I am pleased to
offer my thoughts on universal service funding reform: Remedies for
Universal Service Funding Compassion Fatigue, 39 Santa Clara High Tech. L.J. 395 (2023);
available at: https://digitalcommons.law.scu.edu/chtlj/vol39/iss4/2/.
Here’s the
Abstract:
Nearly every nation in the world has
a government mandated program aiming to make telecommunications service more
widely available and affordable. Universal service funding subsidies have
garnered popular support largely based on the shared view that society and
individuals benefit from progress in achieving ubiquitous and affordable
access, initially to voice telephone service.
Technological developments and
changes in consumer requirements have generated support for expanding the
universal service mission to include broadband access to the Internet, and to
identify a growing number of subsidy beneficiaries, now including schools,
libraries, healthcare facilities, telephone companies operating in high-cost
areas, and people with low incomes.
This Article summarizes the history
and structure of the universal service funding in the United States with an eye
toward identifying matters warranting immediate reform. The expansion of the
mission to include affordable and widespread access to broadband service has
added significant cost, complexity, and incentive to secure funding through
fraudulent acts.
Telecommunications carriers can
lawfully pass through universal service funding requirements directly to
subscribers, many of whom now question the efficacy and efficiency of the
funding process. For the first quarter of 2023, consumers paid a 32.6% surcharge
on telecommunications services, but incurred no contribution obligation when
providing broadband Internet access and other data services. “Compassion
fatigue” has encouraged litigation challenging whether the Federal
Communications Commission (“FCC”) has clear statutory authority to impose the
functional equivalent of a tax on consumers and to delegate management of the
collection and distribution of funds to a private company.
This Article evaluates the validity
of such claims especially when the Covid-19 pandemic highlights the
essentialness of broadband access. Additionally, congressional legislation,
enacted in 1996, codified the universal service mission and required the FCC to
act. The Article also evaluates several different types of universal service
funding reform proposals with an eye towards identifying their marketplace
impacts.
Most proposals recommend expanding
the categories of universal service contributors to spread the burden more
equitably that in turn would reduce the subsidy cost now exclusively borne by
telecommunications service subscribers. New categories of subsidy contributors
include federal income taxpayers, any venture assigning telephone numbers to
subscribers, broadband carriers delivering data to and from subscribers,
platform intermediaries, such as eBay, Facebook, Google, and Twitter, and
creators and aggregators of content, such as Amazon Prime, Netflix, and
YouTube. The Article concludes with an assessment of what reforms can possibly
occur in the short term.
