Universal Service Fund

Congress should extend the worthwhile Affordability Connectivity Program (ACP) promptly by appropriating additional funding. At the same time, it can consider revising the program to better target the ACP benefit to those lower-income households most truly in need and adopting measures to minimize, to the extent possible, any waste, fraud, and abuse in the program. The ACP represents one-half of the federal government's push to make it possible for every American to access a high-speed Internet connection.

The Universal Service Fund is funded  by a quarterly surcharge on interstate and international telecommunications revenue. Each quarter, a private nonprofit known as the Universal Service Administrative Company (USAC) estimates how much money it needs to fund the Federal Communications Commission’s (FCC) myriad universal service initiatives. It also estimates the amount of telecommunications revenue expected to be generated by industry, and from there calculates the surcharge percentage necessary to cover program costs.

The total projected collected interstate and international end-user revenue base to be used in determining the contribution factor for the Universal Service Fund support mechanisms for the second quarter of calendar year 2023 (2Q2023) is $8,761,742,607.

Charter Communications has talked a lot recently about its rural expansion plans. But what it hasn’t drawn attention to is the fact that most - if not all - of its planned rural passings will be delivered with fiber. The operator originally announced its rural build plan in 2021 after the close of the Rural Digital Opportunity Fund (RDOF) auction. All told, it said it was planning to spend $5 billion – including $1.2 billion in RDOF subsidy money – to reach 1 million rural locations across 24 states over the coming years.

The Federal Communications Commission is an important institution. It oversees a huge input to our information economy: Spectrum. Fortunately, three decades ago, we developed a method for allocating spectrum that has garnered bipartisan praise, been copied around the world, underlaid two Nobel prizes, and is arguably the most successful communications policy innovation ever. Unfortunately, Congress can’t decide how to reauthorize that auction authority. Congressional dysfunction? Alas, not weird. The stakes are high: billions in investment capital, 10x more in economic impact.

Here is an overview of the major federal funding vehicles for broadband that are helping to fuel the broadband investment cycle and are aimed at closing the digital divide so that all Americans have access to high-speed, reliable, affordable broadband:

The Federal Communications Commission adopted a proposal seeking comment on steps to encourage greater participation by eligible Tribal applicants in the E-Rate program, which provides high-speed internet to schools and libraries.

The US Department of Agriculture (USDA) is investing $63 million to bring high-speed internet access to people living and working in rural areas in Illinois, Michigan, Minnesota, and Mississippi. The investments include funding from the Infrastructure Investment and Jobs Act. The $63 million in grants comes from the third funding round of the ReConnect Program, in which USDA invested a total of $1.7 billion. The four projects being funded are:

US Senators Shelley Moore Capito (R-WV) and Amy Klobuchar (D-MN) reintroduced the Rural Broadband Protection Act (S.275), which would require a more thorough vetting and verification process for internet service providers seeking to participate in the Federal Communications Commission's high-cost programs. The bill would provide essential safeguards to the Universal Service Funds' (USF) high-cost programs by ensuring that funding goes to companies with both a proven track record of success and have demonstrated sound judgment in deploying in hard-to-serve areas.

I want to take on the phrase ‘technology-neutral’. This phrase is being used to justify building technologies that are clearly not as good as fiber. The phrase was used a lot to justify allowing Starlink into the Rural Digital Opportunity Fund (RDOF) reverse auction.