Comments to Congress' USF Group Call for Wider Contributions Pool or Appropriations
A handful of right-leaning groups are pressing strongly for a bipartisan congressional working group to recommend funding USF via the appropriations process as part of a potential legislative revamp of the program, but other stakeholders said they still they favor various expansions of the initiative’s contributions base. Comments to the working group were due late Monday night as part of its recently relaunched bill consultations (see 2508010051). The right-leaning groups also called for the most far-reaching changes to the program’s governance and structure, in some cases seeking to ax the high-cost fund.
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The Free State Foundation urged Congress to “migrate [USF] to multi-year appropriations for whatever remaining subsidies are deemed necessary because this would foster greater efficiency, transparency, and accountability and help prevent waste, fraud, and abuse.” If Congress chooses to maintain the surcharge system, lawmakers “should consider broadening the contribution base to include the large online platforms that [most benefit] from subsidized broadband access.”
The Information Technology and Innovation Foundation (ITIF) said Congress “should fund USF as much as possible through appropriations or some other method to spread the burden to all taxpayers,” as the current mechanism of sector-specific USF fees is “an ineffective contribution model. Consumers always bear most of the burden of taxes even when they are technically levied on companies.”
TechFreedom pushed lawmakers to “fund USF through general funds, [as just] legislating an expansion of the contribution base won’t solve [the contribution factor’s] fundamental inequity.” An expansion of the factor to include edge providers like Netflix “would result in them passing along those fees to customers,” TechFreedom said. “It would also make them rethink their investments in the Internet itself.”
The three groups proposed other changes as well, including FSF’s call for the program to “focus on affordability for low-income households and replace the inefficient and fraud-prone Lifeline program with a voucher-based approach modeled on the [FCC’s lapsed] Affordable Connectivity Program and open to all providers.” TechFreedom sought to require the FCC to directly administer USF rather than “delegate” it to the Universal Service Administrative Co., which “has every incentive to keep driving costs up and hide behind an opaque system that is not subject to FOIA or any other practical oversight.”
ITIF urged Congress and the FCC to “eliminate the High-Cost fund once current funding obligations are complete” and institute a narrower Lifeline program that provides “a $30 per month voucher to low-income households for the broadband service of their choice.”
The National Lifeline Association also called for expanding Lifeline’s subsidy to $30 per month, putting it in line with the amount of funding that the affordable connectivity program provided before it lapsed last year. The congressional USF working group previously eyed melding the two initiatives.
SHLB, Others Back Expansion
Schools, Health & Libraries Broadband Coalition Executive Director Joey Wender told us he has seen no evidence that stakeholders have shifted in any substantial way in favor of mostly funding USF via appropriations, something Senate Commerce Committee Chairman Ted Cruz, R-Texas, favors (see 2403060090). “There is widespread support [on Capitol Hill] for maintaining” USF funding via fees, Wender said.
SHLB’s filing with the working group urged Congress “and the FCC to consider adding new revenue sources” for USF, including expanding the contribution base to “stabilize the rate paid by current providers, offer a fairer approach for consumers, and ensure that schools, libraries, and rural healthcare providers have the funding they need.”
USTelecom was one of many other groups that favored an expansion of the contributions base, in line with what FCC Chairman Brendan Carr began advocating in 2021 as a commissioner (see 2105240037). “Under the current contributions system, the Fund primarily assesses services in demand in 1996, not 2025,” the group said. Congress should expand the system beyond its current base of carriers and interconnected VoIP providers to “include large tech companies that have built trillion-dollar businesses on broadband infrastructure, services, and adoption.”
The Competitive Carriers Association urged Congress to modernize the contribution mechanism “to reflect current and anticipated users and uses of connectivity,” specifically arguing against shifting to “an appropriations-based model. Doing so would undermine all of the programs due to the uncertainty inherent in the annual appropriations process.” An updated contribution mechanism “should not be in the form of an internet ‘tax’ on consumers,” the group said. Congress “should be extremely sensitive to how burdens of a reformed contribution model would impact consumers, as well as broadband providers.”
NTCA called for Congress to “undertake holistic reform [of USF] that spreads the contribution obligation as widely as possible across participants in what one recent paper thoughtfully entitled the ‘Digital Ecosystem.’” An expanded contribution mechanism should include digital advertising, cloud computing, streaming and other online platforms, the group said. “Broadening the base to capture the entire ‘Digital Ecosystem’ [could lead to] a significantly mitigated impact on end users in the form of a 0.8% contribution rate.”
The National Lifeline Association “supports expanding the base of contributors in a manner that keeps the contribution factor low, but collects enough contributions to meet the needs of an effective Lifeline program, which necessarily includes support levels at a minimum of $30 monthly and participation by a majority of eligible households.”