Tag Archives: FCC

2026 Urban Rate Study

One of the more curious undertakings done by the FCC every year is the Urban Rate Study. This is an exercise undertaken every year to determine the highest monthly broadband rates that can be charged by ETCs (Eligible Telecommunications Carriers). This basically means regulated telcos and other ISPs that participate in some grant or subsidy programs. At a minimum, these rate caps apply to incumbent rate-of-return telephone companies, and ISPs that participated in the Rural Broadband Experiment, CAF II Phase II Auction, RDOF (Rural Digital Opportunity Fund Auction 904), and Enhanced A-CAM. These rate caps will apply to any BEAD winners that are certified as an ETC. These rate caps also apply to any ISP that voluntarily became an ETC in order to participate in any other subsidy program, such as the Universal Service Fund.

The FCC publishes this rate near the end of each year, and by July 1 of the following year, every ETC must certify to the FCC that it doesn’t charge a rate higher than the benchmarks.

 The FCC determines rate caps for an interesting mix of speeds that match the minimum speed goals set over the years for different subsidy programs. The FCC samples actual rates in the market and sets the target rates by applying two standard deviations. The FCC also sets the minimum size of any rate cap, and for 2026 has raised any monthly rate caps to provide at least 800 megabytes of data as of July 2026.

Below is a table that compares the 2026 rates to the rates from the Urban Rate Study in 2019.

It’s interesting that the maximum rates allowed for slow speeds have increased significantly between 2019 and 2026. The FCC rate caps for speeds of 100 Mbps or greater have decreased since 2019. I think this is because gigabit rates were somewhat rare in 2019, and some ISPs that offered gigabit then charged a premium rate.

It’s commonly believed that the FCC is not in the ratemaking business, and for broadband, I think this is the agency’s only ratemaking role.

I’ve seen ISPs with rates higher than these benchmarks, but those ISPs are not regulated ETCs. I doubt that consumers are comforted by these rates, and luckily, market competition has pushed rates lower than everything in the table for most ISPs.

Cell Tower Regulation Changes?

Cellular carriers seem to be on a winning streak with federal regulators. In the Big Beautiful Bill last year, cellular carriers were able to insert language in the bill that mandates the FCC to auction 800 MHz of mid-range spectrum. That’s going to force the FCC to carve the spectrum from other uses, and it seems likely that most spectrum that goes to auction will be won by the big cell carriers.

Late last fall, the FCC opened a Notice of Inquiry (NOI) Eliminating Barriers to Wireless Deployments. In the NOI, the FCC asked the following questions.

  • Should the FCC establish a new set of shot clocks that cover permitting and construction of wireless towers and other wireless infrastructure?
  • Should the FCC consider a “deemed approved” rule that would mean that any proposed new tower project would be considered as approved if a local government doesn’t approve the project within a specified time frame?
  • Should the FCC preempt local governments from setting fees related to permits, rights-of-way, and construction processes, and should the FCC set national fees for these efforts?

As someone who has read a lot of FCC documents, the tone of this NOI suggests to me that the FCC has already largely determined what it is going to order related to the shot clock and fees. It looks likely that the cell carriers will likely achieve another big win on their regulatory wish list.

The NOI also seeks comments on a wide range of other questions:

  • Can localities reject a tower request for a carrier that will be providing interstate services?
  • The FCC is thinking about relaxing the rules for concealment elements, which is the process of hiding towers or disguising them to look like trees of other objects.
  • The FCC wants to make it harder for localities to disallow modifications to existing towers.
  • The NOI explores the definition of a macro cell site in relation to existing rules related to small cell sites.
  • The FCC asks if it can limit the ability of a locality to reject a tower application based on aesthetics.
  • The NOI asks if local franchise agreements that involve in-kind contributions are a violation of Section 253 rules.

The NOI saw over 4,000 public comments. AT&T, T-Mobile, and CTIA, the lobbying group for the cellular carriers, were in favor of what the FCC is proposing, while almost all of the other comments were against some or all of the FCC proposals.

A lot of the comments involved those that want local communities to have some say in the placement of towers for health reasons. Traditionally, these folks have an uphill battle since the Telecommunications Act of 1996 and other FCC rulings have made it hard for the FCC to consider “environmental issues’ related to cell site placement. But I read last week that HHS Secretary Robert F Kennedy Jr. supports the idea that there are health risks from cell towers, so perhaps this now has some chance.

There were also comments from local governments and groups like the National Conference of Counties NACo), the United States Conference of Mayors (USCM), the National League of Cities (NLC), and the National Association of Telecommunications Officers and Advisors (NATOA) have all filed comments that disagree with allowing the FCC to override local authority. The comments from these groups asked the FCC to:

  • Preserve local aesthetic and placement authority.
  • Recognize that local governments are entitled to compensation which reflects the full costs of wireless deployment, not an arbitrary national assessment of what costs “should” be.
  • Reject the creation of a “rocket docket”.
  • Reject premature preemption of state and local AI regulations.
  • Facilitate industry and local cooperation rather than heavy-handed federal mandates.

I do fine it curious that an agency that is working feverishly to eliminate regulatory requirements won’t hesitate to create new rules it likes.

 

Is the FCC an Independent Agency?

FCC Chairman Brendan Carr recently told Congress that he doesn’t believe that the FCC is an independent agency. The FCC went so far as to remove the term independent from its website. The bottom line of Chairman Carr’s opinion is that he believes the FCC should take direction from the White House.

It’s an interesting position that contradicts the long-standing intentions that the FCC, and many other federal agencies are independent, meaning that they don’t take directions directly from the Administration, but are required to follow whatever enabling laws and rules established by Congress. There are a number of independent agencies other than the FCC, including the EPA, SEC, Federal Reserve, NASA, CIA, FTC, SSA, and NTSB.

There are several key characteristics of independent agencies. First, they are not part of, and don’t report to any of the fifteen cabinet departments like State or Treasury. Independent agencies were generally established by Congress to be somewhat shielded from political pressure. For example, it’s not easy for the President to fire the head of an independent agency. The agencies are often structured with a multi-member Board or Commission, which typically includes rules that require representation from both parties. Some agencies like the SEC and the FCC are accorded rule-making power within a specified range of issues.

The FCC was created by Congress with the passage of the Communications Act of 1934. The agency has been directed by Congress to regulate radio, television, wire, satellite, cable, and the Internet. The Act did not include language that specified the FCC was independent. The independent status is inferred from the structural provisions in the Act that define how the agency operates. The relevant language appears in Section 4(a) of the Act (codified as 47 U.S.C. § 154(a)), which establishes the structure of the Commission. The Act created a commission of five (originally seven) members who are appointed by the President and confirmed by the Senate. The Commission must be bilateral, and no more than three members can be from the same political party. Commissioners serve for fixed, five-year terms. The FCC is required to follow laws passed by Congress aimed specifically at the agency.

The Supreme Court has explored issues related to independent agencies over the years. Supreme Court rulings, like Humphrey’s Executor v. United States (1935), defined a key element of an independent agency to be a lack of explicit legislative language giving a President the power to remove commissioners at will (i.e., for any reason). Instead, the ability to remove commissioners is widely understood to be limited to specific reasons like “inefficiency, neglect of duty, or malfeasance in office.” This structure of independent agencies is done deliberately to insulate agencies from direct presidential control and ensure decisions are based on the public interest rather than political pressure.

Chairman Carr’s statements are a direct challenge to Congress. Historically, independent agencies like the FCC are given general marching orders from Congress through legislation, but even then, the agency is free to interpret specifically how to enact laws. Chairman Carr says that he feels empowered to take direction directly from the White House, and it seems likely this will eventually trigger a showdown. At some point, Congress will have to assert its authority or cede its power to the Administration.

The FCC has never been free from politics, because almost nothing in Washington D.C. can be. The FCC Chairman has traditionally been from the same party as the White House and is typically sympathetic to policies of the administration. But there has always been an uproar if an FCC Chairman has been accused of directly taking direction from the administration. An example of this happened when Republicans accused Chairman Tom Wheeler of too closely following the White House direction on the issue of net neutrality.

The long-term repercussions of a political FCC are not good for the industry. While ISPs, carriers, and programmers all have a wish list of regulations they don’t like, there has always been a huge benefit for regulated companies to have regulatory certainty, which means that rules don’t change drastically with every change of administration. Regulated companies might complain loudly about being overregulated, but they benefit financially from knowing the rules, since this allows them to develop long-term strategies. Every large ISP will quietly admit that regulatory certainty is far better for them than rules that change with each Administration.

Mission Accomplished?

In my recent annual predictions for 2026, I predicted that the FCC or the NTIA would declare that the rural digital divide has been solved since everybody in the country now has access to adequate broadband.

We got an inkling of this from NTIA Assistant Secretary Arielle Roth in a speech she made to the Hudson Institute. She alluded to the end of the rural digital divide twice in that speech. First, she said, “This administration does not want BEAD to become just another well-intentioned broadband program that falls short. Its mission is nothing less than to close the “digital divide” once and for all.” Later in the speech, she said, “Being good stewards of taxpayer money means holding awardees accountable and making sure those who take taxpayer dollars will deliver on their promises. That is what will set BEAD apart and ensure that this really is the last broadband funding program.”

I can’t find any similar statements from FCC Chairman Brendan Carr, but he has been a strong supporter of satellite broadband. He’s been a big proponent recently for easing the regulation of satellite broadband companies and also freeing up a lot of spectrum for them.

It’s obvious that any pronouncements about the end of the rural digital divide would be tied to the ubiquitous availability of satellite broadband. It would not be a stretch for regulators to say that the rural digital divide has been solved since everybody can buy satellite broadband.

Of course, pronouncing the end of the rural digital divide is not the same thing as it being true. Starlink told State Broadband Offices that it needs BEAD grant funding to grow the capacity to serve larger numbers of rural households. Starlink no longer has any waiting lists, but it does warn that new subscribers might have to pay a ‘demand surcharge” in areas that are oversubscribed.

Starlink is no different than any ISP in that there is a maximum number of customers that it can serve in a geographic area. Recent estimates are that the company has around 2.6 million U.S. customers. Only Starlink knows what its real capacity is, but it’s not an unlimited number of subscribers, particularly in the parts of the country where it will see a greater concentration of customers. It’s anybody’s guess what Amazon One will mean for the industry.

There are definite repercussions if federal regulators say that the rural broadband gap has been solved. Certainly, this would mean the end of federal broadband grants. Even if grants are created, like is happening with ReConnect at USDA, there will be no grants awarded if the federal government declares that satellite broadband means all households are considered to be served.

Such a declaration probably also puts pressure on maintaining federal subsidies in rural areas through the Universal Service Fund. It becomes easy to justify ending ongoing subsidies for rural ISPs if satellite broadband can pick up any customers left stranded by the end of subsidies.

Such a declaration would be a big disappointment to the millions of homes being missed by BEAD. The last two years of the BEAD process focused on eliminating BEAD-eligible locations, many of which still don’t have good broadband. For example, the map challenge process eliminated huge numbers of homes from BEAD that are claimed by WISPs using CBRS spectrum, with no real concern if the WISPs were actually delivering adequate broadband. Making this declaration would end up leaving these homes to satellite without any public declaration.

People who still don’t have good broadband are not going to stop complaining about it to local, state, and federal elected officials. A declaration that rural broadband might make it easy to ignore these folks for a while, but that will only last for so long.

Predictions for 2026

The following are my predictions for 2026. I noticed that after I wrote this, the overall tenor of the list is negative. I’m generally pretty upbeat, but I can’t find fault with any of the predictions.

Federal Regulators Will Continue to Ignore Congress. Federal broadband regulators will continue to ignore Congressional legislation. This past year, the FCC ignored a Congressional edict to lower inmate calling rates. NTIA is ignoring Congress by withholding grant funding for the Digital Equity Act, and is likely to provide little or no funding for BEAD non-deployment funds. Expect similar actions in 2026.

Further Erosion of BEAD. NTIA is not done trying to whittle down the size of BEAD grant funding. The agency already whacked funding with the Benefit of the Bargain rule changes, along with numerous other actions. I expect NTIA to pull more rabbits out of the hat and find more excuses to deny funding to some states for issues like net neutrality, state permitting rules, or state regulation of AI.

Major Spectrum Battles. Congress instructed the FCC to find 800 megahertz of mid-range spectrum for auction. That means potentially reclaiming CBRS spectrum used for rural broadband and 6 GHz spectrum that is just starting to be implemented for WiFi 7. Cellular lobbyists preempted the normal deliberations on spectrum management and got the biggest item on their wish list included in the Big Beautiful Bill. I don’t expect opponents of the spectrum grab to go down without a big fight.

FWA Will Have Another Strong Year. AT&T, T-Mobile, and Verizon just had the biggest quarterly gain of new customers yet, adding over 1 million net new FWA customers in the third quarter of 2025. I predict the three companies will continue to add over 900,000 customers per quarter in 2026, and even more if we see a softening of the economy.

Universal Service Fund Reform Will Stall. Congress is considering badly needed changes to the Universal Service Fund. In the current political chaos in Congress, I predict that a USF bill will never make it through the legislative process.   

Big ISPs Will Have Record Cash Windfalls. There hasn’t been a lot of industry press about the bonus depreciation change included in the Big Beautiful Bill. This allows ISPs to quickly write off current fiber construction, which will cut tax liabilities and generate big cash bonuses for the biggest ISPs in 2026. I predict much of the windfall will be used to buy back stock rather than invest in new networks.

Big ISPs Will All Raise Rates. You might think that in a weakened economy, where the cost of living is the number one issue with the public, ISPs might hold off on rate increases. But the recent $5 across-the-board rate increase by AT&T for fiber will be the first of many significant rate increases during the coming year.

A Federal Regulator Will Declare that the Rural Broadband Gap has Been Solved. I don’t know if it will be the FCC or NTIA, but I expect one of the federal broadband regulators to declare that the rural broadband gap has been solved because of the many grant programs and because everybody can now buy satellite broadband. Arielle Roth already hinted at this when she said in a speech that the mission of BEAD “is nothing less than to close the digital divide once and for all”.

Do We Have a Spectrum Policy?

Telecompetitor recently published an article that cited concerns from analysts at MoffettNathanson Research that wonder about the way spectrum is being allocated for FWA home cellular broadband. It turns out that the big cellular carriers are devoting a huge amount of network resources to FWA while reaping only small financial benefits. FWA use may already account for more than half of the traffic on the Verizon cellular network while only accounting for 3% of Verizon’s revenues. FWA makes up only 6% of T-Mobile’s revenues.

I’ve written about this before, and the difference in monthly data usage between cell customers and home broadband customers is immense. CTIA, the association for cellular carriers, recently reported that the average cell customer uses 17.2 gigabytes of data per month on cellular networks. OpenVault recently reported that the average home broadband customer used over 640 gigabytes per month at the end of the third quarter. That means that the average FWA customer is using as much bandwidth as 37 average cellular customers.

You might ask why it matters how Verizon and T-Mobile use the spectrum they purchased in FCC auctions. From a regulatory perspective, it probably doesn’t matter. Once these companies buy the spectrum, they are free to use it in ways allowed by the spectrum licenses. Cellular spectrum has been used for home broadband for many years through the sale of hotspots. The big difference between hotspots and FWA is that hotspots most normally have stingy data caps similar to what is sold to cellphones, while FWA offers unlimited home broadband.

But from a market perspective, it matters a lot because the government has suddenly decided to shuttle a lot more spectrum to the cellular carriers. In the Big Beautiful Bill, Congress instructed the FCC to find at least 800 megahertz of spectrum for commercial wireless services. The expectation is that the sale of this spectrum could raise around $88 billion for the U.S. Treasury. It’s highly likely that the three big cellular companies would buy most of this spectrum along with perhaps a few large cable companies.

Cellular carriers need this extra spectrum to support FWA. Even if they add no new FWA customers, home broadband usage has been growing at around 9% per year, so FWA will take up an increasing share of existing cellular spectrum every year. But the major reason the carriers need more spectrum is because they have big plans to continue to grow FWA cellular. Verizon says it plans to double the number of FWA customers by 2028. T-Mobile says it plans to grow from today’s 7.8 million FWA customers to over 12 million by 2028. AT&T has expressed no specific plan for FWA growth but has recently stepped up sales significantly.

The three carriers will need the new spectrum being made available by Congress to support their sudden appetite for using spectrum to compete for home broadband. That’s one of the more surprising sentences I have ever written. A decade ago, I would have been laughed out of the room if I had suggested that our scarce national spectrum resource should be used to compete with landline broadband networks.

This is policy gone amok. Clearly, the carrier lobbyists were successful in getting this change inserted into the Big Beautiful Bill. That alone is extraordinary, because in the past, the FCC and the NTIA together collaborated to determine spectrum policy. Apparently, Congress can now set spectrum policy in a footnote of a budget reconciliation bill.

There are many other important uses for the same spectrum bands now being considered for expanding FWA. The spectrum is also needed for the military, for rural fixed wireless broadband, for communicating with airplanes, for weather services, for public safety, and for WiFi.

That last use is the most troublesome of all. WiFi spectrum is by far the most valuable spectrum in the U.S. economy. Almost everybody reading this blog spends most of their online time, whether by computer or cellphone, using WiFi spectrum. The FCC is likely going to have to dip into the 6 GHz WiFi spectrum to satisfy the Congressional mandate. That is absurdly short-sighted and undoes decades of careful spectrum deliberations that have tried to make sure that every use of spectrum is protected.

It’s a fair question to ask if we even have a national spectrum policy now. Raiding 800 megahertz of the most valuable spectrum we have to support FWA sounds less like a policy and more like a land grab by the cellular industry.

Grants Should Look Forward

State Broadband Offices had to go through a process this year of deciding if various technologies qualify for grant purposes as priority projects. A priority technology must meet the following requirement: Provide broadband service that meets speed, latency, reliability, consistency in quality of service, and related criteria as the Assistant Secretary shall determine; and ensure that the network built by the project can easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.

NTIA chose a speed of 100/20 Mbps as the metric for meeting the current test of a priority technology. This is convenient, since this was the declared speed that the legislation said a BEAD-funded technology must be able to deliver. Today’s blog asks if that definition is adequate.

One way to consider what the current speed of broadband should be is to look at historical trends. For many years, Cisco issued reports that regularly reported that the demand for speed was growing at roughly 21% per year for residential broadband, and a little faster for business broadband. Cisco and others noted that the demand for broadband speeds was on a relatively straight line back to the early 1980s.

It’s not hard to test the Cisco long-term growth rate. The following table applies a 21% growth rate to the 25/3 Mbps definition of broadband established by the FCC in 2015.This table is somewhat arbitrary since it assumes that broadband demand in 2015 was exactly 25 Mbps – but there was widespread praise of the new definition at that time, other than from ISPs who wanted to stick with the 4/1 Mbps definition. This simple table accurately predicted that we would be talking about the need to increase the definition of broadband to 100 Mbps download around 2022, which is exactly what happened. The FCC did not have a fifth Commissioner at the time and wasn’t able to make the change until March 2024 – but in 2022, the FCC wanted to change the definition of broadband to 100 Mbps download, which was at a 21% compounded annual growth rate from the definition of broadband the FCC had established in 2015.

I can’t think of any fundamental industry changes that would change the historical growth rate in the near future. We’ve certainly seen a big demand to buy faster broadband products. Consider the following chart that starts with the assumption that 100 Mbps was the right definition of broadband in 2022. Growing that number over time by the same 21% results in the following table. What does this table suggest for BEAD and other grant?. Consider the evaluation of Starlink, which is the technology that is closest to meeting or not meeting the needed speed. Ookla released a report in the first quarter of 2025 showing that the median speed on Starlink was 104.71 Mbps download and 14.84 Mbps upload, and that only 17% of Starlink customers in the first quarter fully met the 100/20 Mbps speed threshold.

The table above suggests that the current definition of broadband in 2025 should be something like 177/35 Mbps. It’s debatable if Starlink meets the 100/20 Mbps test today, but it clearly doesn’t meet a test based on the speed demand in 2025.

The BEAD future-looking test is challenging because nobody defined what future-looking means. I can think of two definitions of forward-looking that might make sense. One is to judge what speeds should be delivered when the grant project has been constructed, which for most BEAD projects will be at the end of 2029. The growth chart suggests that the speed for defining broadband in 2029 will be around 380/76 Mbps.

I think a better forward-looking test for a government-sponsored grant should be that a grant-funded network should still be relevant a decade after a grant is awarded. The chart suggests the desired speed should be 1191/238 Mbps in 2035.

Naysayers will argue that the 21% growth in speed demand can’t be sustained. Consider taking a more conservative approach that cuts the historical growth rate in half. That conservative approach would say that a target speed for a grant-funded project would be 195/30 Mbps in 2029 and 345/69 Mbps in 2035. I have nothing to go on except my gut, which tells me that 345/69 Mbps will feel inadequate in 2035.

Can the FCC Regulate Local Permitting?

ACA Connects, an industry group that represents midsize cable companies and fiber overbuilders, recently asked the FCC to issue regulations to streamline permitting and the acquisition of rights-of-way. For those who lose track of the various industry advocacy organizations, ACA Connects was previously known as the American Cable Association.

The ACA Connects comments were filed in response to the open Notice of Inquiry that asks for comments that can eliminate barriers to wireline deployments. The ACA Connects comments ask the FCC to investigate and regulate three issues. First is the timeline for local communities to respond to a request for rights-of-way or construction permits. ACA Connects members have related stories of communities that sit on requests for months with no response. ACA Connects advocates for a shot clock that requires communities to react within a specified time, similar to what has been required by the FCC for requests for placing a new wireless tower.

Second, the group asks that fees charged for access to rights-of-ways be cost-based and objectively reasonable, and that new ISPs are provided the same treatment that was provided to incumbent providers. There are communities that want large up-front fees to obtain rights-of-way and permits that go far beyond a reasonable value. I’ve often suspected that this is a result of cities losing franchise fees as the cable TV industry continues to lose customers.

ISPs also object to hidden fees and costs. The filing documents examples of unreasonable costs, such as having to bury conduit deeper than is required by industry standards. The filing cites an example where an ISP was asked to repave a full block after disturbing only a small portion of a sidewalk.

It’s worth noting that these are not universal problems, and many communities are welcoming fiber overbuilders with open arms and easing the process of bringing competition to their community. But any ISP understands how unexpected delays and costs for a routine function like obtaining rights-of-ways and permits can delay, and even kill plans to complete a new network project.

ACA Connects recognizes that this would be a big lift for the FCC. Communities are going to strongly resist any efforts to dictate rules for how cities manage and charge for rights-of-way. The FCC has made headway in managing the placement of towers and wireless facilities. But that’s partially because the process of siting a tower is unique. However, rights-of-way rules apply to a lot larger universe than just ISPs. Any changes to the rules will suddenly change the way that cities interact with electric utilities, cable companies, gas utilities, and even the general public who wants to make changes like cutting a new driveway into a busy road.

Local communities view control or rights-of-ways as one of the most important rights of a community and will resist any attempt by a federal agency to change the rules. I predict a huge legal battle if the FCC decides to tackle this. Not that it should matter, but that means that implementing what ACA Connects recommends could take many years and many lawsuits before implementation.

The FCC’s ability to tackle something like this has been weakened by recent Supreme Court rulings. For example, in Loper Bright Enterprises v. Raimondo, the Supreme Court largely ended the Chevron deference and ruled that federal agencies are on shaky ground when they make decisions that are not explicitly directed by Congress. In the 2025 ruling, McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., the Supreme Court ruled that Courts can more easily disagree with rulings made by federal agencies, making it easier for courts to disagree with orders made by the FCC.

Like with many other regulatory issues, the reality of the court rulings means the right forum for fixing these issues is in Congress. But Congress has been conspicuously missing from regulation since the Loper Bright ruling. There is no question that the ISPs that prompted ACA Connects to file these comments are feeling pain in the market. But even if the FCC tackles what they are requesting, there won’t be any quick fixes.

FCC Raises Inmate Calling Rates

In what would normally be an extraordinary action, but which is becoming commonplace, the FCC thumbed its nose at Congress and raised rates for telephone and video calls placed from jails and prisons.

The FCC under Jessica Rosenworcel issued new rules in 2024 that lowered prison calling rates that came as a result of the Martha Wright-Reed Fair and Just Communication Act, enacted by Congress. Earlier this year, the FCC put the rate reductions on hold and recently ruled to make the reversal of the law permanent.

The FCC was reacting to heavy lobbying from the handful of companies that specialize in providing prison calling, along with lobbying from jail and prison officials who benefit by sharing in the revenues from inmate calls. The new Congressional Act not only cut rates but also eliminated the payment of commissions to jails.

The FCC didn’t only raise calling rates. The new order adds a 2-cent facility fee to each call. The FCC rules now allow the prison carriers to add a fee to cover “safety and security’ costs. The FCC also created a new category of even higher rates for extremely small jails that house fewer than 50 inmates. Finally, the FCC now allows prison carriers to add a 6.7% increase to rates for inflation.

The new FCC rules kept a few of the provisions of the original Act. Carriers can’t pay commissions to jails and prisons from Interstate calling. The Act also eliminated a lot of ancillary fees that were charged mostly to families of inmates.

I call the ruling extraordinary because I can’t recall an FCC in the past that so blatantly decided to ignore a law passed by Congress. The only other time I recall the FCC having a major issue with a law was when Chairman Mark Fowler in the 1980s took exception to Congressional rules related to the Fairness Doctrine, although there might have been other instances. The FCC was created as an independent agency by Congress, and it’s assumed that the Agency is required to follow explicit laws enacted by Congress.

This is not the only federal agency ignoring Congress. NTIA, at the behest of the Administration, is refusing to award grants from the Digital Equity Act. The NTIA is also mulling over sending excess BEAD funds, called non-deployment funds, back to the Treasury. These actions are in direct violation of the funding rules created by the IIJA legislation that funded BEAD and Digital Equity.

The obvious party to address a rogue FCC and NTIA is Congress, but for now, they seem to be ceding power to the Executive branch. It’s possible that the Courts could act to make the FCC and the Administration follow the law. There was a recent lawsuit filed by NDIA that challenges the ability of the Administration and the NTIA to kill the Digital Equity Act.

There are also Supreme Court rulings over the last few years that seemingly make it more difficult for federal agencies to act on their own. The Supreme Court ruled in Loper Bright Enterprises v. Raimondo  to effectively end the Chevron deference and said that federal agencies are on shaky ground when they make decisions that are not explicitly directed by Congress. In the 2025 ruling, McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., the Supreme Court ruled that Courts can more easily disagree with rulings made by federal agencies. It would seem those two court decisions provide a lot of ammunition for attacking the FCC decision on prison calling rates.

I’m Ready to Call It

I think we can now foresee the demise of traditional telephone service delivered over the PSTN (public switched telephone network). My best guess is the PSTN will ether be dead or dying by the end of 2030. This doesn’t mean the death of telephone voice service, but the end of the regulated service that has been offered by telephone companies. Any voice products that remain will be delivered using VoIP.

The death of the PSTN is being fostered by the FCC, which has made it much easier for telephone companies to tear down or decommission copper telephone networks. The FCC began the process by providing a two-year moratorium on notifications for taking down copper in July and followed that up more recently with a formal docket to make the rules permanent.

Eliminating copper lines is not the same as eliminating the PSTN. I expect the FCC will formally announce rules to end the PSTN soon. But even if the FCC doesn’t take specific action, I expect the big telcos to start dismantling the PSTN in pieces on their own.

The PSTN consists of a private network owned collectively by telephone companies. The PSTN is a series of regional networks that surround a large tandem switch that connects to the telcos and CLECs in the region. The connections between each voice provider and the tandem are called trunks. These are transport routes, many still using the old TDM technology based on T1s, to deliver the traffic. Local voice providers can also have direct trunks to other local voice providers in the area, to the largest long-distance carriers, or to the large cellular carriers.

The PSTN is also the mechanism used to route calls between a local voice provider and the many other carriers in the country. There is a complex set of routing tables that instruct tandem switches how to route calls to reach every registered telephone number in the system. The PSTN is also the starting point for routing other kinds of calls, like international long distance and 800 numbers.

This may sound too complex to break apart, but the biggest telcos have been talking about this for over twenty years. They do not want to be responsible for taking care of the local PSTN arrangements, which costs them money and causes a lot of maintenance. I remember sitting in meetings twenty years ago that discussed ways that the regional tandem switching network could be deactivated over time. There was a lot of investigation done on the topic ten years ago at the FCC, but that effort fizzled out somehow.

The impetus to dismantle the PSTN was always driven by money. The big long-distance carriers were paying huge amounts in access charges to get ‘access’ to the local networks of the many voice providers in the country. The FCC took an axe to many of those fees, and after the magnitude of spending on access decreased, I think the focus on finishing the process died.

The largest telcos like AT&T have always envisioned a much-simplified replacement for the PSTN. Twenty years ago, AT&T talked about a vision where it would replace hundreds of tandem switches nationwide with perhaps two for the whole country. Every carrier that used one of its tandems would be responsible for buying transport to reach one of the big new switches. We can’t ever get rid of the function of routing calls, but this vision would shift most of the cost of the PSTN function away from the big telcos onto each company that originates or terminates voice calls. Under the AT&T vision, the PSTN would be greatly simplified by greatly decreasing the number of locations where calls are exchanged.

There is nothing stopping the big telcos from doing this, other than having a method in place to make sure that calls continue to route. The big carriers are feeling emboldened by the current FCC to wash away old systems, and I think they are now ready to finally tackle this.