rural scene

In addition to making unprecedented funding available for broadband, the infrastructure act signed into law late last year also directed the FCC to study the impact of the new government broadband funding on the Universal Service Fund program. As part of this process, the commission asked stakeholders for their comments on this, and many of those comments – particularly those from service provider associations — had a common thread: The USF program will still be needed, but its contribution system needs reform.

Not all commenters agreed on how the system should be reformed, however.

Telecompetitor reviewed summaries of or press releases about comment filings from ACA Connects, the Competitive Carriers Association, The Free Press, The Free State Foundation, INCOMPAS, The Internet Innovation Alliance, the National Rural Electric Cooperative Association (NRECA), NTCA – The Rural Broadband Association, the Rural Wireless Association (RWA), the Wireless Internet Service Providers Association (WISPA), and WTA – Advocates for Rural Broadband.

USF Contribution Reform 

The USF program is comprised of four separate programs, including the schools and libraries program, the rural healthcare program, the Lifeline low-income program and the high-cost program, which covers some of the costs of providing voice and broadband in rural areas. By and large, comments agreed that all the programs would still be needed, despite the new funding sources.

NTCA and others noted that even if broadband is made available to all Americans, ongoing support would still be needed in high-cost areas to maintain that infrastructure.

All four of the programs are focused heavily on broadband. Yet the money for the programs is paid by service providers as a percentage of telecom revenues, which are comprised in large part of voice revenues. Broadband revenues, which the FCC refers to as broadband internet access service (BIAS) revenues, are not included in the contribution base, even though funding largely goes toward those services.

This funding mechanism has become increasingly impractical – some say, unsustainable — as voice revenues have declined and the percentage of telecom revenues that service providers pay into the fund has approached 40%.

What to do about it?

Commenters suggesting that BIAS revenues should be included in the contribution base include RWA, NTCA, WTA and INCOMPAS.

Public interest groups, including The Free State Foundation and IIA, said Congress should appropriate USF funding and/or large tech companies that benefit from broadband should contribute to the fund.

“These companies include Alphabet, Amazon, Apple, Meta, Microsoft, Netflix, and Twitter, and other online web providers, social media companies, Internet messaging and video services, and so forth,” Free State Foundation wrote.

ACA Connects was vaguer in its recommendations but said the FCC should ensure that “all stakeholders that benefit from universal telecommunications and advanced communications connectivity are assessed and contribute based on their ability to pay and by reducing administrative burdens on those who contribute.”

RWA had another suggestion, proposing that “Congress should consider legislation that collects a penny at the point of sale for every commercial transaction that takes place using broadband.”

According to RWA, 100 trillion commercial transactions would equate to $1 trillion – money that could be used toward infrastructure but could also be used to reduce the national debt and lower other taxes.

Other comments worth noting:

  • NRECA suggested that the FCC broadband benchmark should be raised to 100 Mbps symmetrical.
  • INCOMPAS said competition should be a USF goal.
  • The Free State Foundation said Lifeline should be converted to a voucher system.
  • WISPA said companies should not have to gain eligible telecommunications carrier (ETC) status in order to get USF support.

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