The 5th U.S. Circuit Court of Appeals in a 9-7 decision sided with Consumers' Research following an en banc rehearing of the group's challenge of the FCC's Universal Service Fund contribution methodology. Calling the contribution factor a "misbegotten tax," the court in a Wednesday ruling in docket 22-60008 held that as a "practical matter," the Universal Service Administrative Co. "sets the USF tax" that's "subject only to FCC's rubber stamp" (see 2406180055). In a statement, Chairwoman Jessica Rosenworcel said the agency will "pursue all available avenues for review."
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
Expect a Donald Trump White House and FCC to focus on deregulation and undoing the agency's net neutrality and digital discrimination rules, telecom policy experts and FCC watchers tell us. Brendan Carr, one of the two GOP minority commissioners, remains the seeming front-runner to head the agency if Trump wins the White House in November (see 2407120002). Despite repeated comments from Trump as a candidate and president calling for FCC action against companies such as CNN and MSNBC over their news content, many FCC watchers on both sides of the aisle told us they don’t expect the agency to actually act against cable networks or broadcast licenses under a second Trump administration.
States hope they can increase federal engagement on telecom no matter who is president in 2025, current and former state utility commissioners said in interviews. In a possible second Donald Trump presidency, “the states and localities are really going to be where broadband policy is made,” predicted Gigi Sohn, Benton Institute for Broadband & Society senior fellow. Some said there is a lot of uncertainty about how a Trump administration might change rules for state grants under NTIA’s $42.5 billion broadband equity, access and deployment (BEAD) program.
Sustaining broadband networks is a “paramount objective” of the Nebraska Universal Service Fund (NUSF) high-cost program, especially with the "influx of federal and state deployment funding," the Nebraska Public Service Commission decided in a Tuesday order. Commissioners voted unanimously Tuesday for two orders on state USF changes (docket NUSF-139) and to consider sanctions against Windstream for three separate 911 outages (docket 911-076).
State lawmakers may be more inclined to pursue broadband affordability policies in the wake of recent FCC and court rulings as well as last month's ending of the federal affordable connectivity program (ACP), multiple telecom experts said last week. Connecticut Senate Majority Leader Bob Duff (D) told Communications Daily he hopes “these developments will lead to stronger support in 2025” for an affordable broadband proposal that failed this year. However, some anticipate ISPs will likely object, and fiscal constraints could limit states' efforts.
The House Appropriations Committee continued debating Thursday afternoon the Financial Services Subcommittee’s FY 2025 funding bill, which increases the FCC’s annual allocation to $416 million and decreases the FTC’s annual funding to $388.7 million (see 2406050067). Communications policy lobbyists said panel Democrats might attempt removing riders from the measure that bar the FCC from using funding for implementing its net neutrality and digital discrimination orders, but they hadn’t sought votes on such amendments at our deadline.
FCC Commissioner Anna Gomez told us during an exclusive Communications Daily Q&A that evaluating assessments made on consumers' bills as part of funding the Universal Service Fund is her top issue amid calls for contribution reform (see 2404190043). Sworn in in September, Gomez also mentioned concerns about USF's future and the affordable connectivity program. She also urged ISPs to create their digital equity plans with "intentionality."
House Republicans pushed back during a Friday Communications Subcommittee field hearing in Bakersfield, California, against calls for Congress to allocate stopgap funding to the FCC’s ailing affordable connectivity program and the rollout of NTIA’s $42.5 billion broadband equity, access and deployment program. ACP supporters believe they made progress last week toward securing a path that keeps the program funded in FY 2024 despite proposals attaching funding to the FAA Reauthorization Act (HR-3935) failing in the Senate (see 2405100046).
The Universal Service Administrative Co. owes Data Research Corp. (DRC) $9.9 million, plus interest, for broadband services it provided more than 20 years ago to the Puerto Rico Department of Education (PRDOE) under the federal E-rate program, DRC's complaint Wednesday alleges (docket 3:24-cv-01211) in U.S. District Court for Puerto Rico in San Juan.
A new bid by Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M., and other senators to attach stopgap funding for the FCC’s affordable connectivity program and additional money for the Secure and Trusted Communications Networks Reimbursement Program to the FAA Reauthorization Act (see 2405070083) faces resistance from chamber leaders. Senate Majority Leader Chuck Schumer, D-N.Y., and other leaders are skeptical about including nongermane language in the FAA package. A previous proposal to attach ACP money drew opposition during a Tuesday night “hotline” that Senate leaders ran to gauge lawmakers’ support for amendments in the package.