Industry Experts, Advocates Eye USF Revisions Under Biden

USF is reaching a tipping point, industry experts said in recent interviews. Revenue continues to decline, and the contribution factor is expected to reach a record 31.8% (see 2012150018). As President-elect Joe Biden prepares to take office, there's some hope among broadband advocates that he will nominate someone to the FCC who brings the political will to tackle USF revisions.

The funding concerns aren't new, analyst Billy Jack Gregg said, and the solutions remain the same. Gregg served on the Federal-State Joint Board on Universal Service in the 2000s. The types of providers contributing to the fund could be expanded to include broadband, because most programs within USF rely on broadband services, but broadband providers don’t pay into the fund. “Frankly, it doesn’t make any sense,” he said.

USF is a “critical element in beating down the digital divide,” said Marty Newell, chief operating officer of the Center for Rural Strategies (CRS). But the current path for USF is unsustainable, said Christopher Mitchell, director of the Institute for Local Self-Reliance’s community broadband networks initiative. It doesn't make “sense for these programs to be subject to congressional appropriation because of the uncertainty,” Mitchell said. Public Knowledge CEO Chris Lewis said USF was “a fantastic system” for the telephone era, “but the FCC has not taken the responsibility of continuing to update it for the broadband era.”

One way to sustain USF could be increased investments in community broadband, Newell suggested, “where a community or nonprofit provider is not looking for the same return, so rural is not at the kind of competitive disadvantage that it is for anybody whose fiduciary responsibility is to the shareholders.” But the last time the FCC sought changes was around 2015, and no final action was taken. Gregg said one of the main factors delaying changes has been disagreement on how to measure revenue. “Anytime you change the rules of a system like this, there’s always going to be winners,” he said.

Another point of contention has been minimum service standards for mobile broadband usage within the Lifeline program. Providers like the National Lifeline Association unsuccessfully sought to block the FCC from raising the standards in December (see 2011300069). Newell said there should be some standard to compete in a global economy, and having something is better than nothing at all.

The pandemic has shined more light on the digital divide, which CRS's Newell sees as hopeful for expanding access to services that rely on USF funding, like rural telehealth and education. “As you hold up those problems, you get the attention of policymakers,” he said. Congress allocated nearly $7 billion for the purpose in its second COVID-19 relief package (see 2012210055). There has also been more focus on Indian Country's access to telehealth services, which Newell found particularly helpful in bridging the digital divide.

Biden and Congress can take additional steps to achieve universal broadband and address the sustainability of the USF, Lewis said, but “until we see the political will to achieve that goal, we're not going to see the reform needed." The president-elect and Senate leadership should commit to move quickly to nominate a fifth FCC commissioner and “get to work on closing the digital divide, including USF reform,” he said.