Many Seek Contributions, High Cost Revisions in FCC's USF Report

Commenters on the Universal Service Fund generally agreed its funding system is unsustainable and in need of changes but disagreed on the solution, in comments posted Friday in docket 21-476 (see 2112220051) as the FCC prepares its report to Congress on the future of USF.

Nearly all commenters recommended ways to revise USF’s contribution base and noted how recent federal broadband funding may affect existing programs. Others suggested pausing certain high-cost programs until the new federal broadband programs end. The report to Congress is due Aug. 12. The comments “covered a really wide range of topics,” Chairwoman Jessica Rosenworcel told reporters Friday. “I want to make sure we take a good look at the reply comments” before offering any thoughts, Rosenworcel said.

More than 300 groups, including the National Digital Inclusion Alliance, Public Knowledge, Schools, Health & Libraries Broadband Coalition, Ad Hoc Telecom Users Committee, Incompas, NTCA, Rural Wireless Association, Voice on the Net Coalition, WTA and more than three dozen ISPs, backed the FCC taking “immediate action” to include broadband internet access services (BIAS) in USF’s contribution base. “When it comes to reform of this critical mechanism, the perfect should not be the enemy of the better,” the groups said.

It’s “no secret” that the current USF contribution factor is “unsustainable,” said Vermont’s Department of Public Service, backing including BIAS revenue. The agency recommended Congress amend Section 254 of the Communications Act to refocus USF’s funding base on “transmission capabilities instead of the type of service.” The California Public Utilities Commission said broadband services should be included in USF’s funding base and the Lifeline eligibility should include the Special Supplemental Nutrition Program for Women, Infants and Children recipients.

Consider raising the de minimis contribution threshold so smaller broadband providers aren’t required to contribute “unless their assessable revenues exceed a certain floor,” said the Wireless ISP Association. These filers should be allowed to “elect to contribute to USF as an alternative to covering USF pass-throughs to upstream providers,” WISPA said, saying Congress should “fundamentally alter the commission’s statutory authority” so it funds broadband instead of telecom services.

Including BIAS revenue "is not, by itself, a solution," said Verizon, suggesting the FCC seek authority to "use a portion of spectrum auction proceeds." AT&T said the FCC should “urge Congress to appropriate funds directly” because it’s “the most straightforward means of spreading the funding requirements.” Launch a proceeding that examines expanding the contribution base to assess broadband revenue “across the industry,” suggested Lumen: “A stabilized contribution factor will lessen the financial burden on consumers … and would level the playing field for enterprise services.” ACA Connects backed “reassess[ing] who benefits from universal service” and “allocat[ing] the assessment based on ability to pay.” The FCC should evaluate whether it has the authority to require contributions from entities that offer customers an information service, said USTelecom, citing the commission's decision to extend the base to interconnected VoIP providers.

FCC Commissioner Brendan Carr proposed last year that Big Tech pay into USF, an idea Rosenworcel called “intriguing” (see 2106010041). Several commenters asked the FCC to consider it. “Require the entities who use our networks the most to pay for their usage,” the Small Company Coalition asked, citing social media and internet marketplaces. Hawaii's Broadband & Digital Equity Office backed Carr's proposed model. "Tying USF funding to those profiting from the gaming, streaming and bandwidth-demanding content users want would greatly improve the sustainability of the fund for present and future generations,” said the Internet Innovation Alliance. It’s “preferable” that USF be funded through congressional appropriations and contributions from Big Tech, said Free State Foundation.

The high- and low-cost programs should "reflect the newly-enacted broadband deployment and adoption programs," Verizon said. There's "no need, at least in the short- or medium-term," for additional high-cost funds for rural broadband deployment, the provider said, saying the Rural Digital Opportunity Fund Phase II auction should be canceled. NCTA agreed, citing the “obvious overlap” between the broadband, equity, access and deployment program and RDOF.

The report should assess "ways to scale back USF programs dramatically" given recent federal broadband funding, said the Information Technology and Innovation Foundation, suggesting high-cost programs be eliminated. “Assess the deployment efforts facilitated by appropriated funding prior to moving forward with additional high-cost universal service funding,” advised CTIA.

The infrastructure law’s broadband deployment funding “requires the commission to fundamentally reassess the utility of the USF High-Cost Fund,” said Free Press. The group noted the “total size of the USF is remarkably stable” and the decline in assessable mobile revenue “means large businesses are carrying slightly more of the USF funding burden.”

Consider updating the alternative connect America cost model program speed requirement “to a minimum of 100/20 Mbps for most eligible locations,” said the ACAM Coalition. It would “align the program’s service commitment levels with the broadband speed standard” set in the Infrastructure Investment and Jobs Act, the group said.

Expand universal service goals to include broadband network and service reliability, said the National Association of State Utility Consumer Advocates. The FCC should also accelerate its broadband mapping efforts as the new federal broadband programs will rely on these maps, NASUCA said.

Maintain a voice-only option for Lifeline subscribers, said the Massachusetts Department of Telecommunications and Cable, noting one in five subscribers in the state uses the service. The Wireline Bureau paused the phasedown of voice-only support until Dec. 1 after several groups asked the FCC to maintain the offering (see 2111050058). The New York Public Service Commission backed retaining the $5.25 voice-only subsidy, and said the FCC could assess broadband services to “provide a more stable contribution base” as voice-only revenue declines.

Allow broadband service to be offered through the Lifeline program, said the National Lifeline Association, saying increased monthly support is needed. The emergency broadband benefit program and affordable connectivity program’s enrollment statistics show the programs are “a far more attractive program to service providers and to low-income consumers than Lifeline,” NaLa said.

USF is being challenged in the 6th U.S. Circuit Court of Appeals by Consumers’ Research, but the case was held in abeyance until the FCC completes its proceeding on the USF report (see 2110050056). The agency sought comments on issues Consumers’ Research raised. The group said USF is “an unconstitutional tax raised and spent by an unaccountable federal agency” and the “failures of [USF] confirm the wisdom of the Framers in vesting control over the purse in a politically accountable legislature.” The constitutionality of USF is “a subject of considerable doubt,” said TechFreedom, saying the FCC should “study the nondelegation matter closely” and “recommend ways to make the statute authorizing the USF clearer.” It’s “only a matter of time before the entire legal basis for USF fails in court,” TechFreedom said.