WASHINGTON, March 29, 2023 – A bill introduced in both chambers Tuesday would require the Federal Communications Commission to study and make rules on expanding the funding base of the Universal Service Fund.

The Reforming Broadband Connectivity Act of 2023 – a previous version of which was introduced two years ago – would require the FCC within one year of the enactment of the bill to solidify rules to reform how the fund is supported and within 120 days to conduct a study on the need to broaden the fund’s base and submit the report to Congress.

The contents of the bill should include the “relative equities and burdens” of the changes on consumers, businesses and seniors, who often bear the brunt of the cost of support because the fund is currently supported by landlines.

The House version was introduced by Lizzie Fletcher, D-TX, Joe Neguse, D-CO, and Angie Craig, D-MN, and the Senate companion was introduced by Amy Klobuchar, D-MN, and John Thune, R-S.D.

“Ensuring broadband service in the most remote, hardest-to-serve areas requires a sustainable Universal Service Fund with a sustainable funding formula,” Brandon Heiner, senior vice president of government affairs at industry association USTelecom, said in a statement. “Senators Amy Klobuchar (D-Minn.) and John Thune (R-S.D.) recognize that the contribution mechanism must be reformed to preserve connectivity for rural Americans. Directing the FCC to initiate a rulemaking to expand the contributions base will help secure the future of universal service.”

The bill’s introduction follows an FCC report to Congress that requested the legislative body provide the commission with the authority to change the fund’s contribution base.

The USF, which includes four high-cost programs supporting basic telecommunications services for institutions and low-income Americans, receives roughly $9 billion a year from voice service providers, whose revenue base has been dwindling for years.

The reliance on those providers has called into question the fund’s sustainability. Various experts have proposed different remedies, including expanding the base to include contributions from broadband service providers, large technology platforms, and from the general taxation pool.

Prior to the FCC’s report to Congress, some experts argued that the commission can unilaterally expand the fund’s base. Those same experts warned that Congress may take too long to implement necessary legislation.

On Friday, an appeals court denied a petition that challenged the FCC’s authority to raise funds and subdelegate the work of coming up with the quarterly contribution amounts providers must pay into it. The petition must go through two more levels of appeal.

WASHINGTON, March 27, 2023 – An appeals court ruled Friday that Congress provided sufficient guidance and limits on the Federal Communications Commission in its administration of the Universal Service Fund, turning away a petition that argued the agency was unjustly collecting arbitrary amounts from telecommunications service providers and was unduly delegating that collection to a private entity.

Early last year, non-profit research house Consumers’ Research and communications service provider Cause Based Commerce asked the U.S. Court of Appeals for the Fifth Circuit to find that Congress under Section 254 of the Telecommunications Act of 1996 gave the FCC unfettered delegatory authority to raise revenues akin to taxation for the fund that provides basic telecommunications services and that the commission has illegally delegated that authority to a private entity known as the Universal Service Administration Company.

But the appeals court denied the petitioners’ points in a decision Friday, ruling that Congress provided sufficient guidance to the agency when administering the $9 billion fund, put in place guardrails to guide that administration, and that the FCC has sufficient oversight of USAC to allow for the subordination. In other words, the FCC is not deviating far from the guidance and the limits imposed on it by the legislative house, according to the court.

On the first point, the three-panel court ruled that – contrary to the petitioners’ claim – Section 254 offers specific guidance, such as offering affordable telecommunications services of decent quality, making it equitably available in rural and urban areas, and funded in an equitable and nondiscriminatory manner.

“Rather than leave the FCC with ‘no guidance whatsoever,’ Congress provided ample direction for the FCC in S 254,” the decision read, adding Congress chose to “confer substantial discretion” over the USF’s administration to the FCC.

On the FCC’s revenue-raising ability, the court also ruled that Section 254 provides adequate limits on that ability. Section 254 “certainly, did not leave the matter to the FCC ‘without standard or rule, to be dealt with as [it] pleased,’” the decision read. “Instead, § 254 requires that the FCC only raise enough revenue to satisfy its primary function.”

Those limits under the provisions of Section 254 include specific guardrails for the expenditure of those funds on telecommunications services that are essential, deployed in public networks by telecoms, and consistent with the public interest.

“Taken together, these provisions demonstrate that the FCC is not in the dark as to the amount of funding it should seek each quarter,” the decision said, referencing how much USAC needs to collect from the largely voice service providers to sustain the fund. “Instead, § 254 sets out the FCC’s obligations with respect to administration of the USF and the FCC, in turn, calculates what funds are necessary to satisfy its obligations.”

Finally, the petitioners argue that the FCC has violated the private nondelegation doctrine by giving authority of the USF over to USAC with no oversight, in part because the FCC only has 14 days to approve the amounts to be collected for the fund and thus rarely exercises its power to change the contribution amount. The petitioners’ argue that the combination of those factors make it so that USAC, not the FCC, administers the fund.

But the court disagreed on that point as well. First the court established that federal statutory law expressly subordinates USAC to the FCC, with the private entity not being able make policy or interpret provisions or the intent of Congress. Second, it said the FCC dictates how USAC calculates the contribution amount and reviews the calculation after the private entity makes a proposal. Third, it noted that those proposals made by the USAC must be approved by the FCC before they are required of the communications companies. Finally, the agency allows for challenges to USAC proposals and “often” grants those challenges, the court ruled.

Still more appeals to go

The court, however, ruled against an FCC argument that the petition is “time barred” because it was not brought when Section 254 was enacted by Congress. The court noted that constitutional challenges are allowed when the approval of contribution amounts by the FCC are applied to companies.

That said, the petitioners also filed appeals in the 6th and 11th Circuit courts on the matter.

“While we are disappointed that the three judge panel ruled against us, we are encouraged that they saw through the FCC’s absurd preliminary arguments, including that our case was not timely,” William Hild, executive director of petitioner Consumers’ Research, told Broadband Breakfast in a statement. “With the acknowledgement that our case is ripe and that we have standing, we will look forward to continuing the legal fight to defend consumers from the unconstitutional USF tax on their phone bills set by unelected bureaucrats.”

The Schools, Health and Libraries Broadband Coalition, whose institutions are recipients of the fund’s money, also filed a brief in the case and said in a statement on Friday it was pleased with the decision.

“SHLB is extremely pleased that the court recognized the importance of the universal service program for the thousands of schools, libraries and health care providers that receive Universal Service Fund (USF) support,” said its executive director John Windhausen. “In the 1996 Telecom Act, Congress provided the FCC with both specific guidance and flexibility to adjust the USF program over time to embrace changes in the marketplace.

“With two more decisions to go, support for thousands of anchor institutions nationwide is still in jeopardy,” Windhausen added. “If the USF is ruled unconstitutional, it would put at risk the funding for four key programs: the Connect America Fund, Lifeline, Schools and Libraries (E-Rate), and Rural Health Care.”

Greg Guice, director of government affairs at advocacy group Public Knowledge, which filed a brief in the case, added “the Fifth Circuit has once again affirmed the importance of our nation’s universal service mission and the FCC’s obligation to ensure it is achieved by placing the program on a sound financial footing,” adding the organization hopes the other courts “take notice of this opinion and rule consistently.”

The National Lifeline Association, which advocates for the continuity of the USF program Lifeline, and industry association INCOMPAS also praised the decision. The latter added “we believe reforms to the USF are necessary to ensure this critical service can continue to exist.”

Those reform calls stem from concern that the fund is unsustainable because it is largely supported by voice service providers who have seen dwindling revenues as more Americans use other forms of communication.

The FCC has left it to Congress to provide it the authority to make changes to the fund for its long-term support, including possibly expanding the base to include broadband service providers and Big Tech.

WASHINGTON, February 23, 2023 – Tribal Ready, a Native American-owned company, on Tuesday announced its launch – together with a new effort to encourage Indian county to be accurately mapped for broadband access and deployment through a “Virtual Tribal Broadband Office.”

“It is incumbent on Tribal leaders, citizens and allies to gather data on a scale large enough to ensure that Tribal nations receive the billions of dollars that are available and necessary to complete broadband expansion projects,” said Joe Valandra, CEO of the new entity.

Hear Joe Valandra of Tribal Ready during Broadband Breakfast Live Online on March 8, 2023: A Status Update on Tribal Broadband

Valandra, a member of the Rosebud Sioux Tribe of South Dakota, said that Tribal entities should receive at least $5 billion of the $42.5 billion of federal funds available under the bipartisan infrastructure law’s Broadband Equity, Access and Deployment program.

The $5 billion number, he said in an interview, is “a very rough calculation that I did based upon the priority being unserved” individuals, and based open the gaping lack of available broadband in Indian County.

Valandra has more than 25 years of experience in executive-level leadership roles in the public, private, government, and non-profit sectors, including an extensive background in Tribal economic development.

Virtual broadband office aims to speak for Tribes

Valandra was highly critical of the Federal Communications Commission’s broadband serviceable location fabric, which he said dramatically undercounted locations and availability for broadband in rural and Tribal areas.

“If the FCC’s fabric were the only tool that were used to allocate these funds, Indian country would be left out,” he said. He cited the broadband map’s representation that the Rosebud Sioux Tribe of South Dakota was served, which he said wasn’t accurate.

In the view of Tribal Ready, the solution is for Tribal Nations to sign up for the Virtual Tribal Broadband Office at TribalReady.com. The new entity works in close partnership with Ready.net, he said, which gives Tribal Ready access to data and other broadband tools.

Just as every state and territory has a state-wide broadband office, Tribes need to be represented through a voice in Washington focused on their needs, said Valandra.

“We hope to become or to acquire a number of ISPs so that we can partner with Tribes to give them the type of knowledge and expertise and regulatory framework to really run those networks and to preserve ownership and control for Tribes,” he said.

Others on the team emphasize the crucial role of broadband data, and other broadband resources, to ensuring maximum funds for Indian country.

“High-speed broadband is a resource – a means to an end,” said Scott Dinsmore, vice president of external affairs at Tribal Ready. “It takes resources to achieve sustainable high-speed networks and the world-class access to economic, education, healthcare and other benefits that come with it.”

Tribal Ready said that it believes the best way to achieve this is to create data and guidelines that help states design fair and inclusive challenge processes. Tribal Ready also emphasized ensuring that Tribal data sovereignty is secure and protected.

Before launching Tribal Ready, Valandra worked in the Indian gaming industry for more than the decade of the 1990s, before coming to Washington. In 2005, he became chief of staff for the National Indian Gaming Commission, a position he occupied until 2007. He subsequently worked extensively in the field of in the Tribal communications.