Bi-Partisan House Bill Introduced to Expand USF Contribution Base to Include Broadband Services Revenue

On May 5, 2020, Representative Collin Peterson (D-Minn.) announced that he and a bi-partisan group of representatives, including Reps. Don Young (R-Alaska), T.J. Cox (D-Calif.), Hal Rogers (R-Ky.), Angie Craig (D-Minn.), et al., had introduced the Universal Broadband Act.  According to the announcement, the legislation would add revenue from broadband services to the Universal Service Fund ("USF") contribution base (revenue subject to USF contributions) and require providers to make contributions to support the fund.

Among other things, the bill would:

• Require the FCC to set the contribution rate as needed to meet universal service goals and serve all Americans;
• Create reporting requirements to ensure the FCC is meeting their buildout goals; and
• Prioritize unserved areas and further ensure tribal areas are served.

The bill is not yet available.

For nearly two decades, the USF has been funded almost exclusively through revenue derived from providers of  interstate and international telecommunications (voice and data transmission) and interconnected VoIP services.  The current quarterly USF contribution factor is 19.6%, having risen to as high as 25% in the 4th quarter of 2019.

In a 2015 ex parte presentation, AT&T shared data with the FCC indicating that adding revenue from broadband services would result in a nearly 50% reduction in the, then effective, USF contribution fee factor (with an even greater reduction if revenue from wireless data services were to be added).

Our firm will continue to monitor the Universal Broadband Act and provide updates of material developments, if/when it progresses through the legislative process.