Senators Set Up Universal Service Fund Working Group, As Cruz Mounts Criticism of Broadband Program

WASHINGTON, May 23, 2023 – Sens. Ben Lujan, D-N.M., and John Thune, R-S.D., announced a bipartisan Senate working group earlier this month that would evaluate and propose potential reforms to the Universal Service Fund and guide education, awareness, and policymaking on the topic.

The USF, funded through a tax on voice service providers, supports four programs that make telephone and broadband services affordable for low-income households, health care providers, and schools and libraries. The fund’s sustainability has been under pressure with voice service revenues declining as more Americans use broadband services.

The working group will consider the current state of the USF requirements and consider reforms that would ensure the Federal Communications Commission is able to achieve its mission of universal service across the United States.

“Every community deserves a pathway to an affordable, resilient, and secure internet connection, and strengthening the Universal Service Fund is a key part of delivering our promise to connect every corner of America,” said Luján in a statement.

Sen Shelley Capito, R-W.VA. said that, “All options need to be on the table to modernize and update the USF to encourage and maintain universal service with our sights set on a more responsible, predictable, and prudent USF.”

Joining them in the working group are Sens. Amy Klobuchar, D-Minn., Shelley Capito, R-W.Va., Gary Peters, D-Mitch., and Jerry Moran, R-Kan.

Competitive Carriers Association CEO Tim Donovan commended the announcement, saying “USF programs are critical for competitive carriers and the consumers they serve. Going forward, these programs must provide sustainable, predictable, and sufficient support.”

Congressional legislation addressing USF concerns

The announcement follows the reintroduction of the Funding Affordable Internet with Reliable Contributions Act in March by Sens. Roger Wicker, R-Miss., Ben Lugan, D-N.M., Todd Young, R-Ind., and Mark Kelly, D-Ariz.

The FAIR Act would direct the FCC to conduct a feasibility study on collecting contributions from internet edge providers. It has passed the house and has been received in the Senate, awaiting a vote.

Later in March, a bill was introduced in both chambers that would require the FCC within one year of the enactment to solidify rules to reform how the fund is supported and conduct a study on the need to broaden the fund’s base. The Reforming Broadband Connectivity Act of 2023 is a version of a similar bill introduced in 2021.

In August, the FCC submitted a letter to Congress, urging it to “provide the commission with the legislative tools needed to make changes to the contributions methodology and base” for the USF.

Currently, there is “significant ambiguity in the record regarding the scope of the commission’s existing authority to broaden the base of contributors,” read the report. The FCC called for more power to make the necessary changes to support the program over the long term.

Ted Cruz takes USF management to task

Sen. Ted Cruz, R-Tex., said in his opening statements to a Senate Subcommittee on Communications, Media and Broadband hearing on May 11 that the USF is unshackled from congressional control and the FCC has avoided accountability for its “wasteful” and “ineffective” spending.

By this time, the fifth and sixth circuit appeals courts ruled in favor of the FCC when they denied a challenge to the commission’s authority in collecting money for the USF. Consumers’ Research alleged that the FCC was unconstitutionally delegating a private entity, the Universal Service Administrative Company, to help run USF programs. The court overruled the opinion, claiming that “Congress chose to ‘confer substantial discretion’ over administration of the USF to the FCC.”

Cruz said the FCC has never held a commission-level vote on a USF tax increase, instead choosing to passively enable hikes through a bureaucratic process, claimed Cruz in his remarks. The FCC has a couple of weeks to either approve or challenge the amount determined by USAC that needs to be collected from voice service providers.

“All told, the FCC has spent more than $156 billion on USF programs over the past twenty years. It’s unclear what American consumers have to show for it—other than higher phone bills,” Cruz said.

It is past due for Congress to get USF spending under control, he said. The solution is not to expand the base as it would not address the USF’s “underlying accountability failures.”

He called for Congress to consider all options of USF reform, “including subjecting it to the appropriations process, eliminating duplicative programs, and preserving only those efforts that demonstrate quantifiable benefits for American consumers.

“It has imposed ever-increasing tax burdens on American consumers without sufficient checks and balances or oversight from Congress,” he wrote, claiming that the USF has morphed into a “regressive, hidden tax.”

Similarly, the FCC “claims the new ACP program is successful but offers no data showing it has increased broadband adoption among low-income Americans as intended,” he said, claiming that the FCC is not responsibly managing the funds and rejecting the suggestion to increase FCC legislative authority. The ACP provides a monthly discount of up to $30 and $75 on tribal lands for connectivity.