A Needed USF Budgetary Cap

The Federal Communications Commission recently chose thoughtful and sensible policy reform when an item was circulated to Commissioners to begin a rulemaking that would establish a much-needed and overdue budget for the agency’s Universal Service Fund (USF).  Against the backdrop of special interest groups and uninformed detractors reflexively opposed to any restraint on the agency’s redistributive subsidies, I am proud to lead this effort to inject more fiscal responsibility into the USF. Hardly a revolutionary idea, budgets are precisely what American families and businesses rely on to manage their everyday operations.  On the government side, nearly every federal spending program, with the exception of entitlement programs—which USF is not—operate within reasonable limitations. What critics fail to consider is that it is untrammeled USF spending that ultimately impedes digital access, not a cap on the fund.  Any increase in USF expenditures is paid for by consumers, and, since the USF fee is non-progressive, providers generally assess it equally against all their consumers.  The burden of an increased contribution fee, therefore, falls disproportionately on low-income households because they pay a greater portion of their income toward telecommunications services than high-income households. In other words, an unchecked USF means disproportionate burdens get placed on those users most sensitive to price changes and most likely to change their spending decisions in response to higher fees.