A bipartisan group of lawmakers has introduced legislation that boosts broadband service in rural and tribal areas, but would grow the troubled Universal Service Fund (USF) and increase costs to providers and consumers.
The Lowering Broadband Costs for Consumers Act of 2023 from U.S. Sens. Markwayne Mullin (R-Okla.), Mark Kelly (D-Ariz.), and Mike Crapo (R-Idaho) would direct the Federal Communications Commission (FCC) to require both edge providers and broadband providers to contribute to the USF for the express purpose of growing rural fiber networks.
The legislation also directs the FCC to adopt a new mechanism under USF’s High-Cost program to provide “specific, predictable and sufficient support for expenses incurred by broadband providers that are not otherwise recovered.”
Mullin called “fair contributions” from edge providers as “long overdue,” saying in a statement that video streaming services account for 75 percent of traffic on rural broadband networks. The bill defines edge providers as any procurer of online content or services, and would affect such companies as Amazon, Apple, Microsoft and Netflix.
Traditional telecom companies, including wireline and wireless companies and cable companies that offer voice services, have provided the funding for the USF since it was launched in 1997. These companies have pushed for broadband and edge providers to share more of the burden as Congress considers reform of the USF.
Groups representing these industries lined up on either side of the bill after it was introduced last month. USTelecom and The Rural Broadband Association were among those publicly supporting the act, while groups like NCTA – The Internet & Television Association oppose it.
Brian Dietz, senior vice president of strategic communications for NCTA, told Fierce Telecom that the bill would be more likely to raise rather than lower prices for consumers.
“Given the massive federal spending on deployment already underway, it seems premature and ill-advised for Congress to create yet another subsidy mechanism for rural telcos,” Dietz said.
In comments submitted in August to a congressional working group discussing how to reform the USF, the Taxpayers Protection Alliance pointed out that there is no easy solution to the issue of USF funding. If the program is changed to an appropriations model (as some have advocated), this would likely lead to inconsistent funding of the USF program with funding being based on the whims of whoever holds congressional offices when appropriations bills are voted on. If USF contributions are assessed on a wider range of parties (including broadband service and edge providers), this backdoor tax would be passed onto consumers.
Such additional costs to providers would lead to increased prices for broadband service during a time when critics are calling for more affordable high-speed internet.
Rather than expand the USF, Congress should look to trim its budget. Utilizing annually, the programs of USF are ripe for waste, fraud and abuse.
The U.S. Government Accountability Office (GAO) found in reports in 2022 and 2023 there is extreme overlap in broadband funding programs. The most recent report from May 2023 noted that 15 agencies within the federal government administer 133 programs. The GAO said the fragmentation and overlap can lead “to the risk of duplicative support” and that “determining whether program overlap results in duplicative support can be challenging.”
Some of the overlap includes USF programs. For example, the Affordable Connectivity Program (ACP) and USF’s Lifeline Programboth focus on helping low-income residents connect to affordable broadband services. The $42.5 billion Broadband, Equity, Access and Deployment (BEAD) Program aids deployment in costly-to-serve areas, just as the USF’s High-Cost Program does.
Because the BEAD program is just beginning to distribute funds across the country, it’s hard to know what gaps will continue to persist after the funds are exhausted over the next few years. That makes it puzzling why the Lowering Broadband Costs for Consumers was introduced in November. It would be better for Congress to wait until BEAD projects are completed before considering such expansions of the program.
