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    Benton’s Thoughts on the Future of the Universal Service Fund

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    Andrew Jay Schwartzman
    Schwartzman

    Acting on instruction from Congress in the Infrastructure Investment and Jobs Act, the Federal Communications Commission has invited comment on the effect of the Infrastructure Act on Universal Service Fund (USF) programs and how the FCC can reach its goals of universal deployment, affordability, adoption, availability, and equitable access to broadband throughout the United States.

    Over the past 40 years Benton has provided information, research, and analysis about communications policy including universal service and advocated to bring open, affordable, high-capacity and competitive broadband to all people in the U.S. to ensure a thriving democracy.

    In a filing at the FCC, Benton offered its insights on how the investments and policy decisions Congress has made over the past two years can and should impact the FCC’s mission.

    New Universal Service Principles

    The Infrastructure Act includes critical language that lays the foundation for the work the FCC now embarks on including a set of challenges, principles and goals that the FCC should embrace and incorporate into the report on the Future of the Universal Service Fund. At a minimum, the Infrastructure Act language offers principles the Commission should determine to be necessary and appropriate for the protection of the public interest, convenience, and necessity and consistent with Section 254 of Telecommunications Act of 1996.

    Since the start of the COVID-19 pandemic, Congress has repeatedly identified areas in which USF programs have fallen short of the FCC’s goals. The FCC should consider how USF programs can better serve the areas and populations that Congress has found it necessary to address with additional funding over the past two years.

    A Universal Service Strategic Plan

    In a recent report, the National Telecommunications and Information Administration identified 22 federal programs funding broadband work and many more programs that can provide funds for broadband. What is needed—and what this proceeding offers the FCC the opportunity to provide—is an overarching plan to employ Congress’ investments across a host of agencies to achieve our national goal. The FCC is well-positioned to devise a strategic plan for universal deployment, affordability, adoption, availability, and equitable access to broadband.

    Defining Affordability

    Low-income households are spending too much on connectivity. The government’s Consumer Expenditure (CE) surveys find that low-income households
    pay 3 percent or more of their gross monthly income—just on wireless telephone service. Survey data shows that, when asked to identify a monthly cost figure for internet that would suit their monthly budgets, some 40 percent of households with annual incomes of $50,000 or less stated that a free internet service plan would align with their needs. The FCC should take a fresh, holistic approach as to what constitutes advanced telecommunications capability and use updated threshold speeds in its next evaluation of advanced telecommunications availability.

    Defining Broadband

    The FCC’s current broadband speed thresholds (download speeds of up to 25 megabits per second and upload speeds of up to 3 megabits per second) are too slow. In the Infrastructure Act, Congress defines as an underserved location any location that lacks access to reliable broadband service offered with a speed of not less than 100 megabits per second for downloads and 20 megabits per second for uploads, and a latency sufficient to support real-time, interactive applications. The FCC’s definition of advanced telecommunications capability can no longer include what Congress has deemed underserved.

    The Continuum of Connectivity

    Universal service is an evolving level of telecommunications services that the FCC establishes periodically, taking into account advances in telecommunications and information technologies and services. In the United States today, it has become the norm for a majority of households to have two types of subscriptions to the internet—mobile data and fixed (and for the most part) wireline service. For households whose annual incomes are $50,000 or more, 75 percent have both a wireless data plan and a wireline broadband subscription. For low-income households (those whose incomes are below $25,000 annually), just 36 percent have a wireless data plan and a home
    wireline broadband subscription. Put differently, 60 percent of U.S. households (i.e., those whose annual incomes exceed $50,000) are highly likely to have both access tools.

    Aligning the Affordable Connectivity Program and the Broadband Equity, Access, and Deployment Program

    The FCC’s Affordable Connectivity Program and the National Telecommunications and Information Administration’s Broadband Equity, Access, and Deployment (BEAD) Program should deliver affordable broadband internet access service to all low-income households, even those that cannot afford any monthly payment at all. The Infrastructure Act requires subgrantees to offer “not less than 1 low-cost broadband service option for eligible subscribers.” The definition of “eligible subscribers” should match the criteria for the Affordable Connectivity Program and low-cost options should not exceed $30/month unless located in Tribal high-cost areas where low-cost options should not exceed $75/month.

    Time to Reform Lifeline

    The FCC’s Lifeline program was created nearly 40 years ago with the aim of providing low-income households with low-cost landline telephony options. As currently structured, Lifeline is inadequate to meet the connectivity needs of low-income households in the 2020s as evidenced by an independent evaluation and the findings and recommendations of the Commission’s own Wireline Competition Bureau. The program is ripe for reform, modernization, and alignment with the new Affordable Connectivity Program.

    Don’t Forget Competition

    The goal of the Telecommunications Act of 1996 is to let anyone enter any communications business—to let any communications business compete in any market against any other. Changes in the USF programs should encourage all telecommunications and broadband service providers to compete for USF support and, especially, to serve low-income households in their service areas. Specifically, the Commission should consider the following pro-competition policies:

    • Prioritize Open-Access Networks that Facilitate Competition Between Multiple Providers
    • Support Municipal Experimentation
    • Encourage Local Planning
    • Empower Community Institutions to Act as Launching Pads
    • Collect and Make Public Broadband Pricing Data

    Sustaining the Universal Service Fund

    The FCC faces a complex task of not only preserving but advancing universal service while trying to maintain current USF contribution factors. The Infrastructure Act’s BEAD Program could alleviate the strain that the Commission’s Rural Digital Opportunity Fund puts on the USF.  There is little dispute that the contribution base for USF must be broadened. There are a number of proposals to accomplish that goal. The FCC may be able to employ its existing powers or suggest legislative options for that purpose.  However, Benton does emphasize that proposals to finance the USF via the Congressional appropriations process are ill advised and, indeed, extremely dangerous.  But if the FCC decides to pursue USF contribution reform, it must ensure that vulnerable consumers do not end up paying a disproportionate rate or substantially more than they are today.

    The FCC has been tasked to present a report that can provide the opportunity to help design a universal service program for the twenty-first century. It is hard to overstate the important role that this report will play in assuring that all Americans have access to adequate and affordable high-speed broadband. 


    Andrew Jay Schwartzman is the Benton Senior Counselor. 

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