Cruz Critical of Broadband Subsidy Administrator After Audit

WASHINGTON, Aug 26, 2024 – A new government audit found the management of a major broadband subsidy complied with government requirements, but costs have risen over the last six years. A frequent critic in the Senate renewed his calls for Congress to exercise more control over the program.

The Government Accountability Office said last Thursday it found the “administration of universal service programs is consistent with selected [Federal Communications Commission] requirements.” But Sen. Ted Cruz, R-Texas, who ordered the audit, criticized the agency’s spending on administering the program.

The FCC is responsible for the $8 billion per year Universal Service Fund, and it’s delegated the day-to-day work to the Universal Service Administrative Company, a non-profit corporation overseen by the FCC.

The report found that USAC’s operating expenditures increased by 27.5 percent from 2018 through 2023. USAC officials told the GAO the increase was the result of implementing FCC directives. For example, the officials said the FCC requested improvements to the Lifeline program, a USF subsidy for low-income households, to prevent fraud, which involved more than doubling the staff on that program and finding an outside vendor to assist with reviews. 

“These findings underscore my concerns about USF’s history of waste, fraud, and abuse, and the serious transparency and performance failures of its administrator, USAC,” Cruz said in a statement.

The GAO found USAC's progress reporting, budget management, and ethics policies – the main subjects of the report – were all in line with FCC requirements.

Despite mostly supporting broadband, the USF is still funded by fees levied on interstate voice revenue. As he has in the past, Cruz called for moving that funding model to Congressional appropriations, something that FCC Chairwoman Jessica Rosenworcel has opposed, calling the current system more stable.

For more than a year, a bicameral group of lawmakers, not including Cruz, has been crafting legislation to update the USF’s contribution base and incorporate the now-shuttered Affordable Connectivity Program. The U.S. Court of Appeals for the Fifth Circuit recently ruled the program’s funding model unconstitutional, which could complicate that task on Capitol Hill if the decision stands. 

The FCC has signaled an intent to appeal to the Supreme Court, and the conservative nonprofit that challenged the fund has already asked for such an intervention.

The FCC did not respond to a request for comment. The report did not outline any recommendations for the agency or USAC.