Universal Service Fund

The fate of the Universal Service Fund (USF) remains uncertain, as the Fifth Circuit Court of Appeals held an en banc (before the entire bench) hearing to debate whether the current system is illegal The USF includes four main programs aimed at addressing the digital divide – High Cost, Lifeline, E-Rate (for schools and libraries) and Rural Health Care.

The Federal Communications Commission is seeking further comment on the 5G Fund for Rural America to reignite the FCC's plan to expand the deployment of 5G service to rural communities that remain trapped on the wrong side of the digital divide.

According to the Federal Communications Commission (FCC), 8.3 million households lack access to high-speed broadband. Providing universal access to communications service—initially voice service and now broadband—has always been a challenge in the United States. Although connecting urban, populated areas is relatively easy, serving sparsely populated rural areas is difficult due to differences in terrain and population density.

I want to start by thanking the Subcommittee for its decision to provide full funding for the Federal Communications Commission in your Fiscal Year 2024 FSGG bill. The work of the FCC matters. I’d like to highlight some the Commission’s recent work, made possible by your support of our budget, under my leadership. First, the Commission’s Affordable Connectivity Program, the largest broadband affordability program in our nation’s history, now helps 21 million households pay for high-speed internet service.

Two broad proposals have been advanced to modernize the Universal Service Fund's contributions system: 1) expanding the contribution base to include revenues from broadband internet access service, and 2) broadening the USF contribution base to include entities including edge providers such as streaming video providers, digital advertising firms, and cloud services companies. The most economically efficient option for reform is to expand the contribution base to include broadband internet access service revenues.

In June, the Biden administration allocated $42.45 billion in Broadband Equity, Access, and Deployment (BEAD) funding among states—the largest single pot of federal broadband spending in our country’s history. Biden officials at the National Telecommunications and Information Administration (NTIA) made these allocations despite repeated requests from lawmakers and communities across the country to first improve the data underlying NTIA’s funding decisions.

Spectrum launched the Internet, Mobile, TV, and Voice services to more than 200 homes and small businesses in Craven County, North Carolina. Spectrum’s newly constructed fiber-optic network buildout in Craven County is part of the company’s approximately $5 billion Rural Digital Opportunity Fund (RDOF)-related investment in unserved rural communities, which includes $1 billion won in the Federal Communications Commission’s RDOF auction. 

The  Universal Service Administrative Company (USAC) submitted projections of demand and administrative expenses for federal universal service support mechanisms for the fourth quarter of 2023. The Federal Communications Commission's Wireline Competition Bureau, in consultation with the FCC's Office of Managing Director, previously directed USAC to carry forward up to $211.50 million in unused funds from prior funding years to the extent necessary to satisfy funding year 2023 Rural Health Care program demand.

Charter Communications has frequently talked up the pace of its rural deployments, reaching 68,000 subsidized rural passings in the second quarter (Q2) of 2023. CFO Jessica Fischer said the Charter has a “tremendous opportunity” to expand its footprint to rural areas. Charter was one of the largest winners in the Rural Digital Opportunity Fund (RDOF) auction, and Fischer noted progress in those builds “has been going quite well” in terms of pace and penetration.