Universal Service Fund

This analysis explores, from an economic perspective, the effects of modifying and expanding the “contribution base”—the supply of financial resources for the Universal Service Fund—to include both voice and broadband connections. While the Federal Communications Commission has updated the way universal service funds are distributed to orient them more toward support of both voice and broadband services, the contributions system that pays for the FCC’s mission-critical USF initiatives continues to rely precariously upon a dwindling pool of revenues from legacy services.

The coronavirus pandemic has laid bare many of the inequalities in America, including the differences in access to broadband Internet. Three policies that can help: (1) allow cities to provide their own broadband; (2) expand and reform Lifeline; and (3) provide tax incentives to firms that subsidize their employees’ broadband. The first of these policies stimulates the “supply” of broadband, while the second two stimulate “demand.” Together, these policies should help reduce the digital divide.

For analysts of digital policy issues, few datasets are more useful and trusted than the Pew Research Center’s Internet & American Life project, which regularly surveys Americans about internet-related topics.

CenturyLink's slow broadband deployment, already a problem before the pandemic, has gotten even slower as the public health crisis causes cities and towns to halt construction. Since 2015, CenturyLink has received $505.7 million each year from the US government's Connect America Fund to deploy Internet service to nearly 1.2 million homes and businesses in 33 states. CenturyLink was required to complete 80 percent of that deployment by the end of 2019 but recently told the Federal Communications Commission that it did not meet the end-of-2019 deadline in 23 of the 33 states.

Reps Collin Peterson (D-MN) and Don Young (R-AK) -- with the bipartisan support of T.J.

The Federal Communications Commission has received challenges from about 180 entities that have stated that they provide broadband at speeds of at least 25 Mbps downstream and 3 Mbps upstream, along with voice service, to at least part of census blocks that were on the commission’s preliminary list of areas eligible for the Rural Digital Opportunity Fund (RDOF) reverse auction scheduled to start in Oct.

Rural North Dakotans are more likely to have access to fiber connectivity and gigabit-speed Internet than those living in urban areas. This case study highlights the efforts of 15 local companies and telephone cooperatives who came together to invest in rural North Dakota and build gigabit fiber networks across the state. Their success is traced back to the companies’ acquisition of 68 rural telephone exchanges from monpoloy provider US West (now CenturyLink) in the 1990s.

On May 1, 2020, Frontier respond to NTCA, NRECA and WISPA, who questioned claims made in Frontier’s challenge to the list of census blocks deemed initially eligible in the Rural Digital Opportunity Fund (RDOF) Phase I auction. Frontier confirmed the vast majority of the census blocks listed in its challenge represent existing builds, including those undertaken as part of the Connect America Fund II program over the past five years.

The time has come for Congress to establish a broadband credit—call it America’s Broadband Credit (ABC)—to ensure that people who can’t afford broadband can use broadband. The debate on whether broadband is a luxury or an essential connection to society is over. Broadband is critical, as Americans have now learned as they work, study, consult doctors, socialize, shop—and really lead their lives from home. But for too many, especially the newly unemployed, the cost of broadband service is not affordable.

The Universal Service Administrative Company’s estimate of demand for the Schools and Libraries Universal Service Support Mechanism discounts (also known as the E-rate) for Funding Year (FY) 2020 is $2.91 billion, of which $1.74 billion is for Category 1 services (mainly broadband internet access service) and $1.17 billion is for Category 2 services (mainly internal connections).