Top-to-Bottom Review of Universal Service Fund

Federal Communications Commission Chairman Brendan Carr has been promising a top-to-bottom review of the Universal Service Fund, and on April 29, the FCC released a Notice of Proposed Rulemaking that looks specifically at the High-Cost fund mechanisms that provide ongoing subsidies to internet service providers operating in very rural markets. The High-Cost fund is the USF program that most people in the country (and even the industry) don’t understand. The High-Cost program was initially created to support rural telephone companies in rural markets with the highest network costs per customer. Over time, the subsidy transitioned to provide support for rural broadband networks. Subsidies are now paid through several mechanisms: Connect America Fund Broadband Loop Support, High Cost Loop Support, and the sunsetting Alternative Connect America Cost Model I, Revised A-CAM I, and A-CAM II mechanisms. Each of these plans is available to a different set of carriers, and the rules for participating in these plans are written in legalese that would probably confound most readers. This new FCC NPRM asks a lot of questions about High-Cost support, with an eye towards possibly radically changing the program.