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The FCC is set to reinstate net neutrality rules at its meeting Thursday
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The draft order would exempt broadband providers like AT&T and Comcast from contributing to the USF
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Industry and consumer groups will be watching to see if FCC Chairwoman Jessica Rosenworcel changes the draft order to accommodate their concerns
The FCC is set to vote on net neutrality on Thursday, but an even older issue — the Universal Service Fund (USF) — is surfacing in comments seeking changes to the order on reestablishing a “fast, open and fair” internet.
Congress created the USF to help fund affordable phone access as part of the Telecommunications Act of 1996. The FCC first took steps to support net neutrality in 2005.
Leading up to Thursday’s vote, industry and consumer groups voiced concerns that the draft net neutrality order will exempt broadband internet service providers from contributing to the USF and kick the can down the road indefinitely.
The USF is funded by telecom companies, including wireless, that contribute a percentage of their interstate and international revenues. It is not the same as the Affordable Connectivity Program (ACP), which was inspired by Covid and is winding down due to lack of funding from Congress.
The Affordable Broadband Campaign (ABC), which would like the government to use the USF to replace the ACP, argues that broadband providers, soon to be considered “telecommunications services” once again, are the most logical new contributors to USF.
“By refusing to apply the fee to broadband, the FCC for all intents and purposes, is shutting the door on saving the [ACP] subsidy, which currently serves over 23 million households. I find it remarkable that the agency is proposing to put such a roadblock in front of continuing perhaps its most important program for closing the digital divide,” wrote ABC spokesperson Gigi Sohn in a statement on LinkedIn.
Sohn was President Biden’s first choice to serve as the third Democrat on the FCC but she withdrew her nomination after an intense smear campaign.
Now Sohn’s group and others are at odds with FCC Chairwoman Jessica Rosenworcel, whose draft net neutrality order exempts broadband providers from contributing to the USF.
In a January 12 letter to Sen. Ben Ray Lujan, Rosenworcel laid out how expanding the USF to include revenues from mass market broadband providers would lead to an increase in the monthly broadband bills paid by the average household.
To forbear or not forbear
Technically speaking, the current draft would forbear — or stop enforcement — on Section 254(d), which is the portion of the Communications Act that would require broadband providers to pay into the USF, Angie Kronenberg, president of Incompas, told Fierce on the sidelines of the Competitive Carriers Association (CCA) convention last week.
“It acknowledges that they may unforbear in the future to do contribution reform, but they would need to go through the process to unforbear, and that’s a process the FCC has never done before, so it’s really uncertain,” she said. “I think there would be a lot of legal challenges” from broadband providers and their trade associations if the FCC were to try to unforbear, she added.
The study that the FCC is relying on is flawed, she added. “It’s odd that the order relies upon this study,” and doesn’t even acknowledge the Brattle Group study that Incompas put forth, which concluded that expanding the contribution base to include revenues from broadband internet service revenues is the most efficient option for USF reform.
“It’s a more complicated picture than we think what the Chairwoman’s draft currently is contemplating.”
NTCA–The Rural Broadband Association also raised concerns about potential forbearance, saying the FCC would be on sounder legal footing and advance the public interest as a practical and policy matter if it were to issue a further notice of proposed rulemaking to consider how and whether to reform universal service contributions.
We’ll all find out soon enough which way the commission ultimately moves on this one. The FCC will consider the net neutrality order at its Thursday meeting that starts at 10:30 a.m. Eastern time sharp.