Growing Support for Assessing Big Tech to Fund Universal Service
SCOTUS is preparing to rule within weeks on a Constitutional challenge to the fund's structure.
WASHINGTON, June 6, 2025 - The Universal Service Fund's reliance on a shrinking base of traditional voice services has created an unsustainable contribution rate, prompting industry leaders to call for technology giants to start into the fund.
While companies like Apple, Amazon, Meta and Netflix earn an estimated $2,600 annually from each household connected through the USF, they contribute virtually nothing to maintaining that connectivity, said one expert on a BroadbandLive panel Wednesday.
"Those who pay for USF are the subscribers of typically voice services, but the financial beneficiaries which are earning $2,600 per year pay zero," said Roslyn Layton, senior vice president at Strand Consult, a consultancy. She was referring to an annual aggregate revenue by a typical big tech company.
Andrew Schwartzman
The discussion comes as the Supreme Court prepares to rule within weeks on a Constitutional challenge to the fund's structure in FCC v. Consumers Research, which argues that Congress improperly delegated authority to the FCC to administer the fund and that the agency's use of a private company to collect fees violates constitutional principles.
While the experts expressed cautious optimism that the high court would uphold Universal Service, there was broad consensus that the funding mechanism must be overhauled regardless of the legal outcome. For example, voice telephone services pay 36% of the cost of telecommunications into the USF.
“This is a potentially huge inflection point,” said Jason Neal, a partner at the law firm HWG, which represents the Schools, Health and Libraries Broadband coalition, one of the parties defending the fund. “I very much hope policymakers get time to work carefully on and deliberate on, rather than having to figure things out in a mad scramble in the wake of an unfortunate Supreme Court decision,” Neal said.
Targeting tech giants with specific metrics
Layton outlined a concrete proposal based on the Senate Bill S. 1651 threshold that would require these companies to contribute: Those with annual revenue of $5 billion or more and accounting for 3% or more of total U.S. internet traffic.
"That is about 30 companies," Layton said, noting that individual tech companies operate dozens of applications that collectively can easily reach the 3% traffic threshold. "Netflix at times can be one-third of the total traffic in the United States."
The economic rationale extends beyond residential users. Layton said rural enterprises connected through USF generate nearly $20,000 annually for tech companies through cloud computing, advertising and cybersecurity purchases.
Nicholas Degani, Chief Strategist of the Digital Progress Institute emphasized the historical precedent for having network beneficiaries fund universal service, dating back to the 1913 Kingsbury Commitment when AT&T provided settlement payments to smaller providers.
"Those who extract the most economic value from it are the ones who primarily pay," Degani said, arguing for a return to that principle.
Three separate proposals for reform on the table
Panelists discussed three potential solutions beyond the status quo. Besides targeting big tech companies, options included broadening the assessment base to cover all broadband services rather than just traditional voice, or shifting to general tax revenues through congressional appropriations.
The general revenue approach faced uniform rejection from panelists. "This is just not fit for something for Congress every year or every year or two to try to take up and debate," said Andrew Schwartzman, Benton Institute’s senior counselor, calling it "an unworkable solution" due to appropriations uncertainty and the risk of program interruption during government shutdowns.
Lynn Follansbee, vice president of USTelecom, agreed, and said that rural providers "really need the certainty" that the current self-sustaining mechanism provides.
The base-broadening option - extending contribution requirement to all broadband services instead of just voice - received more support but was viewed as insufficient on its own.
"I think we can combine two of them, which is broaden the base and bring big tech in," said Follansbee.
Several panelists pointed to existing bipartisan legislation as evidence that reform momentum exists. S. 1651 is sponsored by Sens. Mark Kelly, D-Arizona and Markwayne Mullin, R- Oklahoma. It specifically targets large technology companies for contributions.
There are 100 million Americans estimated to access internet services annually through the USF program, including rural broadband, school and library connectivity, telehealth services and low-income assistance.
"Universal service really is just important for pretty much every American," Degani emphasized.
Despite the rising rate, Schwartzman noted the system's surprising resilience as the rising contribution rate, passed through to consumers, has not significantly reduced the number of people paying for connections.
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Andrew Schwartzman
