Universal Service Fund

We write to express our strong opposition to a plan circulated by Chairwoman Jessica Rosenworcel to expand the Federal Communication Commission’s (FCC or the Commission) E-Rate program. This plan would not only violate federal law but also duplicate programs across the federal government, directly contradicting FCC commissioners’ repeated commitments to streamlining federal broadband funding.

There have been several lawsuits over the last few years that challenge the legitimacy of the Federal Communications Commission's Universal Service Fund (USF). A suit from a non-profit group called Consumers’ Research argues that USF fees are taxes and that the original creation of the USF was unconstitutional since the Telecommunications Act of 1996 gave the FCC the power to levy taxes.

US Sens Ben Ray Luján (D-NM), and John Thune (R-SD), Chair and Ranking Member of the Subcommittee on Communications, Media, and Broadband, respectively, announced Reps Bob Latta (R-OH) and Doris Matsui (D-CA), Chair and Ranking Member of the House Subcommittee on Communications and Technology, respectively, have joined the Universal Service Fund (USF) Working Group. Launched in early 2023 in the Senate, the USF Working Group was established to evaluate and propose potential reforms to the USF, with the goal of developing a bipartisan forum to guide education, awareness, and policy-making.

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.