidy, a spectrum subsidy. We gifted the digital TV spectrum to the telcos, 300MHz of public property.

In 2008, 52MHz of adjacent spectrum was auctioned for $19B, so do the math on what 300MHz would be worth.


The article you linked to in your other comment talks about spectrum being given to CBS and other TV broadcasters. Are you saying that CBS agreed to launch a broadband service in exchange for that spectrum?

I'm going to need some evidence to believe that.


It was part of the greater Telecom Act of 1996.. The broadcasters were gifted the spectrum largely because it was assumed that we'd have universal broadband by the time of the HD rollout. They're not causally linked, but the spectrum being swallowed by the broadcasters is a side-affect of the same nonsense.

A copy/paste from my other comment:

The more direct subsidies come from many other places. A good place to start is the Universal Service Fund[2]. Every landline bill, every cable bill, every mobile phone bill has a line item for "Universal Service" on it. These funds are collected from consumers then 'disbursed' to companies for them to provide service extensions. This has been happening since 1997. They've disbursed over $80B back to telecom companies as part of the telecom act, the GAO isn't too impressed with how it was being spent.[3] Besides the direct subsidies, they got favorable depreciation schedules,

The oddly interesting Robert Cringely did a special for PBS on the mess, which is probably the origin of the $200B number[4]:

    Over the decade from 1994-2004 the major telephone companies profited
    from higher phone rates paid by all of us, accelerated depreciation
    on their networks, and direct tax credits an average of $2,000 per
    subscriber for which the companies delivered precisely nothing in terms
    of service to customers. That's $200 billion with nothing to be shown for it.


[1] - http://object.cato.org/sites/cato.org/files/serials/files/ca...

[2] - http://en.wikipedia.org/wiki/Universal_Service_Fund

[3] - http://www.gao.gov/modules/ereport/handler.php?1=1&path=/ere...

[4] - http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_0026...


The USF isn't a subsidy to the industry. Its funded by a tax on the industry. It just shifts money from one kind of customer to another.

The USF is 100% passed through to consumers, and then distributed back to the telecoms. It's a subtle difference, but an important one.

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