WASHINGTON, September 19, 2023 – Tech company trade group INCOMPAS and consulting firm Brattle Group released on Tuesday a report arguing for adding broadband providers as contributors to the Universal Service Fund.

The USF spends roughly $8 billion each year to support four programs that provide internet subsidies to low-income households, health care providers, schools, and libraries. The money comes from a tax on voice service providers, causing lawmakers to look for alternative sources of funding as more Americans switch from phone lines to broadband services.

The Federal Communications Commission administers the fund through the Universal Service Administration Company, but has left it to Congress to make changes to the contribution pool.

The report argues that broadband providers should be one of those sources. It cites the fact that USF funds are largely used for broadband rather than voice services and that broadband adoption is increasing as phone line use decreases.

“The USF contribution base needs to change to account for the fact that connectivity implies not just voice telephone services, but predominantly broadband internet access,” the report says.

It also rebuts arguments for adding tech companies like INCOMPAS members Google and Amazon to the contribution pool, saying they represent a less stable source of income for the program and that added fees for services like streaming could affect . 

The report is the latest salvo in an ongoing dispute between tech companies and broadband providers over who should support the USF in the future, with broadband companies arguing big tech should be tapped for funding as they run businesses on the networks supported by the fund.

Sens. Ben Lujan, D-N.M., and John Thune, R-S.D. established in May a senate working group to explore potential reforms to the program. The group heard comments in August  from associations of tech and broadband companies, each outlining arguments for including the other industry in the USF contribution base.

WASHINGTON, September 18, 2023 – Rural broadband companies are pushing the Federal Communications Commission to require unsubsidized providers to prove their coverage in rural areas.

The calls come weeks after the FCC announced funding offers under the Enhanced Alternative Connect America Cost Model, or Enhanced ACAM. The model allocates support to providers already receiving funding through the Universal Service Fund.

The new allocation of funds takes into account whether an area is already served at the required speed threshold – 100 Mbps download and 20 Mbps upload, faster than the previous Connect America Cost Model – by an unsubsidized provider. Areas the FCC deemed to be served only by an unsubsidized provider were excluded from awards and less money was made available to recipients operating in the same area as an unsubsidized provider.

Providers who were offered Enhanced ACAM funding must accept or decline their offers by September 29, but the FCC will accept challenges from awardees and make adjustments to the awards until 2025.

In a September 15 filing to the FCC, NTCA – The Rural Broadband Association said the process for challenging these determinations is insufficient and urged the agency to require unsubsidized carriers to certify their reported coverage where Enhanced ACAM funds .

The challenge process is lacking, the association said, because it relies on the FCC’s broadband map and the accompanying challenge procedures. 

The map data includes maximum speeds available at a given location, but it does not reflect potential decreases in speed that happen when many people are simultaneously using a fixed wireless network – the technology many rural providers use – and does not include information on standalone voice service, which a provider must offer to meet the agency’s definition of an unsubsidized competitor.

The agency told Enhanced ACAM recipients to submit concerns on these and other issues not captured by the map via public comment in its docket system and to challenge unsubsidized coverage and speeds through its standard broadband map challenge process. 

FCC speed data is also difficult to challenge, the NTCA said in its filing. Challenges alleging a carrier’s provided speed is lower than that recorded in the data cannot be submitted in bulk, but must be submitted individually. That makes it difficult to determine if an unsubsidized provider offers lower speeds than they reported for large areas.

Requiring certifications from unsubsidized providers would provide “a well-structured and well-defined supplemental process,” for submitting challenges to Enhanced ACAM allocations, the association wrote.

The NTCA met with agency officials ahead of the award announcements to ask for the same certification, according to an ex parte filing from July 24.

WASHINGTON, August 29, 2023 – Telecommunications companies and tech giants disagree on who should provide funding for the Universal Service Fund.

The fund’s money comes from a tax on voice service providers, putting its future in jeopardy as more Americans switch from phone lines to broadband services. The USF spends roughly $8 billion a year to buoy four programs that provide internet subsidies to low-income households, health care providers, schools, and libraries.

In filings submitted to a Senate working group evaluating potential reforms to the program, telecoms argued in public comments that some of this money should be paid by tech companies who provide online services. Tech companies advocated tapping more broadband providers for funds.

The Computer & Communications Industry Association, a trade group representing some of the biggest tech companies in the U.S., said in an August 21 filing that the USF could be saved by one action: “include all providers of internet connectivity in the USF contributions base.”

The National Telephone Cooperative Association, a group of smaller broadband providers that serve rural areas, argued in an August 25 filing that tech companies gain so much from expanded broadband coverage that they should pay directly into the USF, saying “internet-based businesses that benefit from widespread availability and affordability of broadband should contribute to that objective.”

The constitutionality of the USF’s funding model is being questioned in court. On September 19, the Fifth Circuit Court of Appeals will rehear a case brought by the conservative nonprofit Consumers’ Research. 

The group argues that in establishing the USF with the Telecommunications Act of 1996, Congress gave the FCC unfettered authority to collect taxes. It also alleges that the FCC has abused this authority by delegating the distribution of funds to a subordinate organization, the Universal Service Administration Company. 

The Fifth Circuit originally struck down the petition, saying Congress put adequate guardrails on the FCC’s authority. Three of its five judges were present to hear arguments and hand down a ruling, but the rehearing in September will involve the full court.

The Sixth Circuit denied a similar petition from Consumers’ Research on the same grounds as the 5th Circuit. The group has suits pending in the Eleventh Circuit and D.C.

Sens. Ben Luján, D-N.M., and John Thune, R-S.D., convened the working group in May to evaluate potential reforms to the USF’s structure and guide future policymaking.