The Federal Communications Commission chair decided not to impose Universal Service fees on Internet service, rejecting arguments for new assessments to shore up an FCC fund that subsidizes broadband network expansions and provides discounts to low-income consumers.
The $8 billion-a-year Universal Service Fund (USF) pays for FCC programs such as Lifeline discounts and Rural Digital Opportunity Fund deployment grants for ISPs. Phone companies must pay a percentage of their revenue into the fund, and telcos generally pass those fees on to consumers with a "Universal Service" line item on telephone bills.
Imposing similar assessments on broadband could increase the Universal Service Fund's size and/or reduce the charges on phone service, spreading the burden more evenly across different types of telecommunications services. Some consumer advocates want the FCC to increase the fund in order to replace the Affordable Connectivity Program (ACP), a different government program that gives $30 monthly broadband discounts to people with low incomes but is about to run out of money because of inaction by Congress.
The Universal Service funding question is coming up now because, on April 25, the FCC is scheduled to vote on reclassifying broadband as a telecommunications service in order to re-impose the net neutrality rules scrapped during the Trump era.
Chair fears “major upheaval”
Imposing Universal Service charges on broadband would likely result in ISPs adding those costs to monthly bills and would make the net neutrality proceeding even more of a political minefield than it already is. FCC Chairwoman Jessica Rosenworcel's net neutrality proposal takes the same stance against requiring Universal Service contributions that the FCC took in 2015 when it first imposed the net neutrality rules.
Advertisement"We conclude that forbearing from imposing new universal service contribution requirements on BIAS [Broadband Internet Access Service] is in the public interest," Rosenworcel's proposal says. "For one thing, we agree with commenters who warn that suddenly and unnecessarily imposing new fees on broadband service could pose 'major upheaval in what is actually a stable and equitable contribution system.' Rather than risk this upheaval, we believe it in the public interest to proceed cautiously and incrementally."
The deferral of action on Universal Service funding is welcome news to cable lobby group NCTA-The Internet & Television Association, even though it opposes the net neutrality plan overall. The NCTA has urged the FCC "to resist calls for immediate action and instead defer to Congress on the complex and controversial issues surrounding contribution reform." Assessments on broadband "would almost certainly result in new passed-through fees not previously assessed on these services" and "may harm broadband adoption," the NCTA says.
Broadband industry lobby group USTelecom has called for Big Tech firms to pay into the Universal Service Fund, an argument that has also been made repeatedly by Republican FCC Commissioner Brendan Carr.
Rosenworcel may be inclined to let Congress tackle broadband contributions to Universal Service. Her draft plan also raises the possibility of the FCC addressing the issue on its own in a separate proceeding:
Contrary to the assumption of some commenters, Commission efforts remain ongoing in this area. Congress has also been actively deliberating on legislative proposals to reform the USF contribution and funding mechanisms. USF contribution reform is an immensely complex and delicate undertaking with far-reaching consequences, and we believe that any decisions on whether and how to make BIAS providers contribute to USF funding are best addressed holistically in those ongoing discussions of USF contribution reform, on a full record and with robust input from all interested parties, rather than in this proceeding.
Forbearance too drastic, advocate argues
A coalition of groups calling itself the Affordable Broadband Campaign argues that the FCC's forbearance decision unnecessarily closes off the possibility of requiring broadband contributions to the fund.
"Instead of opening up such a huge question to public comment, this order unnecessarily shuts the door to that future proceeding," the group said. "The draft order 'forbears' from applying Universal Service Fund contributions to broadband Internet Access Services (BIAS). The Commission has never reversed a decision to forbear in this situation."
Rosenworcel's proposal argues that forbearance "essentially maintains the longstanding status quo."
The Affordable Broadband Campaign's spokesperson is longtime consumer advocate Gigi Sohn, who was nearly an FCC commissioner. Sohn was President Biden's first choice to fill an empty FCC seat, but the Senate refused to vote on her nomination.
"While we respect the chairwoman's concern about increasing consumers' broadband bills—nobody wants that—the draft order itself admits that the record is complex, which is why we need a further developed record to reach a definitive conclusion on that question," Sohn said.
The FCC could have delayed action on requiring broadband contributions without taking the step of forbearance, the Affordable Broadband Campaign argues. "A decision not to forbear from applying USF funds to BIAS would not result in broadband companies having to contribute to the Fund immediately—the FCC would have to hold a separate proceeding to figure out if, and how, to apply USF contributions to BIAS," the group says.
AdvertisementUS discount program runs out
Sohn's group wants the FCC to use the USF to replace the Affordable Connectivity Program, which was funded directly by Congress instead of through the Universal Service Fund. The $30-per-month discount program is now in its last full month because Congress hasn't added money.
Rosenworcel's proposal "will close the door to a possible permanent replacement for the subsidy that keeps over 23 million households connected," the Affordable Broadband Campaign said.
The FCC recreating the ACP could roughly double the Universal Service Fund's $8 billion annual spending. Rosenworcel has repeatedly urged Congress to renew the ACP and hasn't floated plans for the FCC to keep the program going on its own.
For the Universal Service Fund's current needs, including $9.25-per-month Lifeline discounts and deployment subsidies for ISPs, Rosenworcel's net neutrality proposal said that new contributions aren't needed. The USF "has been funding broadband access and affordability for well over a decade without imposing contribution requirements on BIAS providers... the record does not convincingly show that imposing universal service contribution requirements on BIAS is necessary at this time," the draft plan said.
