Universal Service Fund

In rural areas, many large internet service providers (ISP) offer voice-over-IP. Nathan Smith, Director of Economics and Policy at Connected Nation said, “It’s likely that a lot of [Broadband Equity, Access, and Deployment (BEAD)] sub-grantees will add voice for an additional revenue stream." However, the BEAD Notice of Funding Opportunity does not require grant applicants to offer voice service, though the actual grants will be made by state governments who set their own rules. Ciena’s Solutions Marketing Senior Adviser Vinicius Santos expects some state broadband offices to ask applicants

The National Digital Inclusion Alliance (NDIA) sees reshaping USF as a key potential strategy for achieving digital equity. Five key recommendations for Congress as it considers the future of USF are:

The Federal Communications Commission released the funding structure for its Enhanced Alternative Connect America Model (A-CAM) program. With the new offer, existing A-CAM program carriers and carriers that are still receiving legacy support will be funded for the deployment of voice and broadband-capable networks in their operating regions. NTCA – The Rural Broadband Association's Executive Vice President, Mike Romano, said that as a result of the FCC’s new offers, NTCA members have more options to deliver on a mission of universal connectivity. Meanwhile, NCTA – The Internet & Televis

LICT completed its spinoff of Michigan Broadband on August 31, 2023. The spinoff company is now known as MachTen. LICT, a rural broadband consolidator with operations in several states, withdrew from the Rural Digital Opportunity Fund (RDOF) program due to “substantial cost increases and other significant changes within the organization since we first participated and won in the RDOF public auction.”

The Senate working group tasked with assessing the Federal Communications Commission's Universal Service Fund (USF) collected comments on what it should focus on when considering potential reforms for the program. The USF funding mechanism was developed at a time when home phone service was the predominant method of communication.

Highline completed the construction of “The Thumb” service area, now offering fiber broadband to over 8,000 households in Sanilac, Tuscola, Lapeer, and St. Clair (MI) counties. Highline’s 823-mile fiber optic network was built with a combination of private investment backed by ITC Capital Partners and the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) grant program. While representing 14% of Highline’s total RDOF location commitment, Highline was able to complete this geographic portion of the network in two years rather than by the end of 2027.

The Congressional directive in the Telecommunications Act of 1996 is for the Federal Communications Commission (FCC) to ensure that there be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service. The dilemma is that the source of Universal Service Fund (USF) programs is end user (i.e. retail) revenues from international and interstate wireline and mobile services, as well as revenue from providers of interconnected Voice over Internet Protocol (VoIP) services.

A tour of the remaining United States Digital Divide from a home in Quincy (CA) to an unserved farm in Newton (NC) to a home in Troy (AL).  These locations (and more) are from a random sample of BEAD-eligible unserved and underserved locations that are not part of the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF) or Alternative Connect America Model (A-CAM) programs. 

We could theoretically reach 94% of the Unserved and Underserved locations nationally. We only miss 750,000 locations. The biggest misses by percentage are Iowa (61% of Unserved and Underserved), Idaho (66%), Illinois, Kansas, and California (all 71%), Minnesota (76%), and Colorado and Nebraska (about 80%). I find it helpful to think about this as a simple math problem: how far the money might go can be estimated by multiplying the number of locations that need service times the average cost to serve them. There are 11.9 million Unserved and Underserved locations nationally.

One of the primary goals in enacting the Telecommunications Act of 1996 was to let anyone enter any communications business—to let any communications business compete in any market against any other firm.