Congress Will Have 'a Gun at Its Head' If SCOTUS Overturns USF
A decision by the U.S. Supreme Court is expected in a matter of weeks in the Consumers' Research case challenging the USF contribution factor and the USF generally, even as SCOTUS wades through numerous emergency petitions from the Trump administration, industry experts said Wednesday during a Broadband Breakfast webinar. USF likely needs an overhaul, they added, but that could be difficult if the FCC loses at SCOTUS, which typically issues several high-profile decisions in June.
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Similar cases were filed in four judicial circuits, said HWG’s Jason Neal, who represents the Schools, Health & Libraries Broadband Coalition. “This has gone on for a really long time -- we’ve had a lot of briefing, a lot of argument, and it’s all sort of led up to this.” The FCC has also spent 25 years implementing the USF under Section 254 of the Communications Act, he added.
What happens in the next few weeks could have “an enormous effect” on the program's future, Neal said. “Big policy debates” remain, and different choices will raise legal issues that need consideration. Neal said he hopes policymakers won’t have to address the future of USF “in a mad scramble in the wake of an unfortunate” SCOTUS decision.
Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society, said it “certainly seemed like the Supreme Court was very skeptical” of the Consumers' Research challenge and that Section 254 would survive legal scrutiny. “We will see.”
Regardless of SCOTUS' decision, changes are likely for the USF program, Schwartzman said. If the court agrees that the contribution factor, as structured, is unconstitutional, “Congress will have a gun at its head, and that is just about the only way that Congress gets anything done,” he said. “It’s not the best way."
“We have multiple ways that the court could go” in its ruling, said Lynn Follansbee, USTelecom's vice president of strategic initiatives and partnerships. For example, it could find Section 254 is constitutional but toss “private delegation” provisions back to the FCC for more work. “That’s a possibility,” she said.
“We are hopeful for a good decision, because this program is so critically important to our members,” Follansbee said, adding that USTelecom strongly supports USF but also believes changes are needed. “We have a dwindling base of voice services that have been supporting this fund for almost 30 years.” If the contribution base is broadened, the contribution factor would drop sharply, she noted.
Nicholas Degani, chief strategist at the Digital Progress Institute, said he’s “very optimistic” the FCC will prevail at SCOTUS. The USF is “the oldest ongoing fund for providing access to telecommunications services to the public,” tracing back more than 100 years to a commitment by long-distance companies to offer settlement payments to smaller providers so they could interconnect to the network.
“The original theory” was “that those who benefit most from the network are the ones who should be paying,” Degani said. Those who benefit “from the primary thing USF supports -- broadband internet -- are often paying zero dollars for its upkeep.”
USF's largest financial beneficiaries don’t pay for the benefits they receive, agreed Roslyn Layton, senior vice president at Strand Consult. People with landline phones -- “the grandmother in tennis shoes, for example” -- are absorbing a charge of 36% on their bill, she said.
If SCOTUS holds that the FCC lacks the authority it asserts over the USF, options like “broadening the base” and expanding USF to include “big tech, whatever that means,” would be “off the table,” Neal said.
“We have a Congress that has a difficult time acting, a difficult time doing appropriations right now,” Follansbee said. USTelecom members, especially those serving high-cost rural areas, “really need certainty.”