Abstract - The Information Society 16(2)

Using Cost Proxy Models with Census Bureau Data To Evaluate Universal Service Funding Options

P.B. Schechter

This paper combines cost proxy model estimates of the cost of the public switched telephone network in Colorado, with U.S. Census Bureau data on household income in Colorado, to examine the possibility of paying for universal telephone service, in a competitively neutral manner, without an explicit high cost fund. Cost proxy models can provide the cost of providing telephone service, by census block group, and Census Bureau data allow the calculation of mean household income, by census block group. With these two types of data, this paper shows that, if telephone service were priced as a tax, and if each household in Colorado paid between three-fifths and three-quarters of one percent of their annual household income for telephone service, there would be no “high cost deficit.” This paper also shows that there is no correlation between household income and cost of telephone service. Thus, it is not the case that all high cost areas are, for example, wealthy mountain communities.

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