Jonathan Spalter

25 Years Later, It’s Time for a FAIR Update to Universal Service

This month marks the 25th anniversary of the Federal Communications Commission’s vote to create the Universal Service Fund as we know it today. And this week marks a critical next step in securing its future.

Tomorrow, the Senate Commerce Committee is poised to mark-up the FAIR Contributions Act, legislation calling for an FCC study examining who should contribute to the future of the Fund. This includes “the class of firms and services that benefit directly and financially” from universal connectivity. On the exploratory list: broadband providers, but also search engines, streaming services, social media, app stores, cloud computing, video conferencing and e-commerce platforms. The study also will consider how future assessments could be made (e.g. user fees for paid services and a share of digital ad revenue for unpaid services).

Such a study would provide a critical foundation of data and analysis as the FCC contemplates the future of the entire program. It also would offer an important signal to their work that Congress is interested in a more equitable and fair distribution of this obligation in a modern, connected world.

It’s time for this change. The Universal Service Fund was envisioned by Congress as part of the 1996 Telecommunications Act, legislation that scarcely referenced the internet. (In its defense, Amazon was simply an online bookstore.) But the program put into action a national commitment to ensuring low-income households, rural Americans and their health, education and library facilities all had access to “advanced telecommunications services.”

Then, those words referred primarily to the ability to place a phone call or perhaps use that “phone jack” in your wall to access the honk and screech of pre-broadband internet. Today, “universal service” clearly means affordable, high-quality access for everyone to high-speed broadband.

Nearly 98% of U.S. homes now have access to high-speed internet as defined by the FCC. And, our country is mounting what we all hope will be a final push to 100% connectivity with Congress and the Administration committing $65 billion alongside U.S. broadband providers (who themselves committed roughly $80 billion in 2020 alone to digital infrastructure) to realize this shared goal.

With 25 years of digital life under our belts, Congress has rightly asked the FCC to look at a refresh of the Universal Service Fund. Most likely to join the pantheon of brick-sized cell phones and hammer pants as historic artifacts not aging gracefully is the program’s funding mechanism.

For the past quarter century, universal service has been funded by a familiar fee imposed on customer voice calls. At inception this approach made sense. Today, with less than a third of the country still having a landline—led by roughly 60% of seniors—the funding mechanism is deeply regressive and unsustainable.

A fresh approach that asks all beneficiaries of universal connectivity to contribute is consistent with the program’s rationale from day one. When our nation established the goal of universal service, it was to ensure every household had a telephone, so everyone could make phone calls. It made sense that effort was financed through the companies whose customers drove all that traffic and whose revenues were enabled by that traffic – phone companies. Today, the vast majority of traffic and the vast majority of the revenue made from universal connectivity comes from a far larger universe of companies across the internet ecosystem – most of whom do not contribute to the FCC’s critical universal service programs.

Congress is right to signal that we need to look to the future and not shy away from the big questions. Chief among them: Who’s contributing to giving universal service a sustainable future?

Each company will have its own opinion on whether that answer should include them. But all bear a responsibility to support Congress calling the question.

A quarter century after the program’s founding, it is important to recognize those at the FCC, including the hardworking staff at the FCC who wrote that landmark order 25 years ago and have been hard at it ever since, as well as those in Congress who created this program and served as its stewards and champions over the years. I can think of no better way to honor and continue their work, then to lock arms once again—across the public and private sectors and all corners of what has evolved into a vast broadband landscape—to ask and answer the question together of how we thoughtfully, equitably and collectively advance this defining national commitment.