Policy expert Blair Levin: We need to look beyond the rural access divide

• It’s “inevitable” the White House will declare it’s closed the rural access divide via the BEAD program, said New Street Research’s Blair Levin
• But gaps in affordable broadband and digital literacy will persist, and the future of the Universal Service Fund (USF) is murky
• State efforts to mandate low-income broadband – and the opposition from the industry – are further complicating matters

ACA CONNECTS SUMMIT, WASHINGTON, D.C. — Regardless of the final form it ends up taking, the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program is poised to play a key role in addressing rural connectivity. But the rural access divide isn’t the only issue we need to worry about, according to New Street Research Policy Analyst Blair Levin.

It’s “inevitable” that President Donald Trump and SpaceX’s Elon Musk will soon declare “mission accomplished” in closing the rural digital divide, Levin said at the ACA Connects Summit Wednesday. Though there’s plenty of debate around which technology is the best for the job, it’s honestly a “very achievable goal.” The bigger question is what comes next.

“We’re going to still have a bunch of other digital divides,” he said. “We have a literacy divide, an affordability divide.”

Addressing these problems hinges on whether the Universal Service Fund (USF), which the Supreme Court is currently reviewing, survives. USF is supported by contributions from telecommunications companies, which in turn fund four programs: High Cost, E-Rate, Lifeline and Rural Health Care.

However, that contribution base has shrunk over the years as more people switched to broadband while using less traditional telephone services.

“Can a reform of universal service, which is absolutely necessary, be done with a Congress that doesn’t care about rural access and only cares about E-Rate and low income?” Levin asked. He doubts it.

Both E-Rate, which provides discounted internet for schools and libraries, and the Lifeline program have a lot of political support, “but I’m not sure that’s enough to get [USF] over the finish line,” he said.

The Supreme Court hears arguments on whether the USF’s funding mechanism is unconstitutional or not on March 26, so we’ll have to wait and see what unfolds.

The Fifth Circuit Court of Appeals, which ruled against the USF’s constitutionality, has called into question the FCC’s ability to delegate taxing power to a private corporation – the Universal Service Administrative Company. But the 6th and 11th Circuits have upheld the USF’s funding mechanism.

“As of now, I think the three justices who will be the swing justices will go along with the 6th and 11th Circuits,” Levin said. Regardless of what the Supreme Court decides, “it cannot solve the problem” with USF.

States and affordable broadband regulation

With the way conversations on BEAD and the USF are playing out, it may be up to the states to tackle universal service and affordable broadband access.

With Congress failing to refund the Affordable Connectivity Program, Levin thinks more states will follow New York’s lead and require ISPs to offer low-income broadband at a certain price. Indeed, there are similar bills pending in California and Massachusetts.

Telecom companies are obviously not big fans of rate regulation, and Levin does think the industry will try to get the Federal Communications Commission (FCC) to fight these state broadband laws. But with net neutrality dead in the water, there’s really nothing the Commission – or Congress – can do.

“You’re either in charge or you’re not in charge,” Levin said. “And if you’re not in charge, the law basically says states are free to do what they want.”

New York’s law currently requires ISPs to offer low-income consumers at least 25 Mbps download speeds for $15/month. From an investor’s perspective, the worry is that states could potentially keep raising the speed threshold while also lowering the price, Levin noted.

“I don’t think states are going to do that, but I understand why Wall Street would say, ‘that is a cloud over our willingness to provide financial capital to those entities,’” he concluded.