I recently had the opportunity to share some remarks with The Media Institute in Washington, D.C., right in the middle of the NATO Summit and 100-degree-plus days, about the background and history of the Universal Service Fund (USF). It was a great chance to speak before representatives from various media outlets, communications industry executives and a few NTCA members in town for the Women in Telecom Fly-In about NTCA and to highlight some of our important advocacy goals for this year and beyond.
Now, I know our members are extremely well versed in all things USF, but I wanted to share my comments in hopes that the information would be useful as we continue to speak with a unified voice in support of this critical funding mechanism.
And thanks to the Media Institute, you can read my full speech or watch a video, as well. Below is an excerpt of my remarks about universal service. (I certainly wouldn’t have been invited back once the audience awoke had I started this presentation with a history lesson about the Communications Act of 1934). With the August recess quickly approaching and members of Congress headed home for an extended period, I hope this is helpful as you explain our broadband priorities to those you see around town or invite to your offices. Also, please forgive the occasional ramblings that come with this transcript.
Remarks:
“What really is universal service? The Communications Act of 1934 was one of those provisions that codified and said that all Americans should have access to rapid, efficient, nationwide communication service at reasonable charges. And then the ‘96 Act … expanded that concept to provide predictable and sufficient financial support for the High-Cost program and several other USF programs. And it’s in the wake of these programs that were actually created out of the ‘96 Act and that have been updated over time that has really ensured that we have made such great progress as a country.
“At NTCA, just sharing our perspective, our focus has always been on a couple of things. First of all, ensuring that the Universal Service Fund is stable. Second of all, that universal service will support and promote affordable service. And third, that USF provides the best possible voice and broadband networks for every American, regardless of your income level, regardless of where you live. So, I think of the High-Cost USF program as really being key to elevating the high cost of serving these rural areas. It’s really kind of a cost recovery mechanism. Without it, and again, I point to the folks that are here in the room, without this program, their customers would not be able to afford the service that they offer. It would be unreasonably expensive.
“I think when we think about affordable broadband and we think about why that matters, I think about how you can put a network in place, but if people can’t afford to take the service, then I’m not quite sure what we have accomplished. And one of the things that I think has been really top of mind for a lot of people these days has been the Affordable Connectivity Program, or the ACP, which came out in the Infrastructure Act. It’s been in the news a lot lately. This program is not part of the Universal Service Fund, but it serves very much the same purpose that that program does because it really is trying to figure out how we make sure that people connected can afford that service.
“So just to be clear, ACP is different than the High-Cost USF fund. ACP ensures that broadband service is affordable for low-income consumers specifically. It is very, very clear on that. NTCA members were very active, as were a number of others of you in this room, in terms of getting folks connected under the ACP program. And the program was very poised to be a very critical part of what we’re going to be seeing next in terms of BEAD and the infrastructure money coming out underway. Whereas on the other hand, you’ve got the High-Cost USF program that helps to make broadband affordable for every consumer in deeply rural communities and certainly in urban communities as well.
“Without ACP, which recently just expired, low-income consumers are going to be paying more than $30 more a month for the service. Without the High-Cost USF program, it’s been estimated that rural consumers will pay more than $100 more per month.
“So, when we think about all of this and we address that affordability puzzle, all of these pieces are going to be very, very important. And thinking about how we solve this universal service challenge, how do we get people connected? How do we keep people connected?
“Fortunately, the smart pathway for that was actually paved by Congress when they did the Act in 1996. We just need some updates. So let me just take a minute to kind of explain what we’re looking at. In 1996, Congress decided that trying to fund universal service through an annual appropriation process just wouldn’t work. Imagine that you are a network provider, and every year you are thinking, “Will I have this money appropriated? Can I make this investment? Can I do cost recovery?” But every year it becomes a question. And then administrations change. Congress changes. It certainly wasn’t a way that Congress knew to build any of these networks. So instead, what they did is they created a framework that would support the various USF programs by collecting contributions from those who benefited from nationwide universal connectivity. In 1996, these beneficiaries were telecom providers, right? They were entities that sold services to end users—and who wanted to place calls and transmit data to anyone, anywhere. Obviously, we’ve got a really different environment today. Our networks in 2024 look very different, but the principle of universal service remains timeless. Those who use or benefit from these networks and services should be the ones contributing to help support their availability and their affordability.
“So, what does that mean in 2024 as we look around us? It means that we need to be looking at who that new group of users actually are. Long distance telephone carriers are a thing of the past, and now when we talk about this, we talk about last mile networks. We talk about middle mile networks, transit and peering networks, internet backbones, content providers, edge providers. All of these play just as big a role in today’s online ecosystem and they benefit from a more connected user base. So, all of these entities should therefore share in an obligation to support universal service. Unfortunately, that’s not the case today, and the USF contribution mechanism is sadly, really outdated and needs to be repaired and put back into kind of a more common-sense approach, given where we are today.
“The current contribution factor is 34% and rising. That’s really high. That’s unsustainable. As fewer customers buy legacy telecom services, the burden on a handful of companies and consumers actually increases, and this is not sustainable. And frankly, it’s also not equitable. So those entities whose services result in the greatest use of these networks get a free ride while selling their own products. You know, the example that I always think of is Netflix. They used to pay postage to be able to get their content to the customers. Now it is the ISPs who are essentially covering the cost of the postage for them.
“That’s not to say, however, that content providers should bear the obligation all by themselves. The whole point is we need an equitable system in which all users and all beneficiaries actually contribute. So, we need to update the USF contribution mechanism. Regardless of where you are on this issue and regardless of your own feelings about it, I think we probably all agree that taking a fresh look is going to be really important. Because that timeless principle that prompted Congress to create it in the first place really boils down to how do we make sure that these services are available and that they are affordable for all Americans.
“So, the big question is, in Washington, as always, all right, so how do you do that? One of the things NTCA supports is obviously broadening the contribution base to make sure that we share this obligation equally and widely and as reasonably as possible. We support including ISPs in the base and we support including edge providers in the base. We are equal opportunity. There are certainly bills that are pending right now that would implement pieces of these different solutions and we support all of these measures. We’ve also seen reports, as I know all of you have as well, about bipartisan working group efforts that are up on Capitol Hill looking to really dig deep into these efforts. I don’t know, maybe I’m bullishly optimistic on this one. But you know, I look at these folks who are putting their minds together, and this is a pretty tough problem, but I am really grateful and very supportive of their efforts. And we eagerly wait to see whatever they are able to do in that closed room. And hopefully it’ll be a constructive outcome.
“But in the end, again, just to share that NTCA supports all of these different initiatives, we think contribution responsibility is shared reasonably and equitably among all underlying users of the network and that those who benefit from the network also help to contribute. So, you know, one of the things that comes out is that some folks have said, “Well, if you would address or assess one group and not another, you know, it’s going to really suppress the use of broadband.” And I will share that I think on the face of that, that rings hollow to me because who’s going to stop buying broadband because there’s a charge of a dollar that’s attached to their broadband bill to support universal service? Who’s actually going to cancel their streaming subscription because of a small surcharge?
“We’ve recently taken a deeper dive. We’ve done some studies. We’ve actually worked with some different organizations to take a look at what those implications really would be. And we have found that, really, it doesn’t move the needle in terms of what folks will do. One of the studies that was done by the Berkeley Research Group found that a per connection charge would add about $0.83 to $0.86 per month to most consumers’ bills. That number would come down even lower to about $0.69 or so per month due to the estimated growth of voice broadband connections. So, I think one of the things when we think about price elasticity, it’s important to realize what drives consumers and what is a way to kind of fund this network going forward. Because again the more connections, the more we can ensure access for all, the more valuable these connections are for all of us.
“So just sharing very quickly what NTCA is doing is, with all of these different reform proposals on the table, we are looking to hopefully get some action, hopefully seeing somebody move somewhere on this.
“We’ve been promoting contribution reform discussions up on Capitol Hill, continuing to encourage the work of the bipartisan USF Working group on Capitol Hill. What a treat to see a bipartisan working group on something here in Washington. And the other thing that we did last year is we kicked off our Broadband Built to Last campaign. And what we tried to do with this is, USF is really complicated, I mean, I’m giving you the 30,000-foot level. But it is a very complicated topic, and we are trying to get policymakers to understand what this program does and the critical role that for the public to understand what USF does in terms of actually providing service, keeping rural consumers connected, how that’s important and what high quality broadband service actually means.”