Momentum Grows to Shore Up FCC Subsidy Programs, But Deal Elusive

Pressure is rising on the Federal Communications Commission and Congress to rethink the $8 billion Universal Service Fund that subsidizes phone and broadband service, as it teeters on a shrinking budget base. Big phone companies like AT&T, entities that benefit from USF programs, and public interest groups see the Biden administration as a new opportunity to press their case for an overhaul of the funding mechanism. But despite widespread agreement that something must be done, no broad consensus on a solution has emerged amid the brewing debate. “The system is at a breaking point and you have both the big companies, the recipients of USF funding and consumer advocates saying it’s got to be fixed,” said Benton Senior Fellow and Public Advocate Gigi Sohn. “The devil is in the details.”

Democrats have weighed expanding the funding base to include more services, such as broadband internet revenues, but that proposal is fiercely opposed by Republicans who decry it as a tax on the internet. Meanwhile, some top Republicans, including recently departed FCC Chairman Ajit Pai, have recently backed a proposal from AT&T to scrap the contributions system altogether and have Congress fund USF programs through the appropriations process. Some stakeholders worry that the appropriations plan would only increase financial instability, given the frequency of budget fights in Congress.