It may seem counterintuitive that a program that provides subsidizes could actually make people worse off, but welcome to the convoluted world of universal service.
Is Obamaphone good for the poor? Maybe not. | The Hills Congress Blog.
The point here is that by funding “universal service” with a flat 16% or so tax — euphemistically called a “contribution” — on all telecom services, the FCC has established a regressive scheme under which low-income people pay far more proportionally than the upper class. Bad policy, but USF is the third-rail of telecom politics.