While the U.S. Supreme Court’s decision last month upholding the USF (see 2506270054) was a win for consumers, questions about the future of the fund won’t go away, Pillsbury lawyers wrote Thursday. Carriers that pay into the USF “get to decide whether to pass those costs through to their customers or absorb [them], and due to the high cost, most choose to pass some if not most of that fee on to customers in the form of a line-item USF charge on their phone bill,” the lawyers blogged. Now that the fund has survived judicial challenges, “advocates will look to Congress and the FCC to expand the contribution base to ensure sustainable funding in the face of eroding revenues from traditional telecommunications sources and the rapid growth of broadband and other connectivity services.”
The FCC, Congress and others have been considering alternative funding mechanisms for USF, and now that the program's legality has been affirmed, they can move forward, Parks Associates analyst Kristen Hanich wrote Tuesday. The U.S. Supreme Court last month upheld the constitutionality of USF's contribution scheme (see 2506270054). With only 25% of U.S. internet households receiving phone service, USF "must evolve in order to meet the needs of Americans for the next 30 years," she said.
Lawyers for the Schools, Health & Libraries Broadband Coalition and the Benton Institute for Broadband & Society said Monday that the U.S. Supreme Court’s decision last month upholding the USF was a clean win for the program and the FCC (see 2507020049). By rejecting the challenge -- brought by Consumers’ Research, a right-wing group -- SCOTUS lifted a cloud that has loomed over the USF for years, the lawyers said during an SHLB webinar.
Leaders of the House and Senate Commerce committees who are spearheading the bipartisan congressional working group on a USF legislative revamp, which relaunched in June (see 2506120091), told us they plan to begin meeting again this month. But they said they feel less pressure to quickly reach an agreement on legislative recommendations since the U.S. Supreme Court's recent ruling in Consumers’ Research v. FCC, which found that USF’s funding mechanism is constitutional (see 2506270054). Sens. Ben Ray Lujan, D-N.M., and John Thune, R-S.D., formed the working group in 2023 as Communications Subcommittee chairman and ranking member, respectively (see 2305110066).
Former FCC Commissioner Mike O’Rielly said Wednesday that while he has long been a critic of the USF, he was relieved that the U.S. Supreme Court last week didn’t overturn the program (see 2506270054). Cutting off support that USF recipients need would be “a terrible outcome,” O’Rielly said during a Broadband Breakfast webinar.
The U.S. Supreme Court upheld the FCC’s USF contribution scheme in a 6-3 opinion Friday in Consumers’ Research v. FCC, but dissenting and concurring opinions from several conservative justices appeared to invite future challenges, attorneys told us.
The U.S. Supreme Court ruled 6-3 on Friday in Consumers’ Research v. FCC that the USF's contribution scheme doesn’t violate the non-delegation doctrine. The decision overturned an en banc ruling from the 5th U.S. Circuit Court of Appeals. Justice Elena Kagan wrote the majority opinion, while Justice Neil Gorsuch wrote a dissent, which was joined by Samuel Alito and Clarence Thomas.
The design of the U.S. universal service subsidy regime is inherently flawed and lacks strong oversight, Competitive Enterprise Institute Senior Policy Analyst Solveig Singleton wrote this week. Rather than reform, it should be scrapped in favor of a market-centered policy that would better provide universal service at a reasonable price, she said. Existing universal service mechanisms "are unnecessary, price- and market-distortive, wasteful, and unaccountable [and] amount to a regressive and constitutionally inappropriate tax." Singleton said subsidies to high-cost areas "are no longer necessary," since mobile and satellite service have eliminated such areas. USF is also made superfluous by other subsidy programs supporting the deployment of advanced services, she added. Instead, she argued in favor of "voucher-type subsidies for low-income users," as that approach -- funded from general tax revenue -- "would limit distortion of consumers’ and carriers’ decisions." Any subsidies for rural health care and educational institutions should be funded from general revenue as well, she said. "Competitive neutrality would be restored."
Strand Consult last week poked holes in a recent study by the Computer & Communications Industry Association, which warned that a 5% USF fee on cloud service revenues, passed through to customers, would cause a hit to the U.S. GDP of up to $148.18 billion (see 2506030049). The study was written by Raul Katz, director of business strategy research at the Columbia Institute for Tele-Information at Columbia Business School. Katz modeled a 5% contribution rate, which would deliver $25 billion, “almost three times the current USF,” Strand said. “No policy maker had made such a proposal. The rate appears to be amplified on purpose to paint a picture of a doomsday scenario.”
The FCC Wireline and Wireless bureaus and the Office of International Affairs have signed off on the transfer of control of Windstream and Uniti Group as part of the two companies' merger, said a public notice Wednesday (docket 24-165). The merger was announced in 2024 and is expected to close in the back half of this year. The FCC said it concluded that the deal wouldn't reduce competition or hurt USF programs.