NTCA Survey Underscores Risks of Lost USF Support
A Fifth Circuit Court decision threatens funding of the $8.1 billion subsidy program
Ari Bertenthal
WASHINGTON, Sept. 6, 2024 – The negative impact of a recent court decision that threatens a multi-billion dollar broadband subsidy program is starting to sink in.
According to a new survey, the demise of the $8.1 billion Universal Service Fund would lead to exorbitant price hikes in rural consumers' monthly Internet bills and damage the ability of network providers to repay existing development loans or invest in new technology in low-density, high-cost areas.
"As this survey highlights, without USF support, not only could consumers who currently have broadband see the cost of their bills skyrocket, but rural providers will find it harder or even impossible to make the further investments needed to connect those still waiting for service or to repay loans for deployments already made," said Shirley Bloomfield, CEO of NTCA - the Rural Broadband Association, sponsor of the survey.
Respondents to the survey, consisting of more than 200 broadband provider members of NTCA, reported receiving an average of $72 a month in USF support per broadband consumer. Without this support, providers would have to turn to consumers to cover operating costs and loan repayments.
Rural consumers already pay more than the average urban consumer, to the tune of tens of dollars monthly, NTCA said.
Without the support of the USF’s $4.3 billion High Cost Fund, this urban-rural discrepancy would worsen by a significant margin, possibly pushing up average monthly bills to $165 for rural customers, NTCA said.
On July 24, the U.S. Court of Appeals for the Fifth Circuit held in Consumers’ Research v. FCC that the USF's current funding mechanism was unconstitutional and remanded the case to the FCC for further proceedings.
Consumers’ Research has asked the Supreme Court to settle conflicting appellate rulings on the USF's legality. Under a Fifth Circuit order that stayed the July 24 ruling, the FCC has until Sept. 30 to file a petition for review with the Supreme Court or the stay will be lifted.
If USF support were rescinded, rural broadband network investments would stagnate in the coming years, NTCA said. Sixty-eight percent of NTCA survey respondents noted that they would need to cancel deployment projects totaling $1 billion over the next 12 months.
Many providers rely on USF support to repay deployment-based loans, many of which are held by the federal government. Sixty-seven percent of respondents said they have outstanding debt for prior broadband deployments. If USF support were eliminated outright, sixty-one percent of that group said they would likely default on their loans within the next three years.
