Challenge to Broadband Subsidy to be Heard by Supreme Court
The FCC is seeking reinstatement of the Universal Service Fund that was previously invalidated by the Fifth Circuit.
On Nov. 22, the Supreme Court agreed to hear the Federal Communications Commission’s (FCC) appeal regarding a lower court ruling that struck down an $8-billion-a-year broadband subsidy.
The court’s decision in FCC v. Consumers’ Research came in the form of an unsigned order, without an explanation or dissenting opinions.
The court consolidated this case with a related appeal, SHLB Coalition v. Consumers’ Research, which involves the Schools, Health & Libraries Broadband Coalition. These two cases will be heard together, and a hearing date has not yet been set.
Back on July 24, the U.S. Court of Appeals for the Fifth Circuit ruled that the Universal Service Fund (USF) was unconstitutional due to its infringement on Congress’s taxing power.
The USF was originally established by Congress in the Telecommunications Act of 1996 to provide subsidies for various telecommunications services, including internet access. The fund supports telephone companies serving high-cost regions, low-income customers, rural healthcare providers, schools, and libraries.
This program is funded through a tax on telephone services and managed by the Universal Service Administrative Company (USAC), a private entity created by the FCC. The tax is collected through line-item charges on monthly phone bills.
The Fifth Circuit found that the mechanism supporting this fund violated the nondelegation doctrine, which prohibits Congress from delegating its legislative powers to others, including private entities and administrative agencies.
In a petition filed on Sept. 30, U.S. Solicitor General Elizabeth Prelogar argued that the circuit court’s decision should be overturned.
She wrote, “The decision rendered the system the Commission has used to implement a significant Act of Congress for the past 25 years invalid. If left to stand, this decision will disrupt universal service programs that benefit millions of consumers nationwide.”
