Senators, from both parties, support updating the Universal Service Fund to help those who live in rural and Tribal areas
Three US Senators introduced the Lowering Broadband Costs for Consumers Act of 2023 (S. 3321). The bill is sponsored by Senators Mullin (R-OK), Kelly (D-AZ), and Crapo (R-ID). It follows the Federal Communications Commission’s (FCC) Report on Congress on the Universal Service Fund, issued in August 2022.
Producing the report was stipulated in the Infrastructure Investment and Jobs Act which became law in November 2021, as part of the rescue measures after the COVID pandemic. It too had bipartisan support.
First major reform of USF
The proposed bipartisan legislation proposes the first major reform of the $9 billion Universal Service Fund (USF) in years. It was set up to provide telephony services to rural and Tribal areas but revenues have been falling for years, and the USF is facing bankruptcy.
During the decline in voice revenues, the USF fees have raised the cost of internet access higher for lower income individuals and households.
The Lowering Broadband Costs for Consumers Act of 2023 seeks to give the Federal Communications Commission (FCC) powers to assess “edge providers” and digital companies that account for more than 3% of the US’ internet traffic or have more than $5 billion annual revenues for contributions to the USF.
This includes the usual suspects cited in fair-share debates, Meta (Facebook), Alphabet (Google), Netflix, Apple, Amazon et al.
The levies set by the FCC would help fund connections for schools, hospitals and libraries and those on low incomes in rural and Tribal areas.
Strand Consult, in a research note, comments, “This reform is long overdue because large entities do not participate meaningfully in USF today, and indeed, engage in efforts to deter needed reform.”
The note continues, “The market-based principle behind the bill is that the largest users of broadband networks and those that are the primary financial beneficiaries of the internet should help pay for broadband networks. Small broadband owners and operators have no market power to demand a good-faith negotiation for cost recovery with large tech enterprises. “
Strand also points out that the bill follows the FCC’s Affordable Connectivity Program (ACP), which is accessed by more than 21 million Americans. Congress created ACP in the Infrastructure Investment and Jobs Act of 2021 with an initial funding allocation of $14.2 billion.
The program has been a success, providing qualifying households with a voucher for up to $30 and up to $75 a month for Tribal households towards broadband costs, and possibly other broadband-related benefits.
Strand states, “While the program makes broadband more affordable for end users, it drives enormous revenue for the largest edge providers, at least $1,500 per user per year for…providers like Alphabet, Meta, Amazon, Apple, Netflix, Microsoft, and ByteDance (TikTok).”
However, the taxpayer foots the bill and the funding will end in early 2024 unless Congress passes a bill to keep it going. Strand Consult explains, “While the Lowering Broadband Costs for Consumers Act does not address ACP explicitly, its construct can be used to merge ACP into USF to fund the popular affordability program without burdening consumers, taxpayers, or future generations.”
The Lowering Broadband Costs for Consumers Act of 2023 is supported by various stakeholders including:
• three national trade associations USTelecom – The Broadband Association, NTCA – The Rural Broadband Association, and WTA – Advocates for Rural Broadband
• telecoms and broadband associations from 18 states; and
• more than 300 rural broadband owners and operators.
Collectively they amount to some 1,200 broadband providers serving millions of customers in every state in the US. The intention to include large edge providers in USF contributions was supported, on the record, by dozens of social justice organisations, think tanks, academics, and other stakeholders in the FCC’s Report on the Future of Universal Service.