News
A recent decision by the Fifth Circuit Court of Appeals has thrown the future of the Universal Service Fund (USF) into a state of flux.
By: Brad Randall, Broadband Communities
Voices around the industry are sounding the alarm after the Fifth Circuit Court of Appeals ruled Universal Service Fund as unconstitutional.
The decision, which was handed down yesterday, is sending shockwaves through the telecommunications industry.
Published reports indicate that the 9-7 decision from the fifth circuit, which covers Texas, Louisiana, and Mississippi, is likely to be heard by the U.S. Supreme Court.
The Universal Service Fund, which was expanded by the Telecommunications Act of 1996, funds E-Rate, allows rural health care providers to pay rates for telecommunications services similar to those in urban areas, assists low-income customers with telecommunications affordability, and provides support to certain qualifying telephone companies that serve high-cost areas, according to the FCC’s website.
Yesterday, the New Orleans court ruled that “Congress delegated its taxing power to the Federal Communications Commission” in the Telecommunications Act of 1996.
The wording of their ruling continues.
“(The) FCC then subdelegated the taxing power to a private corporation (the Universal Service Administrative Company). That private corporation, in turn, relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the nation. We hold this misbegotten tax violates Article I, § 1 of the Constitution.”
The decision, by the full panel of judges in the circuit, is contrary to that court’s ruling by a three-judge panel, along with earlier ones in the sixth and eleventh circuits, both of which upheld the USF.
The USF was challenged by Consumers’ Research, a conservative group that had previously asked the high court to review the other circuit decisions, but the justices declined in June.
The fund in question is subsidized through fees paid by telecommunications carriers and supports programs like the High-Cost Program, the Connect America Fund, the Lifeline Program, the Rural Health Care Program, and the Schools and Libraries Program.
“If left standing, yesterday’s decision will destroy critical programs that keep schools, libraries, rural health care clinics, rural communities, and low-income households connected to the internet,” said Raza Panjwani, a senior policy counsel at Open Technology Institute, in a release on the organization’s website. “Universal service has been the policy of the United States for nearly a century, with Congress explicitly directing the FCC to pursue that goal by statute.”
A blog post by Noelle Ellerson, the associate executive director advocacy and governance at The School Superintendents Association, wrote that the ruling has the potential to be disruptive “to all programs, including education.”
“This decision may be considered in a broader context,” Ellerson wrote. “In the past year, both the 11th and 6th circuits issued decisions that upheld the USF structure, making it likely/possible this moves to (the US Supreme Court).”
Broadband Communities will continue to report on this developing story. Reporting from contributor Steve Ross is included in this report.
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