CEI Report: Reforms to Universal Service Fund Will Allow the FCC to Cut Taxpayer Costs and Improve Broadband Affordability for Underserved Americans

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WASHINGTON—Congress and the Federal Communications Commission (FCC) have an opportunity to both improve broadband connectivity and reduce costs to taxpayers by making some commonsense reforms to the Universal Service Fund (USF), according to a new report from the Competitive Enterprise Institute.

The USF was created by Congress as part of the Telecommunications Act of 1996 with the aim of providing affordable broadband and telecommunications services throughout the country. The USF includes four constituent parts: The high-cost program (also known as the Connect America Fund), the Lifeline program, the Rural Health Care Program, and the E-Rate program for eligible schools and libraries. In his report, “How Congress and the Federal Communications Commission Can Help Improve Affordable Internet Access to Underserved Populations: Review of the FCC’s Universal Service Fund Can Help Reduce Waste and Benefit Consumers,” CEI research fellow Ryan Nabil outlines five specific proposals to reform the USF: 

  • Re-evaluating which USF programs are necessary to achieve the FCC’s broadband connectivity goals.
  • Reconsidering the need for the high-cost program in light of recent increases in broadband funding through the American Rescue Plan and the Infrastructure Investment and Jobs Act. 
  • Focusing the USF on consumer-focused initiatives, such as the Lifeline program, and educational programs like E-Rate.
  • Reforming the E-Rate program for eligible schools and libraries so that taxpayer-provided funds are used effectively.
  • Eliminating the USF surcharge and using Congressional appropriations to fund future USF programs.

“With dramatic recent increases in federal funding and growing private broadband investment, the FCC can help ensure universal broadband access without significant future assistance,” said Nabil. “In order to do so, the FCC needs to ensure that it uses existing funding prudently and effectively. Reforming the Lifeline and E-Rate programs and phasing out the high-cost program should help the FCC cut costs while still meeting its goals for universal access.” 

Read the full report on CEI.org.