Industry Split on Future of USF High Cost Programs, Funding Mechanism

Industry disagreed whether the FCC should pause some of its high-cost Universal Service Fund programs amid the recent $65 billion federal broadband support from the Infrastructure Investment and Jobs Act, in reply comments posted Friday in docket 21-476 (see 2202180046). Others debated whether to expand the fund's contribution base or turn to direct congressional appropriations. The FCC sought comments on USF's future as part of its report to Congress due by Aug. 12.

There's "widespread support" for the goals of existing USF programs, said USTelecom. The FCC "should heed the call from many in the record to immediately act to update the contributions mechanism to reflect the current marketplace service demands and growing revenue sources," it said. The "historic" recent federal broadband investment "will not succeed unless the outdated Universal Service Fund is reformed," said the National Grange.

Direct appropriations "would provide predictability and certainty to the program," said the Wireless Infrastructure Association. It would be the "easiest and most fair approach to funding universal service initiatives," said AT&T, which the Free State Foundation echoed. AT&T opposed replacing the current contribution system with a connections- or telephone number-based assessment. A shift toward a connections-based mechanism "would be regressive and shift the USF funding burden from large users to residential consumers," said CTIA.

The contribution base should include "all companies who offer integrated services ... regardless of whether they own or operate their own transmission facilities or obtain them from third parties," said the Multicultural Media Telecom and Internet Council, National Action Network, NAACP and U.S. Black Chambers in joint comments. NCIC Communications backed the Prison Policy Initiative's request that the FCC revisit its previous decision to not "relieve inmate calling service ... customers from USF assessments on ICS bills." The FCC should "consider the burden of USF assessments on inmates and their families," NCIC said.

WIA backed Verizon's call to pause Phase II of the Rural Digital Opportunity Fund as the FCC "evaluates how the USF should be funded." A pause on new broadband deployment funding "can reduce the demands on the USF while stabilizing the contribution factor for at least the next five years" without contribution reform, said T-Mobile. Congress "provided the equivalent of 15 years of high-cost support to be distributed in the next few years," said NCTA, and "the time is ripe for the commission to pause any new high-cost support programs."

The FCC "must conduct an extensive analysis into whether continued high-cost funding is still needed" considering the federal funding, said Incompas. ACA Connects agreed: The FCC should "refrain from initiating new high-cost programs in price cap carrier territories until the results of all of these efforts can be evaluated."

NTCA disagreed, saying calls to end these programs "provide no basis in law, fact, economics, or good public policy." The FCC should instead "seek comment on proposals that would enhance these existing programs," NTCA said. The New York Public Service Commission called Verizon’s proposal "misguided.” Pausing RDOF Phase II "will only address the stability of the contribution factor in the short term," the PSC said. The Alaska Remote Carrier Coalition said comments suggesting the new federal broadband funding will be "the finish line" are "both short-sighted and without empirical support."

The record showed "USF support for [Lifeline] voice-only service is still needed as many customers still want voice-only service," said the D.C. Public Service Commission, asking the FCC to restore the $9.25 monthly support for the service. Increase Lifeline support to $30 per month "to be consistent with the [affordable connectivity program] support amount," said the National Lifeline Association. NaLa backed Public Knowledge's proposal to create a device program that gives low-income families "two $400 discounts" to buy devices.

The National Association of State Utility Consumer Advocates backed increasing Lifeline's monthly support and maintaining voice-only support. It opposed calls to "end the role of [eligible telecom carrier] designation and certain ETC obligations." The ETC designation process "has permitted many states to be a crucial partner with the FCC" in "blocking carrier diversions of federal USF program funds to nonexistent customers," said NARUC (see 2203140056). Eliminating it "means there will be less protection for USF program integrity," it said.