Can the AT&T-DirecTV merger end the Universal Service High-Cost Fund?

[Commentary] The "public interest statement" AT&T filed with the Federal Communications Commission asserts that the merger with DirecTV will make it viable for the company to "bring new and better high-speed broadband options to millions of Americans, many of them in rural areas."

The company estimates that this new broadband will cover 13 million "rural customer locations," 20 percent of whom currently have no terrestrial broadband service and 27 percent of whom have only one terrestrial provider. If AT&T's estimates are correct and it follows through on its commitment, the new network would put a significant dent in the number of households with no terrestrial broadband provider and increase competition for a significant number of other households who currently have only one. AT&T's plans should eliminate any remaining doubt as to whether the most basic justification of these subsidies needs a serious reassessment. In one fell swoop, this network would cut the number of households without terrestrial service by half and create terrestrial competition in areas where it does not exist today. Why should we continue to subsidize places that a private firm will serve without taxpayer subsidies?

[Wallsten is vice president for research and senior fellow at the Technology Policy Institute]