With EU momentum largely lost, the US is considering increasing the number of universal service fund contributors, although legislative progress appears unlikely
Bill calls for big tech contributions to the USF
On 15 November 2023, US Senators introduced a bipartisan bill to require “edge providers” to make contributions to the country’s Universal Service Fund (USF). The Lowering Broadband Costs for Consumers Act of 2023 (S. 3221) would require providers of online content and services, such as search engines, streaming services and cloud providers, to contribute to the USF on an “equitable and non-discriminatory basis” in the same manner as telecoms operators. The bill would apply only to the largest edge providers, including those that accounted for at least 3% of broadband data transmitted in the US and earned at least $5bn (£3.98bn) in revenue in the US. Currently, operators are required to contribute a percentage of their interstate and international revenues to the USF, with that figure determined by the Federal Communications Commission (FCC). These costs are often passed on to consumers as a specific line item on their telecoms bills. The USF is used to fund the development of telecoms services in “high-cost” areas, as well as guarantee broadband access for schools and libraries through the FCC’s e-Rate programme.
Despite proposed legislation, the US is unlikely to move quickly on fair share
While the bill has bipartisan support, it currently appears unlikely to move forward in the current Congress given the focus on other digital economy priorities, such as online safety. Issues of waste and fraud, as well as concerns regarding the competitive advantages that USF funding provides to incumbents have derailed other efforts at reforming the programme in the past and have not yet been fully resolved. The FCC is also currently facing a legal challenge to its authority to administer the USF on constitutional grounds. Nevertheless, the Biden Administration has made clear through its response to the EC’s exploratory consultation that the USF is part of its current plan to meet universal service obligations (USO), along with the large amounts of Congressional spending on expanding broadband availability passed in 2021. As the FCC looks to update USO standards while also implementing rules against digital discrimination, the US may have to consider supplementing declining revenue from traditional sources or accept more limited progress on connectivity targets. Meanwhile, public pressure will continue to drive policymakers to rein in the power of big tech, making S. 3221 a politically plausible solution despite some of these immediate hurdles.
Fair share continues to drive debate among policymakers
Though modernisation of the USF in the US is unlikely before the 2024 presidential elections, conversations continue around the world on updating funding mechanisms to support delivery of the USO and future network investment. As the impact of South Korea’s sending party network pays scheme remains subject to debate, progress in the EU on fair share appears to have stalled since the EC’s consultation in February 2023. However, other countries such as Brazil and India are considering some contribution by tech firms to telecoms network costs, with the Cellular Operators Association of India recently voicing its support for S. 3221 as a model to follow. Policymakers in these countries will need to determine whether a direct payment model (like the one supported by large European operators) is an appropriate approach, or if a government-administered USF like in the US could provide a better framework for achieving national connectivity goals.
