USF Survived SCOTUS Challenge but May Not Be Sustainable in Current Form

An immediate end to the USF would have meant bankruptcies and lost jobs, and many Americans would have seen service cut off, O’Rielly said. However, “that doesn’t mean everything is great.” There are problems with the Universal Service Administrative Co., which was a focus of the SCOTUS challenge, he noted. Having USF recipients on the USAC board “makes no sense.” Questions remain about the relationship between USAC and the FCC and decisions on enforcement actions, he added.

As a Hill staffer and later a commissioner, O’Rielly said he had problems getting basic information from USAC. “It’s a perennial problem.” There’s also “the bigger problem with the USF,” specifically how much the program has grown, he said. While SCOTUS found that the USF contribution factor was constitutional, that doesn’t mean the administration of the program is “in a good place.”

Addressing just the contribution factor isn’t enough, O’Rielly argued. He pointed out that the high-cost program consists of 13 subprograms, many of which are more than 30 years old and out of date. “We have a Lifeline program that we’re not sure makes any sense” and is being questioned by Congress. The schools and libraries program is growing “when schools are saying no more connected devices in our buildings.”

Evan Swarztrauber, a principal at CorePoint Strategies and a former aide to FCC Chairman Brendan Carr, noted that Congress relaunched a USF working group (see 2506120091). Twenty years ago, people said that if the USF contribution factor goes higher than 5%, “that’s a crisis,” he said, but it's now much higher. The FCC Office of Managing Director last month proposed a contribution factor of 36% for Q3 2025 (see 2506110058).

“My take is pretty simple,” Swarztrauber added. “You need to reform the program and also consider new funding.”

With the $42.5 billion BEAD program and numerous other government programs paying for broadband, Swarztrauber called for a “comprehensive audit” of everything the U.S. is doing on broadband. Tech companies that benefit from people being online should also have to support USF, he said. “Their services are growing while the services that fund this program are shrinking.”

O’Rielly said the congressional task force is made up of the members you’d expect -- leaders of subcommittees with oversight of the USF. It doesn’t include some of the most conservative members of the House and Senate, he noted. “There’s a whole voice that’s going to be need to be listened to if we’re actually going to get somewhere.”

“It really is hard to legislate” with the thin majorities in the House and Senate, O’Rielly said. “This isn’t something that you can do overnight.” The FCC and Congress are also both very busy now, he added.

Christopher Mitchell, director of community broadband networks at the Institute of Local Self-Reliance, said he’s “deeply concerned” about the USF's future. In Minnesota, where he lives, and other parts of the U.S., smaller providers invested and got loans based on the expectation that they would have a “safe source of support from the federal government,” he said.

Mitchell doesn’t trust Congress to reform the USF in a “way that would give me a lot of comfort.” Washington seems to be “in a cycle of very short-term thinking, of being more political than it has been in the past.” But policymakers can’t ignore the growing role of satellite broadband, he said. “Things change when they absolutely have to change, and I think we might be getting to that point.” Congress should give the FCC more power to look at other sources of revenue to support the USF, Mitchell added: “I don’t want it to be really complicated.”

FCC Commissioner Anna Gomez noted the importance of the SCOTUS decision during a Fiber Broadband Association webinar Wednesday (see 2507020038). The ruling should provide Congress with “the clarity and confidence it needs to move forward with bipartisan, bicameral reforms, to protect the program and to ensure its sustainability,” she said.