The Battle Over the Future of USF Funding Rages On

WASHINGTON, April 17, 2024 – Federal regulators are on track to address a multibillion-dollar broadband Internet funding decision, triggering an epic tug-of-war among some sharp-elbowed groups and personalities in Washington telecom policy circles bent on getting their way.

What’s generating all the heat? The Federal Communications Commission’s Universal Service Fund, a $8.1 billion program that subsidizes Internet service in rural markets and connects schools and libraries across the country.

The FCC is facing a backlash because FCC Chairwoman Jessica Rosenworcel wants to exempt broadband Internet Service Providers like Comcast and AT&T from contributing to the USF at a time when many feel the fund’s underlying financial structure is unsustainable.

Some even want ISP dollars to serve as a reservoir of permanent funding for the FCC’s ailing Affordable Connectivity Program.

Rosenworcel is pursuing her USF objectives over the strong opposition of groups like INCOMPAS and the Computer & Communications Industry Association. Gigi Sohn and Greg Guice – both affiliated with the Affordable Broadband Compaign – are in a state of bafflement over an approach by Democrat Rosenworcel that appears to some as if she is caving to corporate interests.

The issue will come to a head on April 25 when the FCC votes to adopt Net Neutrality rules. Rosenworcel in these draft rules has the agency declaring that it will rely on its forbearance authority to shield ISPs from making USF contributions.

Wrong move, INCOMPAS and CCIA said.

“CCIA respectfully requests that the [FCC] remove from the draft order any statement indicating that it will forbear … from applying any provision [in USF statutes] to Broadband Internet Access Service (BIAS), as well as ... any proposed grounds or rationale for such forbearance,” the trade group said in an FCC filing on Wednesday signed by CCIA Vice President Stephanie Joyce.

INCOMPAS, in a long and detailed FCC submission Tuesday by Policy Manager Lindsay Stern, chided the FCC on several fronts, saying the agency relied on “significantly flawed” research in coming to its determinative conclusion that retail broadband bills would spike if ISPs had to support USF.

In lieu of forbearance, INCOMPAS wants the FCC to grant ISPs temporary waivers while the agency contemplates future USF funding needs in a new rulemaking. The group also wants the FCC to purge from the record “any findings regarding the impact of assessing BIAS – specifically, its finding that rates could rise if BIAS is assessed for USF purposes.”

It would be a challenge for the FCC to blot out the entire record on pricing impact.

Requiring ISPs to fund USF could raise broadband bills

In a January 12 letter to Sen. Ben Ray Luján, D-N.M., Rosenworcel warned that requiring broadband ISPs to fund USF could result in a material increase in consumer broadband bills, potentially in the range of roughly $5 to $18 per month.

INCOMPAS and CCIA insisted that Rosenworcel’s ranges are inaccurate, based on unreliable research and should be stricken from the record. The two groups claimed the FCC ignored a study by the Brattle Group, which found that assessing broadband ISP revenues would be “the least market distortionary option after general appropriations.”

Nevertheless, Rosenworcel’s Net Neutrality rules dispute the view that the USF needs broadband ISP revenue now.

“The [USF] has been funding broadband access and affordability for well over a decade without imposing contribution requirements on BIAS providers” the rules said in paragraph 360.'

Rosenworcel has an important ally working in support of the USF funding status quo.

Free Press says now is not the time to expand contribution base

Free Press, a progressive group urging adoption of the Net Neutrality regulations, has stated agreement with Rosenworcel that now is not the time to expand the USF contribution base.

“By granting this temporary forbearance, the [FCC] is protecting millions of hard-working families from bill shock that would force many to curtail or drop important broadband and wireless services,” Free Press Senior Advisor S. Derek Turner said in an April 15 filing with the FCC. “The USF contributions system is simply not in a ‘death spiral.’”

For INCOMPAS and CCIA, the Net Neutrality rules represent a now-or-never moment that they don’t want to see the FCC forfeit.

“We remain concerned that the agency will face significant opposition and legal uncertainty to unforbear – a process that the [FCC] has never undertaken, and as a result, that the universal service mission will be in jeopardy,” INCOMPAS said.