The momentum for updating the Universal Service Fund (USF) program by adding new revenue sources to the contribution base is steadily growing and gaining speed. Recently, the trade association representing the major broadband providers has called on Congress to expand the USF contribution base to include a variety of edge providers of content, digital advertising, and other heavy users of broadband networks. This increases the likelihood that Congress will eventually adopt legislation authorizing the FCC to implement the necessary regulations to significantly grow the revenue base, ultimately reducing the contribution factor from well north of 30% (in recent years) to the low single digits (around 3%).
Jonathan Spalter, CEO of USTelecom, has urged Congress to involve big tech companies in supporting the USF to maintain its financial sustainability. The expiration of the Affordable Connectivity Program’s (ACP) funding last week highlighted the need for a “financially responsible, and self-sustaining” USF. The Federal Communications Commission (FCC) announced that the ACP, which subsidized internet service for low-income households and tribal lands since 2022, ended after the Republican-controlled House of Representatives declined to renew its funding.
In response, a group of 14 providers, including AT&T, Verizon, Comcast, Cox, and Optimum, announced they would voluntarily offer low-income plans through the end of the year. However, these plans would only be available to about 10 million households, leaving an additional 13 million households without ACP subsidies.
Advocates have called for Congress and the FCC to integrate these subsidies into the USF, largely funded by fees paid by telecommunications carriers and interconnected VoIP service providers (and their customers). USTelecom’s CEO argues that the burden of funding access programs should also be shifted onto tech platforms to ensure a self-sustaining revenue model for the USF and to lower costs for phone users. The USF, established by Congress in 1996, is currently funded solely by phone carriers providing voice and data transmission services. However, with less than 28% of Americans having a “home” phone, and the growing demand for enhanced services, such as broadband, there is a need to widen the pool of services contributing to the USF.
Proposals have been made to include digital advertising revenues in the funding equation, which could significantly reduce the universal service fee charged to phone customers. Last year, a bipartisan group of senators introduced legislation to direct the FCC to consider collecting USF contributions from “internet edge providers,” including search engines, advertising services, social media, e-commerce platforms, and streaming services. Although the bill has not progressed, the FCC has opened a public comment docket on the future of the fund but has not yet moved to require edge providers to contribute.
Due to the closure of the ACP caused by Congressional inaction, there is an urgent need to shore up the USF and restore subsidies for low-income and tribal Americans. With the powerful industry interests behind USTelecom throwing their weight behind legislative reforms that would expand the contribution base, the momentum needed to transform and modernize the USF program to ensure affordable connectivity for all is at an all-time high.
If you have any questions or need further assistance regarding the momentum to expand the Universal Service Fund contribution base, please don’t hesitate to reach out. Contact Jonathan Marashlian at jsm@commlawgroup.com for guidance on navigating these developments and their potential impact on your business.
