Broadband Industry, Advocates Defend USF to High Court

WASHINGTON, Jan. 13, 2025 – Telecom court battles often pit industry associations against consumer advocates, but not in the case of the Federal Communications Commission’s Universal Service Fund. Broadband trade groups and advocates both joined the agency in asking the Supreme Court to uphold the fund’s legality.

“Telecom Petitioners’ members have invested and hope to continue to invest tens of billions in private capital each year in network infrastructure across the country, but this case threatens the certainty, network effects, and economies of scale necessary for long-term infrastructure investment,” wrote industry groups including NTCA, USTelecom, and the Competitive Carriers Association in a Jan. 9 brief.

The roughly $8 billion-per-year Universal Service Fund supports subsidy programs aimed at supporting rural broadband and voice infrastructure as well as discounts for low-income subscribers, schools and libraries, and healthcare centers. It’s been funded since 1996 by fees on interstate voice revenue, which get calculated and collected by the FCC’s Universal Service Administrative Company, a nonprofit set up for the purpose.

After a string of unsuccessful legal challenges to the fund by conservative nonprofit Consumers’ Research, the U.S. Court of Appeals for the Fifth Circuit ruled in July that the arrangement violated the ‘non-delegation doctrine,’ the principle that Congress’s legislative duties or other government powers can’t be handed to anyone else. The law standing up the fund and the FCC’s delegation to USAC were alleged to have violated the doctrine separately, but the court found the combination of the two unconstitutional. That ruling and the two original questions are before the Supreme Court after an FCC appeal.

As for whether the Telecom Act of 1996 ran afoul of the non-delegation doctrine when it stood up the fund, consumer advocacy groups including the SHLB Coalition, the Benton Institute for Broadband and Society, the National Digital Inclusion Alliance, and MediaJustice argued the law had sufficient guardrails to pass legal muster. Laws have been held not to violate the rule if they give sufficient direction and guardrails to an agency being given broad authorities.

The law “passes muster under any plausible understanding of the limits the Constitution places on delegation to agencies,” and “provided significantly more statutory direction as to the key inputs that determine the size of the universal service fund” than had existed for predecessor programs, the consumer groups wrote.

The providers agreed. 

The Telecom Act of 1996 “prescribes far more detailed directions than other statutes that have been upheld repeatedly by this Court in response to nondelegation challenges,” they wrote. “And this case is wholly distinguishable from the only two cases in which this Court has struck down statutes on nondelegation grounds, both of which involved an absence of legislative guidance.”

Even if the Supreme Court is looking to ditch the so-called ‘intelligible principle test’ and make it even harder for Congress to give broad regulatory powers to federal agencies—conservative justices signaled a desire to do so in 2019—both groups said justices should still find the law compliant.

“The important policy judgments have all been made by Congress,” the ISPs wrote.

While the Fifth Circuit also didn’t rule definitively on whether the FCC’s delegation of accounting duties to USAC was unlawful, the opinion made clear judges were skeptical, casting the entity as a means for industry players to juice their projected USF need under the FCC’s nose.

“USAC makes no policy, but rather it performs mechanical calculations according to detailed FCC specifications,” the industry groups wrote. “While any for-profit enterprise would welcome the ‘blank check’ that the Fifth Circuit majority imagines, Telecom Petitioners can confirm that there simply is none to be found here.” 

A brief from Consumers’ Research is due Feb. 11.