Leaders in both parties like the Universal Service Fund. But lobbying and Washington politics are making it nearly impossible to fix.
The Universal Service Fund — a federal subsidy pool collected monthly from American telephone customers — faces the biggest crisis of its existence.
Congress, which created the USF as part of its last landmark telecom law rewrite in 1996, could stop any potential shutdown by fast-tracking legislation securing the fund’s role and its constitutionality, funding sources and missions. But the roadblocks to any kind of deal on Capitol Hill are already looming. It has become the center of a Washington lobbying war between Big Tech and the leading telecom firms, both of which want the other to foot the bill.
The Consumers’ Research suit argues that USF fees are actually taxes — and that the fund’s 1996 setup was unconstitutional because it wrongly gives the agency power to levy taxes, then allows it to delegate management to an outside entity. Other similar cases filed by Consumers’ Research are pending before the 11th Circuit, which held oral arguments in June, and before the D.C. Circuit, which has not yet heard arguments.
Then-AT&T Chairman Robert Allen testifies before the House Commerce Committee during a hearing on the Telecommunications Act — which would later establish the Universal Service Fund — on May 10, 1995. | Marcy Nighswander/AP Photo Politicians have another consideration: Their constituents with phone services, who end up paying for the fund. The telecom industry passes the fee directly to customers as a line item on their monthly landline or cellphone bill, so Americans with voice phone service end up paying usually at least a couple of dollars per month to support the programs.
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