The Federal Communication Commission’s little-known Universal Service Fund (USF) has long burdened consumers and taxpayers with waste, fraud, abuse, and mismanagement—but the fund has not escaped the watchful eyes of the courts. In fact, one court thinks the program may be downright illegal. However, Congress shouldn’t wait for the judiciary to reform it.
As the Fifth Circuit Court of Appeals recently noted in the case Consumers’ Research v. FCC, “nobody voted for” the fund’s inappropriate power delegation from Congress to the FCC and from the FCC to a private corporation, nor did they vote for its multibillion-dollar tax on ratepayers that keep the fund solvent. With conflicting decisions on the fund’s legality now swirling in different circuit courts, the program is on pause as a future showdown at the Supreme Court likely awaits.
Congress should make that legal debate a moot point instead. The USF falls woefully short of its original purpose to close the digital divide and provide Americans with affordable access to high-speed internet while imposing an unnecessary tax on ratepayers. As a recent report from the American Consumer Institute explains, USF’s unique funding model is largely to blame for the program’s shortcomings—which warrant policy reform irrespective of what the courts ultimately decide about the program’s legality.
Unlike many federal programs that require Congress to authorize payments in the appropriations process, the USF outsources administration to a private company that taxes a percentage of interstate and international telecommunication company revenues. That means neither Congress nor the FCC is directly responsible for setting this rate, making the USF uniquely unaccountable and susceptible to abuse. Plagued by a lack of oversight, the tax—and the financial costs of mismanagement—are passed down the ladder until consumers pay the price in more expensive monthly phone bills.
Read the full article here.
Nate Scherer is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us at www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.