Outline of David Boaz's Address on Universal Service.
ACM Policy '98 Conference.

May 12, 1998.
Source: David Boaz.

Universal Service

Information Age offers unlimited possibilities and opportunities We want everyone to participate in those opportunities -- how do we do that?

Historically, new technologies spread very slowly First the rich, then the middle class and the poor -- but eventually everybody gets television, telephones, and so on. 98 percent have TVs, 94 percent have phones

The newer the technology, the more rapidly it spreads

It took 46 years for a quarter of the population to get electricity, 35 a telephone; but only 16 years for a quarter to get a PC, and only 7 for Internet access

People competing to make money in a market economy is the most effective system for spreading technology in a useful and efficient way

But some people want government to guarantee or mandate or subsidize universal access to new technologies

Several problems


Taxes and regulations discourage investment and impede the development and expansion of technology

[Tax something, or limit the price at which you can sell it, and you discourage companies from investing in it]

Subsidies privilege established services and technologies at the expense of innovation

[Subsidies inherently go to existing technologies, not to the next generation of technology; and the subsidies give the existing technology a financial advantage over new technologies seeking investment; new technologies tend to be cheaper and better, but subsidies may encourage development of earlier and less efficient technologies]


Taxes and subsidies, especially hidden taxes and subsidies, always create public-choice problems, that is, opportunities for industries and interest groups to profit by political activity rather than by invention, innovation, and production

Congress has created a big politicized pork barrel We're already getting gold-plated requests for ineligible products and services from schools

In addition, Congress has delegated taxing, spending, and regulatory power to the FCC in a manner that is probably unconstitutional; and then the FCC has delegated its powers to three corporations, which the General Accounting Office has said are illegal


Why should some people be taxed to provide goods and services to other people?

My brother still lives in the small town where we grew up. He was able to buy a big, new, two-story, four-bedroom house for half the price of my two-bedroom basement condo in downtown Washington. Why should I subsidize his Internet access?

Now, I'm not here to advise the FCC on how best to implement an unwise policy

But I'll make a couple of suggestions:

IF you think the government should tax some people to give money to others--whether schools, or poor people, or rural people--why give them subsidized telecommunications? Why not just give them money and let them decide how to spend it? It's awfully paternalistic to say "we don't trust you to spend your money wisely; we know that what you really need is Internet access, so we're giving you that instead of money."

But if we ARE going to set up a system of subsidies, make them explicit. Make it a line item on consumers' bills, so we know what we're paying for. Hidden taxes and subsidies are undemocratic.

Now, just a word about universal service for schools

American schools have a lot of problems

Inner-city schools in poor neighborhoods already spend lots of money; money isn't their problem

Schools need to teach children to read and write --- they don't need Internet access for that -- they'd be better off if we bought McGuffey's Readers for every school

Internet access won't help children who can't read and calculate

But the Education Establishment is short-sighted and overly responsive to fads and politics, so this is the latest demand: how can you expect us to teach kids if we don't have the latest technology?

Now I should say that I think market-driven schools would use technology intelligently. I have every confidence that soon the free-market revolution and the technological revolution will bypass the government-monopoly schools, and we'll see technology revolutionizing the delivery of education. But when that happens, it will be delivered by free enterprise, not politics.

A final word:

Critics of the marketplace find "market failures" under every bed. Usually "market failure" means "the failure of the market to supply what I want."

There's no good pizza in my neighborhood. If I ran the Pizza Access Project, I'd be demanding government pizza subsidies to remedy this market failure

But as my colleague Lawrence Gasman writes in a new paper, "A barefoot population is an opportunity for a shoe salesman--not a sign that the government should subsidize shoes."

I hope Congress, and Janet Reno, and Joel Klein will let the inventors and the salesmen spread new technology