Latta, Matsui Join Senate USF Revamp Working Group; Hearing Eyes Funding Options

House Communications Subcommittee Chairman Bob Latta, R-Ohio, and ranking member Doris Matsui, D-Calif., said during a Thursday hearing they’re signing on to the USF working group that Senate Communications Subcommittee leaders formed in May to evaluate how to move forward on a comprehensive revamp of the program that may update its contribution factor to include non-wireline entities (see 2305110066). The Thursday hearing largely focused on USF revamp and possible integration of the affordable connectivity program, as expected (see 2309120059).

“I look forward to hearing from stakeholders in working with my colleagues on both sides of the aisle and in the Capitol to find a solution that will ensure sustainable universal service for years to come,” Latta said. Recent federal funding via the 2021 Infrastructure Investment and Jobs Act and COVID-19 aid measures potentially duplicated existing USF programs, so “Congress needs to address whether we still need the USF and, if so, what it should look like,” he said. That review should include “addressing what programs the USF should fund, how the USF should be funded, and what reforms are needed to ensure the programs are run effectively and without waste, fraud, or abuse,” he said.

It's “imperative that we take a holistic look at” USF’s “support mechanisms to ensure they are solvent,” Matsui said. USF “is one of our most effective models of expanding connectivity,” but “without reforms,” its “future is uncertain,” she said: It’s “imperative that we get it on solid footing.” Lawmakers “really need to be smart about how we” parcel out broadband money “and be intentional about it,” Matsui said. “There have been mistakes made” in previous broadband funding initiatives “but let’s not make any mistakes this time.”

Congress should evaluate “the necessity of the USF and consider what it should support to ensure federal resources are achieving their intended purpose and that efforts aren’t being duplicated” before it turns to addressing its funding mechanism, said House Commerce Committee Chair Cathy McMorris Rodgers, R-Wash. USF’s current funding base comes from “contributions from providers based on a revenue source that is declining, causing the contribution factor to increase,” which “is not sustainable.”

House Commerce ranking member Frank Pallone, D-N.J., warned lawmakers to continue considering “the opportunity costs for those on the wrong end of the digital divide” as they evaluate USF’s future. The digital divide will “only be exacerbated with the rush to artificial intelligence and other emerging technologies, unless we ensure that all communities have equal access to robust, affordable internet service, with the digital skills necessary to take advantage of it,” he said.

USTelecom CEO Jonathan Spalter urged lawmakers to give the FCC “clear authority to assess the revenues of a more diverse array of companies,” including edge providers, to ensure USF is available to fund “ongoing operational costs of maintaining, repairing and upgrading this physical infrastructure over time” even after all the IIJA money is gone.

Technology Policy Institute President Scott Wallsten urged Congress to “allocate funds by true competitive bidding, specifically reverse auctions,” require “independent, rigorous evaluation” of USF disbursals “rather than only compliance checks” and “minimize the chances that grant recipients come back to ask for more money.”

Existing USF programs “may no longer make the best sense in their current form,” said Justin Forde, Mid-Continent Communications vice president-government relations. “Rather than continue to pump money into” USF, “Congress should await the results of the current investment” from IIJA “and carefully evaluate the money that was spent and the gain that was realized as a result.”

Affordable Connectivity Divisions

House Communications Republicans and Democrats appeared to divide more sharply on how to address ACP’s future. House Rural Broadband Caucus co-Chairs Angie Craig, D-Minn., and Rob Wittman, R-Va., released a letter they led with 23 other members to President Joe Biden and congressional leaders pushing for additional ACP funding. The program “is a valuable tool in connecting every American to high-speed, affordable broadband, and is in urgent need of additional funding,” the lawmakers said: “The continuation of the ACP will improve the economic case for deployment and reaffirm our continued commitment to provide broadband service to millions of unserved and undersold households.”

Rodgers, House Communications Vice Chair Buddy Carter of Georgia and other Republicans questioned ACP’s potential overlap with USF’s Lifeline program. “Congress has a responsibility to ensure that these programs are run effectively, and I do have questions about which program is most effective, how efforts can be consolidated or streamlined, and what a federal subsidy program for low-income Americans should look like going forward,” Rodgers said. Carter pressed on the extent to which ACP has brought in new broadband adopters rather than providing a new discount to existing subscribers. “We’ve got way too many” federal connectivity programs already, he said.

Pallone, Matsui and other Democrats emphasized the short time left for Congress to provide more funding for ACP before its $14 billion pot from IIJA runs out. Pallone characterized it as a “looming digital cliff” ahead of ACP “running dry,” likely “early next year.” If “that estimate holds true, providers may have to start sending 90-day ‘shut off’ notices to consumers as early as December, at the height of the holiday season, informing them that they will lose this benefit and their monthly internet bill will go up,” Pallone said. That’s “a present none of our constituents deserve to receive,” Matsui said: “I’m committed to doing everything I can to find additional support to give us time to find a lasting solution to sustain” ACP.

Sara Nichols, regional planner, North Carolina's Land of Sky Regional Council, testified strongly in ACP’s favor, saying its expiration “will lead to higher-cost infrastructure projects that slow down our deployment,” meaning “rural folks across the country and my neighbors” in western North Carolina “will have to wait even longer to have access to affordable broadband in their homes.” Spalter urged lawmakers to okay “appropriate stop-gap funding” for ACP until Congress can reach a “permanent solution” to extend its life. He suggested integrating ACP into USF as one possible option.

Lawmakers eyed some other broadband issues. Carter and other Republicans touted a range of broadband permitting measures, including the House Commerce-cleared (see 2305240069) American Broadband Deployment Act (HR-3557), as a way of improving connectivity access. Matsui castigated a report from Senate Commerce Committee ranking member Ted Cruz, R-Texas, that criticized NTIA’s administration of the $42.5 billion broadband equity, access and deployment (BEAD) program (see 2309150069). If states “are pressured to give up” BEAD funding “for other causes like paying down the national debt,” as Cruz suggests, “we could leave households unconnected,” Matsui said.