Battle to save major internet subsidy reaches Supreme Court
U.S. Sen. Ed Markey speaks during a rally on Capitol Hill urging the Supreme Court to protect the Universal Service Fund. Justices debated the fund's constitutionality earlier this week. Chris Teale for GovExec
By
Chris Teale
Advocates and elected officials warned of the harm if the Universal Service Fund is struck down as unconstitutionally financed. Justices appeared inclined to preserve the fund.
The U.S. Supreme Court appeared reluctant Wednesday to strike down a popular program that helps get underserved communities online as they worried about the effects of such a decision.
Justices heard oral arguments regarding the future of the Universal Service Fund, known as USF and administered by the Federal Communications Commission. A U.S. appeals court had ruled last year that the mechanism that funds the USF is unconstitutional.
USF provides money for a swath of programs, including the Lifeline and High Cost subsidy programs, as well as the Rural Health Care Program and E-Rate, which subsidizes telecoms and other services for public schools and libraries. Justices worried that taking those programs away would have dramatic consequences.
“If you go through what this program is providing, what would you cut out?” asked Justice Elena Kagan. “This is all basic stuff,” she added later. “These are not exorbitant things; these are not gratuitous things.” Similarly, Justice Samuel Alito said he was “concerned” about the effects of a decision against USF for rural residents, while Justice Amy Coney Barrett asked if it would be “cataclysmic” and “devastating for universal service.”
At issue is how funds are raised for the USF, which was established in 1996 under the Telecommunications Act, to administer those programs. The FCC designated the independent nonprofit Universal Service Administrative Company to determine how much funding is required, then assess a contribution from each telecom service provider on the FCC’s behalf. Those assessments are then passed onto consumers via their monthly bills.
But the U.S. Court of Appeals for the Fifth Circuit ruled that method gave the FCC too much discretion in how it sets USF contribution rates and so is making major policy and revenue decisions without congressional oversight. A lawsuit argued that because of that, the USF should be struck down as unconstitutional.
R. Trent McCotter, a partner with Boyden Gray PLLC who represents the conservative nonprofit Consumers’ Research that is challenging the USF, said the case is “taxation without representation,” and that any discussion about how much revenue to raise is a “quintessential legislative determination, not some minor detail to be filled in later.”
McCotter also argued that the law is written in such a way that the FCC can take into account various principles that define universal service, including whether a service is essential to public health, safety and education; a majority of customers subscribe to it; and it is deployed through public networks.
“The FCC gets to redefine universal service based on an evolving standard,” McCotter said. But some justices rejected that argument and said the law as written reflects how technology evolves over time. “The guidelines are quite clear,” Kagan said.
Justice Neil Gorsuch also questioned if the law as written gives the FCC too much scope in how much money it can raise through USF fees. He asked if a “numerical cap” might be more appropriate, as otherwise this open-ended tax is “unlike any other tax that this court’s ever approved.”
In response, Acting Solicitor General Sarah Harris said the program has a “qualitative cap” that is prevented from being a “slush fund,” as the FCC can only collect what is deemed “sufficient” for universal service.
Advocates warned of the dire consequences of the USF going away. Earlier in the day, a group of more than 40 activists gathered on Capitol Hill in Washington, D.C., in blustery conditions, holding signs that said, among other slogans, “Defend Universal Service,” “Affordable Broadband for All,” and “Connected Communities, Stronger America.” Speakers, which included Democratic U.S. Sen. Ed Markey and FCC Commissioner Anna Gomez warned of the dire financial consequences if internet subsidies were to dry up.
“Families shouldn’t have to pick between a month of broadband and a month of breakfast,” Angela Siefer, executive director of the nonprofit National Digital Inclusion Alliance, said during the press conference on Capitol Hill.
Keith Kruger, CEO of the Consortium for School Networking, which represents school system technology leaders and is known as CoSN, said E-Rate is “one of the greatest success stories in education,” as it helps students from every walk of life get online. CoSN found that the cost of bandwidth has dropped 92% for schools, while 94% of the group’s members said E-Rate is vital for their internet connectivity.
“I challenge you to find another government program with that level of success and satisfaction from those that it serves,” Kruger said.
Schools and libraries would be hardest hit, especially in rural areas. The American Library Association said more than half of all public libraries each year apply for E-Rate.
And schools would suffer massive budget gaps and need to make “significant trade-offs” if that funding went away, said Arlington County, Virginia, Public Schools Superintendent Francisco Duran, including cutting teachers and staff. E-Rate’s demise would spark an “educational crisis,” he said.
Speakers at the event also noted USF’s wide political support, reflected in a brief filed early this year by a bipartisan, bicameral group of lawmakers in Congress. While many elected officials acknowledge that USF needs tweaks, its demise would be far worse.
“It will be a devastating outcome if that happens, leaving many Americans without service,” Rep. Brett Guthrie, a Kentucky Republican who chairs the House Energy and Commerce Committee, said during a recent hearing. “Congress must act to affirm the constitutionality of this program, and I hope this is an area where we can find bipartisan agreement to react quickly if we have to react quickly.”
A decision on this case is expected by the end of the year.