A bipartisan bill introduced in the Senate would expand the Universal Service Fund (USF) contribution base. The USF includes four programs, which fund rural broadband and telecom deployments; low-income broadband; telecom, school and library connectivity; and a rural telehealth program.
The program is currently funded as a percentage of long-distance telecom voice revenues – a cost that telecom providers pass on to subscribers as a charge on telephone bills.
The bill – titled the “Reforming Broadband Connectivity Act of 2021” – does not specify who should be required to pay into the contribution base but instead would direct the FCC to conduct a study and make a determination about that. The goal would be to ensure that the contribution base is “imposed fairly and equitably,” the bill states.
The FCC would have 120 days after the date of the enactment of the bill to complete the study, which would assess the need to expand the Universal Service Fund contribution base. Within a year of the enactment of the bill, the commission would be required to complete a rulemaking to “reform the contribution system” of the USF, “including by expanding the contribution base” of the fund.
The current USF funding mechanism has become increasingly impractical, as broadband revenues are not included in the base from which providers – and ultimately their customers — pay for the program. The percentage of long-distance telecom revenues that goes toward the fund now runs about 30%. And a 2020 Telecompetitor analysis projected that the percentage could hit 50% by 2030.
The situation has occurred because the USF was originally established to cover certain telephone costs in high-cost rural areas and for low-income households, etc. Over the years, the USF programs have been expanded to cover broadband, but the funding mechanism hasn’t been adjusted.
Those who oppose expanding the Universal Service Fund contribution base to include broadband revenues position that move as “taxing the internet,” which traditionally has made politicians and regulators reluctant to propose contribution base expansion. Accordingly, it’s not surprising that the bill doesn’t make specific recommendations about how the base should be expanded but instead assigns that task to the FCC.
Attitudes toward broadband funding have changed somewhat as a result of the COVID-19 pandemic, with citizens more likely to support government broadband programs than in the past. But whether attitudes have changed enough for the new bill to become law remains to be seen.
The Reforming Broadband Connectivity Act of 2021 is sponsored by Amy Klobuchar (D-Minnesota), John Thune (R- South Dakota.), John Hickenlooper (D-Colorado) and Jerry Moran (R-Kansas).