On August 15, 2022, the FCC released a Report on the future of the Universal Service Fund (“USF”), as required by the Infrastructure Investment and Jobs Act (“IIJA”), which instructs the FCC to submit a report to Congress on options to improve the FCC’s effectiveness in achieving the IIJA’s universal service goals for broadband and similar legislation. The FCC sought comment on the future of USF in a Notice of Inquiry (“USF NOI”), which is summarized in the email below. Based upon responses to the NOI, the Report makes four broad findings regarding broadband and USF as detailed below.
I. Universal Service Goals For Broadband
First, the FCC adopts the goals of universal deployment, affordability, adoption, availability, and equitable access to broadband throughout the United States, as proposed in the USF NOI. In adopting these goals, the FCC reiterated that it is committed to the principal of technological neutrality in universal service and that fixed and mobile broadband are not complete substitutes. The FCC concluded that its goals should evolve over time as technology advances. The FCC will measure progress toward its goals through more precise and granular mapping data, reporting from existing USF and affordability programs, and through its work implementing the IIJA.
The FCC also found that the IIJA will not achieve all the universal service goals for broadband, and thus the FCC should not abandon its USF programs. While modifications to existing USF programs may be necessary, the FCC concluded that its universal service goals for broadband cannot be achieved without the existing USF programs and that the full impact of the IIJA will not be possible until the IIJA programs have progressed further.
II. Interagency Coordination
Second, the FCC concluded that effective deployment of future USF support will require interagency coordination with regard to mapping and funding commitments to identify proper locations for broadband funding and to avoid duplicative support. The FCC commits to continued close coordination with NTIA, USDA, and Treasury to share data and program updates. The FCC also plans to look for opportunities to coordinate with other agencies and states regarding administrative matters such as application and reporting procedures to reduce burdens on applicants.
The FCC recognized that the Broadband DATA Maps, including the granular data coverage maps and the Deployment Locations Map, which will identify locations served by federally funded infrastructure and detailed data for each agency’s funding programs, will be valuable resources in its coordination efforts and ensuring that future broadband funding is distributed to areas that are unserved. The FCC also noted that it has executed coordination agreements with USDA, NTIA, and Treasury to ensure that information is being shared among the agencies regarding each respective broadband support programs. The FCC noted that these agreements have helped to establish robust communication channels and will continue to be a vital part of closing the digital divide.
Third, the FCC makes several recommendations on the future of the USF programs, including:
- Reorientation of the High Cost Program: the FCC recognizes that the BEAD Program will make substantial investment in broadband infrastructure in areas that overlap with qualifying regions in the FCC’s High Cost Programs. The FCC recommends that it initiate a proceeding to consider the future support needs of networks serving high-cost and other hard to serve areas, including: (1) if, when, and under what circumstances continuing support is necessary to develop, sustain, and improve broadband operations; (2) how best to determine which carriers may need such support and in which amounts; and (3) to explore and develop strategies to ensure consumers in high-cost areas have access to advanced telecommunications services at prices reasonably comparable to urban areas. The FCC notes that some of these evaluations should be done parallel to BEAD funding disbursements. The FCC notes that it should continue to administer High Cost support that has already been committed and that it should consider whether future planned processes, such as RDOF Phase II, remain necessary after the FCC’s creation of the BDC and deployment commitments under BEAD or other IIJA programs are made. Finally, with respect to support for Mobile Broadband, the FCC notes that the BEAD Program will not fund mobile deployments, and that the FCC should proceed with providing additional support for mobile broadband through a competitive process after it has updated maps.
- Lifeline and Affordable Connectivity Program: the FCC recommends that it initiate a rulemaking to evaluate how the Lifeline program can best operate with the ACP and examine lessons learned from implementation of the EBB Program and ACP that may be able to be applied to Lifeline. The FCC notes it should evaluate the differences in qualifying requirements, the different purposes and populations that the programs serve, whether combining the programs would be beneficial to consumers, and whether there are benefits of one program that should be applied to the other. For any Lifeline rulemaking the FCC recommends that it consider continuing Lifeline support for voice-only service based on strong support in the record and analysis of marketplace reports, that it revisit the minimum service standards, and evaluate ways to encourage provider participation in the program.
- E-Rate and Emergency Connectivity Fund Programs: the FCC notes than an analysis of these programs will need to wait until the funded networks are built and the FCC has an opportunity to analyze the effects of the programs through these projects. The FCC will also need time to analyze the impact of IIJA funding regarding the deployment of broadband to community anchor institutions.
- Health Care Equipment and Rural Health Care Programs: the FCC is currently reviewing several of its health care programs and recommends in conjunction with that review that Congress revisit the list of entities defined as health care providers.
- USF Contributions: the FCC recommends that Congress adopt legislation to clarify the Commission’s authority to assess contributions on Broadband Internet Access Providers, digital advertising, and on other online edge services that benefit from broadband networks. The FCC also requests Congress pass legislation that allows the FCC to make changes to the contributions methodology and base in order to reduce the financial burden on consumers, provide additional certainty for entities that will be required to make contributions, and sustain the Fund and its programs over the long term.
IV. The Lawfulness of the USF under Section 254
Finally, the FCC concluded that it is permitted to collect USF fees under section 254 of the Communications Act, which establishes detailed instructions to the Commission considering the establishment and funding of the USF. Consumers’ Research’s assertion that USF fees are a tax does not alter the FCC’s conclusion. Further, USAC is permitted to administer the fund, as it is merely providing ministerial support to the FCC, not exercising its own governmental authority, and is a private corporation, such that the FCC Chair’s appointment of USAC board members doesn’t violate the appointments clause in the Constitution. The FCC further concluded that it has satisfied the APA with regard to its notice and comment requirements, as it adopted rules governing the USF in 1997, which were subject to notice and comment, and that each Notice approving a quarterly contribution factor is not a legislative rule requiring that notice and comment procedures be followed.
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