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Using Competitive Bidding to Reform the Universal Service High Cost Fund

Using Competitive Bidding to Reform the Universal Service High Cost Fund

Subsidies from the high-cost fund to rural telecommunications providers have increased from $1.7 billion in 1999 to nearly $5 billion today. Distributors of the fund should move from the current inefficient system to one that awards subsidies through competitive bidding. Such reverse auctions for universal service have been used successfully in other countries and could reduce subsidies and benefit consumers.

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