Senate Commerce Democrats Wary of Appropriations as Option for USF Funding
Top Senate Commerce Committee leaders told us they aren’t yet completely ruling out proposals to make the USF subject to Congress’ annual appropriations process as part of a legislative revamp of the program. However, some panel Democrats are dubious because of flaws in the funding system, amplified by the ongoing government shutdown (see 2510230049). In comments submitted to Congress' bipartisan USF working group, some stakeholders also strongly advocated for shifting to an appropriations-based funding model (see 2509160064). Meanwhile, panelists at a Schools, Health & Libraries Broadband Coalition event Wednesday said they see appropriations as a largely unappealing option to give USF more sustainable long-term funding.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Senate Communications ranking member Ben Ray Lujan, D-N.M., a USF working group co-chair, said he remains “open to having a conversation” about using appropriations as a temporary stopgap, but only “as long as we are working towards the common goal of” strengthening the connectivity program. He suggested that stakeholders who advocated for USF appropriations last year proposed it as a “short-term fix, understanding there has to be a more permanent” solution in a final revamp bill.
“You’ll have to ask [Senate Commerce Chairman Ted Cruz, R-Texas], what he wants to do, [but] it doesn’t sound like” making USF subject to appropriations is an attractive alternative to the program’s existing contributions-based funding mechanism, said ranking member Maria Cantwell, D-Wash. Cruz in 2024 called for Congress to make all USF initiatives besides the high-cost program subject to appropriations because proposals to instead expand the contributions base constitute a “tax on the working class” (see 2403060090).
Cruz and Communications Subcommittee Chair Deb Fischer, R-Neb., aren’t publicly advocating for or against a shift to appropriations. “We need USF reform, and I'm hopeful that we'll enact it,” Cruz said in a brief interview. Fischer, a working group co-chair, told us she hasn’t yet reviewed stakeholders’ September USF comments to determine whether an appropriations model is better than expanding the contributions base. Her staff and aides to other working group members are still organizing the comments, “so the next step will be to meet with staff and have a conversation” about how to proceed on legislative recommendations, Fischer said.
Not 'Stable'
Vernonburg Group Chief Policy Officer Greg Guice was among several panelists at the SHLB event who voiced strong skepticism about a federal appropriations model for USF, particularly since the U.S. Supreme Court's June ruling in Consumers’ Research v. FCC found the current contributions mechanism to be constitutional (see 2506270054). Congressional appropriations “is probably the one choice [for USF funding] that is most off the table,” Guice said. Lawmakers’ “inaction” in 2024 to renew the FCC’s lapsed affordable connectivity program shows that entrusting Capitol Hill to ensure the “steady” funding that USF recipients need “is probably not a great proposition for the people that run those networks [or] consumers that rely on” them.
Appropriations wouldn’t put USF on “the most stable base possible,” said Brattle Group principal Paroma Sanyal. Consultant Carol Mattey said “annual appropriations [are] a nonstarter,” in part because there appears to be “no end in sight” for the government shutdown, which began Oct. 1. “It remains to be seen” whether a multiyear appropriations commitment for USF would be feasible, but “these programs require stability and consistency” in their funding mechanism, Mattey said. The debate over modernizing USF contributions “has been going on for 20 years amongst” insiders in Washington, which shows that “Congress doesn’t actually have a sense of urgency” about addressing the issue.
Roslyn Layton, senior vice president at Strand Consult, and others argued for various expansions of USF’s contribution base. FCC Chairman Brendan Carr has long backed expanding the USF contribution base to include major tech “edge providers” (see 2105240037). Guice said he sees opportunities to bring “the edge providers and some of the services they offer" into the USF contribution base when "they're not contributing in what they're taking from these networks.”
“You could look at market-based mechanisms [that involve] metering the largest traffic generators,” including major social media platforms and AI companies, Layton said. “AI data centers are going up everywhere [and are] not necessarily connecting their local communities,” while the top eight tech companies generate a combined $200 billion in annual revenue and pay “almost zero” into the fund proportionate with the amount of internet traffic they produce.
Layton pointed to the Lowering Broadband Costs for Consumers Act (HR-4032/S-1651) as one legislative option for expanding USF’s funding base. The measure would require the FCC to complete a rulemaking within 18 months to expand USF’s contribution base to include social media platforms, streaming services and most other major edge providers (see 2311160070).
Mattey noted that continued “uniform opposition" by edge providers "to the idea of reform” of the contribution base will be a “big brick wall to deal with.” The “snowball effect of actually effectuating change" will need to involve "at least one of the companies [realizing] it's in their self-interest to figure out a way to sort of contribute” to USF, she said.