NTCA CEO Calls for USF Reform

WASHINGTON, July 11, 2024 – Pressure continues to mount from the telecommunications industry to reform the federal Universal Service Fund.

Shirley Bloomfield, CEO of NTCA - The Rural Broadband Association, was the latest industry leader to advocate for an expansion of the USF contribution base to ensure a fairer distribution of responsibility.

“The USF contribution mechanism is sadly really outdated and needs to be repaired and put back into kind of a more common-sense approach given where we are today,” Bloomfield said.

Bloomfield’s comments came during a Wednesday luncheon hosted by the Media Institute, just weeks after the Federal Communications Commission said it was raising the contribution factor to 34.4%. The fund primarily sources money from legacy communications services, such as interstate phone calls.

“As fewer customers buy legacy telecom services, the burden on a handful of companies and consumers actually increases and this is not sustainable, and frankly it’s also not equitable,” Bloomfield said.

Bloomfield argued that the contribution fund framework was originally intended to collect money from services benefiting from the broadband availability of communications services. 

Bloomfield said that because long distance telephone calls have become a dwindling mode of communication, the USF should naturally be updated to reflect the modern communications landscape.

Bloomfield listed several services that benefit from a connected user base and therefore should contribute, including transit and peering networks, content providers, and edge providers.

“All of these entities should therefore share in an obligation to support Universal Service,” Bloomfield said.

Although not discussed in the speech, NTCA has also previously called for broadband ISPs to pay their share into the USF.

In her comments, Bloomfield named streaming platform Netflix as an examples of an entity that received a “free ride” on networks to sell their products.

“They used to pay postage to be able to get their content to the customers. Now it is the ISPs who are essentially covering the cost of the postage for them,” Bloomfield said, referring to Netflix’s early years as a DVD rental service delivered via U.S. Mail.

Bloomfield said that concerns an increase in consumer cost on broadband might hurt the industry “rings hollow” to her. 

Bloomfield cited a study by the Berkeley Research Group, which found that a per-connection USF charge could increase most consumer bills by approximately $0.83 to $0.86 per month.

“Who’s going to stop buying broadband because there’s a charge of a dollar that’s attached to their broadband bill to support Universal Service?” Bloomfield said.

In a letter to Congress in January, FCC Chairwoman Jessica Rosenworcel said that requiring broadband ISPs to contribute to the USF “would increase consumer broadband bills by $5.28-$17.96 per month.”