By Ryan Johnston
With the end of the Affordable Connectivity Program many former participants are now looking to the Federal Communications Commission’s (“FCC” or “Commission”) Lifeline Program for help with their broadband bills. An estimated 7.5 million people enrolled in the Lifeline program, providing eligible consumers with $9.25 a month to put toward a participating broadband provider. However, even this program has recently been at risk. The Lifeline Program is part of a larger collection of FCC initiatives housed within the Universal Service Fund. Codified in the Telecommunications Act of 1996, the Universal Service Fund (“USF”) and its administrator the Universal Service Administrative Company (“USAC”) were created to collect funds from telecommunications companies and disburse them across four USF programs: Lifeline, E-Rate, High-Cost, and Rural Healthcare. To determine how much each provider contributes USAC sets a percentage of interstate and international end-user revenues to be collected. The current contribution factor is set at 34.4%. This contribution is generally passed through to the consumer as a USF Fee on a consumer’s bill.
In 2021, Consumer’s Research and several others petitioned the Fifth and Sixth Circuits to review the Commission’s decision to approve the 2021 Fourth Quarter Contribution Factor. Consumer’s Research argued that Section 254 of the Communications Act violated the nondelegation doctrine because it failed to provide limits on how the FCC can administer the USF. Further, Consumer’s Research also argued that USAC’s role in the USF system violates the private-nondelegation doctrine as agencies are prohibited from delegating authority to private entities.
In the Fifth Circuit, the court originally found in favor of the FCC, but the full circuit voted to rehear the case en banc. The oral argument for the en banc hearing was held in September, 2023, but the opinion has not yet been released. The Sixth Circuit also found in favor of the FCC, but Consumer’s Research filed a Petition for Certiorari with the Supreme Court in January, 2024. The Court has since denied the petition without citing a particular reasoning.
Additionally, Consumer’s Research also filed petitions for rehearing in the Eleventh Circuit and D.C. Circuit challenging the fourth quarter 2022 and the second quarter, 2023 contribution factors respectively. These petitions also included arguments similar to those found in the petitions to the Fifth and Sixth Circuits. In the Eleventh Circuit the court ruled in favor of the FCC releasing its opinion in December, 2023. While oral arguments were held for the D.C. Circuit in January, 2024, an opinion has yet to be released.
So far the courts have upheld the status of the USF and USAC as its administrator. However, the unreleased opinions from the Fifth and D.C. Circuits could provide the split needed for the Supreme Court to grant a Petition for Certiorari. However, the question of USF reform remains a significant question, even if the system is not deemed to be illegal.
