Universal Service Fund

Two key Republican lawmakers are opposing a Federal Communications Commission proposal that would expand the E-rate program to allow it to pay for Wi-Fi on school buses and mobile hotspots that schools can loan out to students.

Cuba City Telephone Exchange Co. and Cal-Ore Communications notified the Federal Communications Commission of their decisions to withdraw from the Rural Digital Opportunity Fund (RDOF) support program. Cuba City and Cal-Ore’s letters constitute notification to the FCC that these carriers are defaulting on their obligations to meet their service milestones.

The Coalition of Rural Digital Opportunity Fund (RDOF) Winners has filed an emergency petition with the Federal Communications Commission regarding its request for extra funding or other relief measures. The group argues that the COVID pandemic has raised deployment costs dramatically and that the funding the companies won is now insufficient.

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.

The Federal Communications Commission published its first “illustrative run” of what the offers might be to broadband providers who elect extended subsidies in exchange for agreeing to bring 100/20 broadband to every location in their “study area.” With this illustrative run document, it now appears that if all the ISPs accept the FCC’s offer, 1.3 million locations would be ineligible for BEAD funding because the FCC would have an enforceable commitment from the ISP to bring service to that location.

On July 24, 2023, the Federal Communications Commission authorized a new subsidy program, Enhanced A-CAM (Alternate Connect America Cost Model). This program will extend subsidies to small, regulated telephone companies at a cost of about $1.27 billion per year for ten years.

Recognizing the impact of the coronavirus (COVID-19) pandemic on financial markets and on the ability of providers to successfully conduct their operations, the Federal Communications Commission's Wireline Competition Bureau (Bureau) waived the FCC’s letter of credit (LOC) rules for Connect America Fund Phase II auction (Auction 903) and Rural Broadband Experiments (RBE) support recipients in 2020 and 2021. Recipients of support from both programs were permitted to comply with the less extensive letter of credit rules established by the FCC for the Rural Digital Opportunity Fund (RDOF).

The basic tenet of universal internet service—that the government should assist those who cannot afford basic access to the network—has long been a cornerstone of American telecommunications policy. Unfortunately, it is far from clear whether Lifeline, the federal program tasked with getting low-income households online, actually addresses this problem. The recently enacted Affordable Connectivity Program (ACP) threatens to compound Lifeline’s errors. The advent of ACP provides a unique opportunity to rethink our approach to broadband affordability initiatives.

Today, many months after passage of the landmark Infrastructure Investment and Jobs Act, the states are finally on the cusp of implementing National Telecommunications and Information Administration’s $40+ billion Broadband Equity Access and Deployment program. Some states are confidently moving ahead quickly, while others are in the early days of developing concrete plans for how they will manage this historic federal investment.

A group known as the Coalition of Rural Digital Opportunity Fund (RDOF) Winners is still hoping that the Federal Communications Commission will release additional funding to the companies to help cover the large increases in deployment costs that the winners have experienced since the RDOF rural broadband funding auction was completed in 2020, just prior to the start of the COVID-19 pandemic in the US. One of the companies seeking extra funding is Aristotle Broadband, which won $62 million in the auction for deployments primarily in Arkansas and Mississippi, including persistent poverty cou