Rural Health Care

There have been several lawsuits over the last few years that challenge the legitimacy of the Federal Communications Commission's Universal Service Fund (USF). A suit from a non-profit group called Consumers’ Research argues that USF fees are taxes and that the original creation of the USF was unconstitutional since the Telecommunications Act of 1996 gave the FCC the power to levy taxes.

According to the Federal Communications Commission (FCC), 8.3 million households lack access to high-speed broadband. Providing universal access to communications service—initially voice service and now broadband—has always been a challenge in the United States. Although connecting urban, populated areas is relatively easy, serving sparsely populated rural areas is difficult due to differences in terrain and population density.

Two broad proposals have been advanced to modernize the Universal Service Fund's contributions system: 1) expanding the contribution base to include revenues from broadband internet access service, and 2) broadening the USF contribution base to include entities including edge providers such as streaming video providers, digital advertising firms, and cloud services companies. The most economically efficient option for reform is to expand the contribution base to include broadband internet access service revenues.

The  Universal Service Administrative Company (USAC) submitted projections of demand and administrative expenses for federal universal service support mechanisms for the fourth quarter of 2023. The Federal Communications Commission's Wireline Competition Bureau, in consultation with the FCC's Office of Managing Director, previously directed USAC to carry forward up to $211.50 million in unused funds from prior funding years to the extent necessary to satisfy funding year 2023 Rural Health Care program demand.

The Congressional directive in the Telecommunications Act of 1996 is for the Federal Communications Commission (FCC) to ensure that there be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service. The dilemma is that the source of Universal Service Fund (USF) programs is end user (i.e. retail) revenues from international and interstate wireline and mobile services, as well as revenue from providers of interconnected Voice over Internet Protocol (VoIP) services.

As what we can do with the internet has expanded, so too has the way we connect, and how we use it—at home and on the go. In the United States today, it has become the norm for a majority of households to have two types of subscriptions to the internet—mobile data for their phone and fixed (and for the most part) wireline service for their residence. Over 75 percent of households whose annual incomes exceed $50,000 have cellular data and wireline broadband subscriptions. For households below that level, 44.7 percent have both types of subscription plans.

The US telecommunications market has significantly evolved since Congress last overhauled the Communications Act more than a quarter century ago. But the Federal Communication Commission’s universal service distribution policies – though periodically tweaked – are still rooted in a framework designed to support incumbent telephone companies. However, the Congress and the FCC now have before them an opportunity to reimagine and reinvent universal service policy for the future.

On July 27, 2023, the U.S. Senate's Universal Service Fund (USF) Working Group invited public comment on the future of the USF with the stated goal of creating a bipartisan forum to guide education, awareness, and policymaking on the USF. The opportunity to weigh in with the senators has had me thinking about the importance of the USF for bringing affordable broadband infrastructure and services to millions of people around the country. So I'm taking this opportunity to share my thoughts on one of the most important tools in our national effort to reach truly universal broadband.

The Federal Communications Commission’s Wireline Competition Bureau (WCB) seeks nominations for the following Board member positions on the Board of Directors of the Universal Service Administrative Company (USAC) listed below for a three-year term:

Over the past 26 years, the Universal Service Fund — a federal subsidy pool collected monthly from American telephone customers — has spent close to $9 billion a year to give Americans better phone and internet connections, wiring rural communities in Arkansas, inner-city neighborhoods in Chicago, and public libraries and schools across the country. Now it faces the biggest crisis of its existence, and Congress appears paralyzed in the effort to fix it.