The Federal Communication Commission’s multi-billion dollar Universal Service Fund (USF) has a rocky history of waste and abuse.  Yet, a new proposal by the Commission would make it even worse, directing up to $400 million in universal service support to subsidies for just two network providers.  And, yes, their names are literally written in the FCC’s proposal.

The newly outlined “health infrastructure program” is intended to help rural health care providers to connect to broadband networks.  The FCC’s plan is to subsidize up to 85% of the cost for health care organizations to connect to broadband networks, but only if they hook up to ones run by two university and government consortiums: Internet2 or National LambdaRail.

This is an absurd attempt at picking winners and losers in the marketplace.  Much can be said about giving the Commission yet another multi-million dollar subsidy program to administer.  But, even worse is their attempt to redirect money toward only two network providers.  This enormously disrupts the free-market by skewing consumer choice and slowing broadband investment.  Why would a rural health care institution ever buy from a private broadband provider if they can get an 85% “discount” with two others?  And what incentive does the private sector have to invest in rural broadband networks if government subsidies ensure they can’t fairly compete for customers?

The Commission is well known for picking winners and losers in the marketplace.  Their current push for Net Neutrality regulations would detrimentally micromanage Internet service providers’ business models, favoring Google and others in the Internet ecosphere.  And before they were recently shot down in court, the FCC had a long history of applying unclear and inconsistent rules and fines censoring speech on broadcast TV and radio.  If it’s approved, we can add the “health infrastructure program” to the pile.