Do We Still Need the Universal Service Fund?

There is currently a policy debate circulating asking who should pay to fund the Federal Communications Commission’s Universal Service Fund. For decades the USF has collected fees from telephone carriers providing landline and cellular phones – and these fees have been passed on to consumers. As landline telephone usage has continued to fall, the fees charged to customers have increased. To fix this, there have been calls to spread fees more widely. Since the USF today is mostly being used to support broadband, the most logical way to expand funding is by collecting the fee from internet service providers (ISPs) – which would also likely pass the fees on to consumers. Another idea is that the USF should instead be funded by the biggest users of the Internet – being Netflix, Google, Facebook, and others who ISPs say get tremendous benefits from the Internet without paying towards the basic infrastructure. As I’ve read this back-and-forth debate, I was struck by a different thought. Instead of expanding funding for the USF, we ought to be talking about curtailing it. The Universal Service Fund is used for several purposes; it funds subsidies to get cheaper broadband for schools and libraries and pays for getting better broadband for rural health care facilities. These seem like worthwhile programs that should continue to be funded. Let’s find another way to fund them without the FCC goofing up subsidies.

[Doug Dawson is the President of CCG Consulting.]