Cruz Wins Texas: Likely Senate Commerce Chair Supports Appropriations for USF
The GOP is not entirely in agreement on the issue, with some wanting to tap big tech revenue instead.
Jake Neenan
WASHINGTON, Nov. 6, 2024 – Texas Republican Sen. Ted Cruz fended off a Democratic challenger last night as Donald Trump won the presidential election. With the Senate also in Republican hands, Cruz is seen as a likely candidate for chair of the Senate Commerce Committee, where he’s currently the ranking member.
Cruz has expressed support for a major shake-up of the already imperiled Universal Service Fund: funding the $8 billion-per-year broadband subsidy through Congressional appropriations, rather than the current model of fees on telecom providers. The fees are managed by a non-profit entity that is responsible to the Federal Communications Commission.
“To get spending under control, Congress – not the FCC – must take charge of defining universal service and deciding where USF funds may go,” Cruz wrote in a report released earlier this year.
Managed by the Universal Service Administrative Company (USAC), the program supports four main broadband programs aimed at subsidizing rural networks and internet discounts for schools and libraries, rural healthcare centers, and low-income households.
The fund is broadly considered in need of reform as its contribution base of interstate voice revenue shrinks, but the GOP isn’t entirely aligned on Cruz’s appropriations proposal.
A bipartisan group of lawmakers from both chambers of Congress, which includes Republican House Commerce leadership but not Cruz, has been working since last year to craft legislation that would reform the USF by tapping more companies’ revenue for funding.
The FCC’s senior Republican, Brendan Carr, and other lawmakers have floated adding big tech companies to the contribution base rather than moving to appropriations.
“We think a critical mass of Republicans is likely to support assessing tech revenues,” senior New Street Research analyst Blair Levin wrote in a September research note.
The agency’s current chairwoman, Jessica Rosenworcel, argued against an appropriations model to the USF working group earlier this year. She wrote in a letter that companies deploying in rural areas depend on a consistent funding source to plan and maintain their networks, and subjecting USF to Congressional budget negotiations could make that funding source less stable.
She pointed to the Affordable Connectivity Program, a separate low-income broadband subsidy that provided a larger discount than its USF counterpart. The program ran out of money in June after lawmakers failed to reach a deal to extend it. Cruz himself intervened to block a bill that would have provided short-term funding for the program, both because of disagreements over the spectrum auctions that would have provided the funding and a desire to tighten the ACP’s affordability requirements.
Cruz wrote in his USF report that “it may make sense to keep the High-Cost program within the current USF funding framework given ongoing multiyear commitments to providers.” That’s the program that funds rural infrastructure deployments.
Any efforts to reform the fund will depend on the result of a legal challenge likely to be taken up by the Supreme Court. In July, the Fifth Circuit broke with existing precedent and found the fund illegally takes taxing power away from the legislature. Both the FCC and the conservative nonprofit challenging the fund are asking the high court to intervene and hand down a final ruling.
The case is scheduled for conference, when justices will consider whether or not to take the case, next week on Nov. 15.
