Disturbing Trend in USF Spending

[Commentary] Under the current structure, the Universal Service Fund (USF) and Interstate Telecommunications Relay Services Fund (TRS) are scheduled to grow to $10 billion in 2015 and steadily increase thereafter to reach $11 billion in 2024.

Most of that growth will continue to be attributable to USF. This means that in 2024, the funds will be over 21% larger than they were in 2013 and, in those 11 years, the funds will spend a remarkable $13 billion more than they would have if funding had been kept at 2013 levels. Importantly, this trajectory just represents present circumstances. In other words, it does not assume that the FCC will make any programmatic changes that would further increase spending. So what do CBO’s USF projections mean for the average American? They represent an ever growing strain on their pocketbook. That is because the FCC --through an entity called the Universal Service Administrative Company (USAC) -- simply estimates what will be needed to cover the planned expenditures for the USF programs, assesses telecom providers, and this cost is inevitably passed on to consumers in the form of a fee on their phone bills.

Given the fund’s projected growth, we must be increasingly sensitive to the burdens that this fee creates and strive to limit the amount of any increase. That is why I am concerned about the budget aspect of the upcoming reforms to the E-Rate program.