USF legality hangs in the balance

The fate of the Universal Service Fund (USF) remains uncertain, as the Fifth Circuit Court of Appeals held an en banc (before the entire bench) hearing to debate whether the current system is illegal The USF includes four main programs aimed at addressing the digital divide – High Cost, Lifeline, E-Rate (for schools and libraries) and Rural Health Care. Telecommunications companies are required by law to make contributions to the USF, and that money often comes from a charge on consumer phone bills. The Federal Communications Commission has tasked the Universal Service Administrative Company (USAC)––a private third party––to help run the USF. Opponents of the USF have argued the FCC illegally delegated its responsibility for the fund to USAC and also said Congress cannot delegate to the FCC the power to tax, referring in this case to the contribution mechanism. Should the Fifth Circuit decide the current universal service framework is illegal, it could result in “potentially negative implications for all [broadband providers],” said New Street Research’s Blair Levin.