November 29, 2021 represented a milestone in the push to reform the federal Universal Service Fund (USF) contribution system by adding revenue from broadband services into the contribution base. 254 organizations representing multiple stakeholders signed a letter urging policymakers to take “immediate action to reform and stabilize the funding mechanism that supports the USF by expanding the list of services that pay into it to include broadband Internet Access service” revenue. According to the proponents of amending the existing revenue-based contribution system administered by the Universal Service Administrative Company (USAC), the addition of revenue from broadband Internet access service (BIAS) would quickly lead to the quarterly contribution factor dropping to 4% or below (as compared to the current quarterly contribution factor of 29.1%).
Stakeholders, including broadband providers, come together to push for USF Reform
The letter’s signatories include public interest groups; consumer organizations; trade associations; anchor institutions; miscellaneous associations, government departments, and entities; and even broadband providers, who would have to contribute if the USF contribution base were expanded to include BIAS.
In fact, broadband providers make up the largest single group of signatories, with good reason: the “recommendation would reduce regulatory uncertainty, would better reflect evolving uses of services, would be straightforward to administer, and would be more equitable and nondiscriminatory for residential and business consumers than the current system.” While the letter notes other justifications for including BIAS in the USF contribution base, these broadband providers likely see the writing on the wall and know they will have to contribute in some way. Acting now to ensure regulatory certainty with the potential to help steer reform is much better than being blindsided with another FCC-mandated fee.
Regulatory Certainty; Simplicity; and a Viable, Sustainable USF
In addition to noting the boon of regulatory certainty, the letter notes the importance of the USF in addressing the digital divide and enabling deployment and operation of broadband across America and how a relatively small assessment on BIAS would be a low-impact way to fund the USF, which expands BIAS availability and affordability.
As support for expanding the USF contribution to include BIAS, the letter references a recent USForward Report that doing so would lower the contribution factor to under 4% for the foreseeable future. The letter also argues the Federal Communications Commission (FCC) could make such a change under its existing authority without new legislation, but does not explain the basis for such FCC authority.
Finally, the signatories argue that, with respect to reform, “the perfect should not be the enemy of the better;” USF reform, long-term stability, and solving the digital divide should not be compromised by deferring or declining reforms merely because “options may warrant further examination.”
If you have questions about the applicability of the USF, including potential reforms, to your company or any other federal regulatory obligations, please reach out to the attorney assigned to your account or contact Jonathan S. Marashlian at firstname.lastname@example.org.