Hardly at all. In fact, they do little more than reapportion income (em a task that lies outside the FCC's mandate.
The Federal-State Joint Board on Universal Service recently proposed to expand subsidy programs for Lifeline telephone service. Under the Telecommunications Act of 1996, the Joint Board seeks to add more low-income households to the telephone network.
Will such a strategy work? Our recent findings suggest not. They indicate that simple continuance of such programs, much less expansion, is a highly questionable proposition.
Lifeline programs sponsored by the Federal Communications Commission, in cooperation with the states and the local exchange carriers, are said to promote universal service. However, our estimates confirm that assertion only in the most limited sense. Our findings indicate that Lifeline programs impart a statistical effect on telephone service penetration rates, but also appear to show that the overwhelming majority of Lifeline subscribers would have taken network service even if the assistance program were not available. For these customers, the program simply redistributes income. Beyond that, we also found that very large increases in expenditures for these programs would have little effect on service penetration.