Still a Long Road for Universal Service Reform, Panelists Say

DALLAS, March 13, 2025 – Even if the Universal Service Fund survives an ongoing legal challenge unscathed, there’s still no end in sight on contribution reform, experts said on Wednesday.

“Even if there was a political consensus on the way forward, it would take years to actually operationalize it,” said Carol Mattey, a former senior FCC official who led efforts to modernize USF in 2009. “Going from the high-level agreement, ‘We’re going to do x,’ to setting up the systems to collect information and actually calculate who pays what? That takes at least a year.”

The roughly $8 billion-per-year program supports building and maintaining rural networks, plus internet and phone discounts for low-income households, schools and libraries, and health care centers.

It’s currently being challenged at the Supreme Court by a conservative nonprofit that’s asking justices to put more limits on the authority Congress can delegate to federal agencies. Oral arguments are slated for March 26, with a ruling expected later this year.

The main questions are whether Congress was prescriptive enough in drafting the 1996 Telecommunications Act that stood up the fund, and whether the FCC had authority to delegate accounting work to the Universal Service Administrative Company, a nonprofit set up for the task. Mattey said even if the high court hands down an adverse finding on one or both of those, Congress could theoretically fix it without too much of a headache.

“You could have a three sentence bill that could be tacked onto something else, one of the other important things that Congress is going to be working on, and that would cure the constitutionality of the fund,” she said.

Modernizing contributions is another story. USF is still funded by interstate voice revenue, a shrinking pool of cash – the contribution factor exceeded 36% of that revenue in the first quarter of 2025 – that now mostly goes toward broadband. A Congressional working group on the issue was stood up more than a year ago, but it was a complicated task even before the legal challenges as industries aren’t eager to be tapped for payments.

Pushing for fees on Big Tech companies?

Broadband providers have pushed for fees on big tech companies to be added to the mix.

“Netflix used to have to put a stamp on the DVD when they mailed it to you,” said Diana Eisner, VP of regulatory affairs for USTelecom, the major broadband trade group. “We absolutely think broadband is part of the solution, but we think it needs to be the whole ecosystem.”

Angie Kronenberg, former general counsel and president of INCOMPAS, which represents independent ISPs and large software companies, said broadband providers should pay into the fund, given the lion’s share of USF money supports internet connectivity. Mattey has also authored a report arguing that’s the way to go.

FCC Chairman Brendan Carr is in the ISPs’ camp, having advocated for assessing fees on big tech companies as part of USF reform. Past FCC Chairwoman Jessica Rosenworcel had told lawmakers she feared tacking extra fees on either broadband or tech giants could raise prices for consumers. 

The agency declined to levy USF fees on broadband providers when it made them Title II common carriers under Rosenworcel, citing those concerns. That door has since been closed after the Sixth Circuit struck down the Title II order in January.