U.S. Capitol

A group of three U.S. Senators has introduced the Funding Affordable Internet with Reliable (FAIR) Contributions Act. The FAIR Act would direct the FCC to study expanding the base of contributors to the USF fund.

It’s not a new idea and it has been debated considerably for many years. Currently, the Universal Service Fund (USF) gets its funding largely from interstate voice revenue captured by telecom carriers. That revenue category has been in decline for years, and many would argue, is an unsustainable revenue source for USF.

The idea of expanding the contribution base has gotten more attention recently, due in part to FCC Commissioner Brendan Carr calling for it.

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The largest portion of the USF was originally used to subsidize bringing voice service to high-cost rural areas, so rural consumers could get comparable telecom services to their urban counterparts at affordable costs. But in addition to voice service, USF increasingly now subsidizes that same mission for broadband, yet the voice-only revenue contribution base remains.

U.S. Sens. Roger Wicker, R-Miss., ranking member of the Senate Committee on Commerce, Science, and Transportation, Shelley Moore Capito, R-W.V., and Todd Young, R-Ind are the sponsors of the FAIR Act, which, if passed, could begin the process of redefining the contribution pool for USF. That contribution pool could be expanded to include so-called edge companies, like Netflix, Google, and others, often grouped together as “big tech.”

“More consumers are moving to internet-based services,” said Wicker in a press release. “This raises concerns about the sustainability of fees collected from consumers’ telephone bills, which support broadband deployment in underserved areas. As online platforms continue to dominate the internet landscape, we should consider the feasibility of Big Tech contributing to the USF to ensure rural areas are not left behind as we work to close the digital divide.”

Specifically the FAIR Act would:

  • Direct the FCC to issue a Notice of Inquiry seeking public comment on the feasibility of collecting USF contributions from internet edge providers, and issue a final report on the matter within 180 days.
  • Require the FCC to consider:
    • Possible sources of Big Tech revenue, such as digital advertising and user fees;
    • The fairness of the current system and a system under which contributions could be assessed on Big Tech firms;
    • The feasibility of assessing contributions on such a broad category of firms that do not currently register with the FCC;
    • The effects such a change would have on Tribal, low-income, and elderly consumers; and
    • The changes to current law necessary to implement this system.
  • Direct the FCC to issue a Notice of Inquiry seeking public comment on the feasibility of collecting USF contributions from internet edge providers, and issue a final report on the matter within 180 days.

This is just the beginning of the process. Legislation would have to be passed by both chambers of Congress and signed by the President before becoming law.

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3 thoughts on “FAIR Act Would Task FCC with Studying if Netflix, Google, Others Should Pay into USF

  1. Well, of course they should pay in! Google? Netflix? How about Amazon and Facebook? They all make a killing from major usage of the internet. Plus, the way the government has always done it is the people and entities with huge amounts of money that catch the tax breaks and all that jazz, right? So, it really shouldn’t hurt their feelings at all considering that is how they’ve made their fortunes. I can’t believe they have gone on this long without putting anything BACK into the system that they worked so well.

  2. The correct answer to this is to just do away with the USF, period. It’s always been a regressive tax on telephone users, now multiplied in families that have more than one phone. But then the proceeds have been just handed over to traditional telephone companies and large ISP’s, who promise the moon and then mostly squander the funds. And there is no accountability to speak of – if a USF recipient makes a commitment and then misses it, at most they will receive a small fine that’s far less than what they take in from the USF.

    Real reform of the USF would require removing per-user or per-device fees entirely, so that end users are never hit with this regressive tax. But far more importantly, there needs to be some real teeth in the regulations to insure that companies that receive the funds honor the commitments they’ve made. No excuses and no extensions – you either do what you have promised to do by the date you have promised to do it by, or you suffer significant consequences.

    Fines don’t seem to deter big companies from wrongdoing; they just pass those on to their customers! So you need to hit them where it hurts. For example, you miss a commitment, you’re now required to allow competitors to use your lines to provide service to their customers (sort of like the old “equal access” scheme for long distance phone service). Or you must allow private entities to buy service at wholesale rates and resell it. Or you must allow municipalities to extend your lines themselves, starting at demarcation points, and then resell your service. Or in the case of gross misconduct, require the company to split into two companies, one solely tasked with maintaining and installing the lines to customers, and the other that provides the actual internet and/or TV service (of course then the first company would be free to accept other service providers as users of their lines). In other words, something a recipient of USF funds would hate far more than any fine that you could impose, and also something that would potentially have real benefits for customers.

    These penalties would need to be written right into the contracts signed by the companies that receive USF funding, so they know exactly what will happen if they miss a deadline, but also so they can’t go to court and claim the enforcement action is illegal or unconstitutional, because it will be something they have contractually agreed to. No more of this namby-pamby “if you fail to meet a commitment we’ll scowl in your general direction” stuff; all the companies are on to that and pretty much expect that, and know they can promise a lot and deliver very little because no one will really hold them accountable. Since I, for one, am not holding my breath waiting for the government to impose any real penalties on USF slackers, I say it is high time to do away with the USF altogether and let people keep their hard-earned money and put it to good use, maybe to help pay for their ever-increasing Internet service bills.

    1. I agree Mitch, get rid of this since 80% of the people use Cell Phone Service. Taxes and fees from the Cell use is over 190 billion dollars right now the FCC is holding on for rural deployment. Then lets see the Government to go to VOIP collect money from these people who are also operating overseas. In reality you have no basis of tax in the deployment for rural use since all the telephone poles used today are not being used for phone service.

      Funny that Republicans are pushing this forward.

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