Total demand for USF programs topped $9 billion in 2021, reported the Federal-State Joint Board on Universal Service on Friday. About $5 billion in high-cost support was claimed in 2020, with FCC staff estimating a similar amount claimed in 2021. Demand for low-income programs in 2021 was more than $1 billion. More than 7 million consumers participated in Lifeline in 2020, with 7,000 tribal subscribers participating in Link Up. More than $1 billion of the $2.4 billion committed to E-rate in 2021 was disbursed. Total rural healthcare funding disbursed was $49 million as of June 30. The USF Q4 2021 contribution factor was 29.1%, down from 31.8% in Q3.
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.
California Public Utilities Commissioners voted 5-0 to deny LTD Broadband the application approval it needed to get about $187.5 million in Rural Digital Opportunities Fund (RDOF) support over 10 years. At a virtual meeting Thursday, commissioners also by unanimous consent cleared multiple California Advanced Services Fund (CASF) grants that LTD and others said partially overlapped areas where they won RDOF support (see 2112140019, 2112090011 and 2112080046). The CPUC got more comments Wednesday on a plan to shift to connections-based state USF contributions.
The federal government is increasingly rife with spectrum fiefdoms among agencies, contrary to the FCC's core purpose as a centralized point of spectrum policy decision-making, Commissioner Brendan Carr said Wednesday during the Practicing Law Institute's annual telecom policy and regulation seminar. He said updating memorandums of understanding would help, but ultimately there must be deference to the expert agency making a final decision. Such "devolution" of spectrum policy will be a permanent fixture, but that trend needs some reversing, he said.
LOUISVILLE -- Just as states are pursuing a few approaches to shore up their own USFs, state regulators have a similar array of ideas about how the federal government can put its funds for broadband and other telecom services on sounder financial footing. In interviews on the sidelines of NARUC's gathering and in phone interviews for those who didn't travel here for the Sunday-Wednesday event, commissioners generally agreed the path the federal USF is on isn't sustainable because the percentage fee on some telecom services that consumers are levied on their monthly bills has gone up in recent years.
The FCC Wireline Bureau paused phasedown of Lifeline voice-only support until Dec. 1, 2022, said an order Friday (see 2111050051). Staff waived the increase of minimum service standards for mobile broadband until then, as expected (see 2111030038). The bureau didn't address the National Association of State Utility Consumer Advocates’ petition for reconsideration and instead acted on its own motion.
A petition challenging the FCC USF Q4 contribution factor is likely to fail on procedural grounds but may be part of a bigger challenge to dismantle USF entirely, legal experts said in recent interviews (see 2110010062). Some said it may be an effort to force a reevaluation of the nondelegation doctrine that prohibits Congress from delegating legislative powers to executive branch agencies.
Provisions in the $65 billion broadband title in a developing infrastructure spending package weren't completely finalized Thursday, a day after the Senate cleared an initial test cloture vote 67-32 on proceeding to a shell bill (HR-3684). A bipartisan group of senators agreed Wednesday on the outlines of the package (see 2107280065). The Senate will vote Friday on the motion to proceed to HR-3684. Telecom-focused senators in both parties told us through Thursday that the thorniest broadband issue -- the extent of pricing transparency and digital redlining language -- remained in flux.
Senate Commerce Committee ranking member Roger Wicker, R-Miss., and Sens. Shelley Moore Capito, R-W.Va., and Todd Young, R-Ind., filed the Funding Affordable Internet with Reliable (Fair) Contributions Act Wednesday to explore requiring “Big Tech” companies to contribute to USF. It would direct the FCC to study “the feasibility of funding Universal Service Fund through contributions supplied by edge providers” like Google-owned YouTube and Netflix. The study should examine “the class of firms and services on which contributions could be assessed, including an inquiry into the specific sources of revenue potentially subject to contributions, such as digital advertising revenue and user fees” and USF contribution “equity issues.” The bill wants the FCC to examine equity of “alternative contributions systems” like federal appropriations and “whether a flat or progressive rate is most appropriate.” More “consumers are moving to internet-based services,” which “raises concerns about the sustainability of fees collected from consumers’ telephone bills,” Wicker said. “As online platforms continue to dominate the internet landscape, we should consider the feasibility of Big Tech contributing to the USF to ensure rural areas are not left behind as we work to close the digital divide.” Commissioner Brendan Carr, who proposed making edge providers pay into USF (see 2105240037), said “requiring Big Tech to contribute is more than fair.”
The FCC and Universal Service Administrative Co. should seek additional funding to extend the emergency broadband benefit program “for as long as necessary,” or at least until Lifeline reimbursement is increased, said a draft resolution to be considered by NARUC during its July 18-21 meeting. The draft recommends Congress phase out the program’s bypass of the state eligible telecom carrier designation process and the FCC address problems with enrolling eligible households through the national verifier. The draft also seeks Lifeline revisions. Also under consideration is a broadband expansion task force recommendation to prioritize areas with less than 25 Mbps download and 3 Mbps up (see 2106250048). It more participation in NTIA initiatives and the Federal-State Joint Board on Universal Service. It recommends a “centralized database of carriers” that don't meet USF obligations, and regularly testing network speed, latency and reliability for carriers receiving federal or state funding. NARUC will consider whether to urge the FCC to make the EBB program more permanent, as well as a resolution backing the California Public Utilities Commission’s petition to reconsider the confidentiality of filings in the network outage and disaster information reporting systems. NARUC’s telecom panel unanimously supported the CPUC's petition in November (see 2011100033). The FCC didn’t comment Wednesday.
The House Appropriations Committee’s proposed report on the Financial Services Subcommittee-cleared measure to fund the FCC and FTC in FY 2022 seeks further work on changes to USF contribution rules and wants additional study of how municipal broadband can expand connectivity access. The committee was still considering the underlying bill late Tuesday afternoon. Dueling panels of telecom policy officials disagreed on how lawmakers should translate into legislation the $65 billion broadband component in a bipartisan infrastructure package framework President Joe Biden endorsed last week (see 2106240070).