Senate Bill Would Require USF Contributions From Major Edge Providers and ISPs

On November 16, the Lowering Broadband Costs for Consumers Act of 2023 was introduced in the U.S. Senate. This Universal Service Fund (USF) reform bill would expand the contribution base to include mega-popular edge providers who generate substantial yearly U.S. revenues. The Act comes with bipartisan sponsorship by Senators Markwayne Mullin, Mark Kelly, and Mike Crapo. As of this blog post, the Act has yet to receive a bill number, but the text of the legislation is available on Sen. Mullin's website, along with a press release. The Senate should give this bill due consideration.

 

The Lowering Broadband Costs for Consumers Act provides that, within 18 months of the bill being passed into law by Congress, the FCC "shall complete a rulemaking to reform the Universal Service Fund by expanding the contribution base so that broadband providers and edge providers… contribute on an equitable and non-discriminatory basis" to "specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service." Importantly, the Act would require contributions only from the largest broadband providers and edge providers, as the bill exempts from contribution requirements broadband providers and edge providers that either: (1) transmit less than 3% of estimated broadband data transmitted in the U.S. during the prior year (as determined by the Commission) and earn less than $5 billion dollars in U.S. revenue during the prior year; or (2) would have a "de minimis" level of contribution to universal service under the Commission's mechanisms. 

 

The Act's definition of an "edge provider" includes digital ad services, search engines, social media platforms, streaming services, app stores, cloud computing services, over-the-top or other text-messaging services, videoconferencing services, video game services, and e-commerce platforms. 

 

The sponsors of the Lowering Broadband Costs for Consumers Act should be saluted for introducing legislation that would tackle the serious problem of the USF contribution scheme's fiscal unsustainability. It makes all the sense in the world to require at least some amount of USF contributions from the service providers who are responsible for the overwhelming majority of the Internet's traffic and who financially benefit the most from internet connectivity. Free State Foundation President Randolph May described the USF system's precarious financial situation and the urgent need for contribution reform in our August 2023 public comments filed with the Universal Service Fund Working Group that is led by Sens. Ben Ray Luján and John Thune. 

For other legislation introduced in the 118th Congress that would address the USF contribution scheme, see my blog post from March of this year, titled "Senators Reintroduce Bill to Require FCC Report on USF Contribution Reforms." Therein I describe the FAIR Contributions Act, which would require the Commission to conduct a feasibility study on collecting USF contributions from Internet edge providers.