Calif. USF Fee Change Hurts Minorities More, Say MMTC, NAACP Amici

California’s shift to a state USF flat fee discriminates against people with less income, said minority advocates in a proposed amicus brief Monday at the 9th U.S. Circuit Court of Appeals. They supported T-Mobile and subsidiaries’ challenge to the CPUC order, which took effect last month, to set a $1.11 per-line surcharge to fund state USF (see 2305020038). “The low-income individuals who are the intended beneficiaries of the surcharge-funded program will be hardest hit,” wrote the Multicultural Media Telecom and Internet Council (MMTC), ALLvanza, NAACP's California Hawaii State Conference and LatinoJustice.

If the 9th Circuit doesn’t reverse the U.S. District Court of Northern California decision not to preliminarily enjoin the CPUC decision, “the CPUC’s new per access-line methodology for assessing surcharges will increase the cost of essential wireless services, a cost that will be borne disproportionately by lower-income, minority communities, harming the many Americans who remain on the wrong side of the digital divide,” the advocates wrote. NAACP believes the case’s outcome “will have important civil rights implications” for its members, said the amici. “People of color are more likely to be disproportionately burdened by regressive taxes and regulatory fees.”

Flat-fee surcharges are regressive and disproportionately affect low-income consumers, said amici: By assessing one fee per access line, "the CPUC places the same burden on a low-income individual who buys the minimal option for connectivity as a business or a millionaire who purchases every possible service for connectivity," said MMTC and others. The new contribution method will increase the monthly surcharge for wireless subscribers to $1.11 per connection from $0.27 on average under the previous, revenue-based approach, they said. "That means a typical family of four will bear an additional, new and unexpected, expense of $3.36 per month or $40.32 per year. The shock of such a new expense will hit communities of color and other marginalized groups the hardest and endanger their ability to access wireless and broadband service."

The CPUC argues it thought about impact to low-income users. The order exempts California LifeLine participants and incarcerated people from paying the state USF fee. But the minority advocates noted the LifeLine exception doesn’t “encompass all the low-income wireless customers, or potential wireless customers, who will be affected by the surcharge." Also, the amici questioned why the CPUC didn’t exempt affordable connectivity program participants.

"Low-income consumers are significantly more likely to rely on mobile wireless as their sole connection to broadband and other communications services," said the amici, citing a National Center for Health Statistics report from December: Nearly three-quarters of low-income adults live in wireless-only households, compared with 69% of all adults. "Wireless service addresses some of the greatest barriers to broadband adoption: providing both widespread access and affordable pricing structures that attract people of color, low-income households, rural populations, and other unserved and underserved groups." Wireless prices have decreased when taking inflation into account, they added: “The FCC preempts states from subjecting broadband to charges such as the CPUC surcharge."

The CPUC’s answering brief is due May 30 in case 23-15490. T-Mobile may file a reply within 21 days of the agency’s answer.