The FCC’s majority along with rural telecom associations reacted strongly to a federal appeals court ruling that struck down the agency’s Universal Service Fund (USF), vowing to fight the decision. FCC Chairwoman Jessica Rosenworcel called the ruling that the USF funding mechanism is unconstitutional “misguided and wrong.”
Rosenworcel asserted: “The opinion reflects a lack of understanding of the statutory scheme that helped create the world’s best and most far-reaching communications network. It upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools, and libraries nationwide. We will pursue all available avenues for review.”
NTCA–The Rural Broadband Association, the Competitive Carriers Association, and USTelecom–The Broadband Association, jointly stated: “The Universal Service Fund has been, and continues to be, a critical tool to narrow the digital divide and help address connectivity gaps. The court’s decision deals a severe blow to these efforts. We steadfastly believe that the Universal Service Fund is constitutional, and we will continue to fight for universal connectivity.”
In Consumers’ Research v. FCC, the U.S. Court of Appeals for the Fifth Circuit ruled the funding mechanism for the broadband subsidy “‘incompatible with our constitutional structure.” The “tax” that funds the Universal Service Fund through contributions from telecommunications companies violates Article I of the Constitution, wrote Judge Andrew Oldham. The involvement of the private entity that helps administer the contribution scheme also violates Article I, he stated, according to the National Review.
The Universal Service Fund supports telephone and internet access by subsidizing low-income families, rural hospitals, and schools who want to purchase broadband services, as well as funding carriers to develop broadband in otherwise high-cost areas. Companies typically pass along the cost of the program to consumers via a monthly charge on their telephone bill.
Advocacy group Consumers’ Research argued that Congress didn’t place sufficient limits on the FCC program when it passed the Telecommunications Act of 1996. The group also asserted the Commission has failed to sufficiently review the Universal Service Administrative Company’s assessment of fees to companies, which the petitioners say go beyond mere advisory changes.
This ruling creates a significant circuit split as the Sixth and Eleventh Circuits have upheld the USF program system, according to Rural Spectrum Scanner. That makes it likely the agency will ask the Supreme Court to step in, notes Broadband Breakfast.
The think tank Information Technology and Innovation Foundation (ITIF) suggested the ruling is an opportunity to reform broadband funding, even though it “may cause some chaos now.” ITIF Director of Broadband and Spectrum Policy Joe Kane said policymakers have known for years the tax on consumers’ phone bills known as the “contribution factor” was “unsustainable” with the cost “skyrocketing.”
“Now, since the old course also has been found to be legally unsound, there is all the more reason for Congress to directly appropriate funding for important broadband programs, such as the Affordable Connectivity Program, while letting obsolete and redundant ones fall away,” he stated.
By Leslie Stimson, Inside Towers Washington Bureau Chief
Reader Interactions