Today’s blog considers some of the changes that might be made to the Universal Service Fund (USF) by a new administration. This fund was created by the FCC to support broadband access and affordability in rural and low-income communities. The fund supports four major programs: Connect America Fund, Lifeline, E-Rate, and Rural Health Care. The fund is roughly $9 billion per year. The fund is currently paying for the rest of the RDOF subsidy to build rural broadband infrastructure. The fund will also be covering the EACAM subsidy paid for faster infrastructure for rural telcos and cooperatives. The FCC recently announced it would be using the USF funds to cover the $9 billion 5G Fund for Rural America.

Interestingly, the FCC shut Starlink out of the RDOF program in 2022. It seems too late to revisit the RDOF funding since a lot of the networks funding by that program have been funded. However, there have been some significant defaults of RDOF funding from companies like Mercury Wireless, and it’s conceivable those funds could be redirected to satellite broadband. I’m not sure what mechanism could be used to do that, but it’s possible.

The Programs. If any investigation into USF is opened, it would be natural to take a look at the programs supported by the USF to see if any should be trimmed or modified. The USF programs are generally well-regarded by Congress, but there has been criticism against some of the details of each of the programs.

Funding. The most immediate issue to address is the current USF funding framework. Telecommunications service providers are assessed a fee for interstate and international telecom, and the base of revenues has been steadily shrinking. FCC Commissioner Brandon Carr has lobbied to spread the assessment base to include tech companies like Google and Facebook. Senator Ted Cruz, who will likely be the Chairman of the Senate Commerce Committee, has suggested that the USF should be funded with general tax revenues so that Congress can have a more direct say in how the money is spent.

Adding to the likelihood that USF might be changed is that the Supreme Court has agreed to hear conflicting lower court rulings on the topic. While two courts said the FCC has the authority to operate the USF, the Fifth Circuit Court of Appeals ruled in July that the current method of funding is unconstitutional. That court referred to the fee on telecom services as a “misbegotten tax”. Another issue identified by the court is how the FCC has outsourced the operation of the USF to the Universal Service Administrative Company (USAC), a non-profit company formed for this sole purpose. A Supreme Court approval of the FCC might mean no changes, while a rejection would mandate a whole new approach.

Low-Income Broadband Subsidies. The USF currently supports the Lifeline program which provides a $9.25 subsidy for qualifying households for telephone or broadband service. There was a lot of discussion in 2024 about somehow moving the now-dead ACP plan into USF. The ACP plan provided a $30 monthly subsidy for broadband bills for qualifying households. There was a lot of bipartisan support in Congress for somehow funding ACP, and the consensus was that the issue would have passed had the issue made it to a vote.

There has been a lot of recent speculation that a lot of the $42.5 billion BEAD grants will go to satellite service. One of the original parameters from the BEAD legislation was that any ISP taking the funds is supposed to have a program to support low-income subscribers. That might be the impetus for revamping ACP to make satellite service more affordable. And that could mean renewing ACP or increasing the size of the USF.

Obviously, this is all speculation, and USF is not likely on anybody’s front burner, unless the Supreme Court puts it there. However, it seems highly likely that Congress and the FCC will revisit the USF sometime in 2025.