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The future of the Universal Service Fund (USF) is in question after the U.S. Fifth Circuit Court of Appeals ruled the Federal Communication Commission’s method for funding the USF unconstitutional.
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The Fifth Circuit Court previously upheld the constitutionality of the USF – as have the Sixth and Eleventh Circuit Courts – but an en banc review by 16 judges on the Fifth Circuit reversed the original ruling.
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At issue is the FCC’s decision to outsource management of the USF to Universal Service Administrative Company (USAC).
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FCC Chairwoman Jessica Rosenworcel in a statement called the decision “misguided and wrong,” vowing to pursue avenues to appeal.
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New Street Research Analyst Blair Levin said the USF will likely continue to operate under the status quo until the Supreme Court weighs in.
In a ruling that quickly caused shock waves in the U.S. telecommunications industry, the Fifth Circuit Court of Appeals today ruled, 9-7, that the Universal Service Fund (USF) is unconstitutional as currently administered.
Federal Communications Commissioner (FCC) Chairwoman Jessica Rosenworcel issued a statement saying: “This decision is misguided and wrong. It upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools and libraries nationwide. The opinion reflects a lack of understanding of the statutory scheme that helped create the world’s best and most far-reaching communications network. We will pursue all available avenues for review.”
New Street Research policy analyst Blair Levin wrote earlier in anticipation of this ruling that it “could throw the entire system, already under financial and political stress, into chaos with potentially negative implications for all ISPs.”
Levin said the case will affect all ISPs, both fixed and mobile, because it influences how they pay in and receive benefits from the governments’ interest in assuring that all have access to and can afford baseline broadband services.
He added in a note issued following the ruling that the USF will likely continue to operate under the status quo until the Supreme Court weighs in, likely by June 2025.
This is a breaking story and will be updated.
Executive Editor Diana Goovaerts contributed to this report.
