Technology Policy Institute

Two very real Universal Service Fund (USF) problems need to be addressed: funding and spending. The way the program is funded is inefficient, unsustainable, and regressive. Regardless of the judicial outcome, the tax that the court declared unconstitutional is both inefficient, by taxing a small, price-sensitive, declining base, and regressive, with a higher proportional burden falling on those least able to afford it. The program spends too much money on the wrong things. The High Cost Fund in particular, which accounts for about half of total spending, is outdated and wasteful.

Consumers and policymakers always care about broadband prices. The issue is of particular interest to policymakers now that the Affordable Connectivity Program (ACP) has ended and as states try to figure out what the “affordability” requirements of the BEAD grants mean and how to implement them. Such analysis should begin with an understanding of current prices and how they have changed. This analysis uses three sources to consider the cost of broadband to consumers: the Federal Communications Commission’s Urban Rate Survey (URS), the U.S.

On May 2, the Senate will hold a hearing on “The Future of Broadband Affordability.” The Affordability Connectivity Program (ACP) that provides subsidies for more than 20 million low-income households will expire in May. Without the extension, these families will see the cost of the internet service increase by up to $30 per month and prompt some families to drop internet service altogether.

In these comments we explain why Title II classification is unnecessary and potentially harmful.  Specifically, we make the following points: 

On September 26 at the National Press Club, Federal Communications Commission Chairwoman Jessica Rosenworcel laid out her arguments for reclassification. Among them was a claim that the lack of broadband competition makes Title II necessary. One can make coherent and serious arguments supporting Title II and net neutrality. But Title II because of the state of competition? No. The Chairwoman is right that areas actually served by only one provider and likely to continue to be served by only one provider really do require more oversight than areas with more competition.

The Universal Service Fund (USF) is inefficient, ineffective, and funded by a regressive tax mechanism. Several reforms could improve the program:

Studies exploring the relationship between technology in the classroom and students’ outcomes have yielded mixed results. We contribute to the debate by examining the effects of broadband subsidies to schools on school performance measures in Florida. Specifically, using a nearly universal panel of Florida schools in the period 2016-2019, we assess the effect of federal broadband subsidies to schools via the E-Rate program on school grades.

A recent story in the Texas Tribune discussed how Texas’s broadband map shows service in some areas that residents say doesn’t exist.