There’s still hope for the USF, but no easy fix

The Universal Service Fund’s day in court came and went, and the U.S. telecommunications industry still has hope the subsidy will live to see another day. But even if the Supreme Court deems the USF framework constitutional, there’s still no easy path to reform the program. The Supreme Court heard arguments related to the Fifth Circuit’s decision that the USF’s funding method is unconstitutional. While it’s by no means certain, New Street Research Policy Analyst Blair Levin said the current USF framework is “more likely than not to be upheld.” The bigger question is what happens next.  Telecommunications providers are required to contribute a certain percentage of their interstate and international service end-user revenues. The problem is the contribution rate continues to go up, but those revenues are shrinking as more people subscribe to broadband over traditional telephone services.