Expansion of the USF Contribution Base

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As discussed in previous editions of the ICORE Blog (3/24/23 and 4/14/23), legislation was introduced in the U.S. House and Senate earlier this year aimed at strengthening the USF by expanding the USF contributions base. The Funding Affordable Internet and Reliable (FAIR) Contributions Act and the Reforming Connectivity Act required the FCC to conduct a study and report to Congress regarding the feasibility of expanding the contributions base to include edge providers. Edge providers are defined as providers of online content or services such as a search engine, a social media platform, streaming services, or an e-commerce platform.

On November 16, 2023, similar legislation was introduced in the U.S. Senate. The Lowering Broadband Costs for Consumers Act of 2023 directs the FCC to require proper contributions to the USF from edge providers. The bill states that requiring contributions from edge providers will reduce the burden on consumers and rural providers and while enhancing broadband availability in rural America. The bill received support from NTCA – The Rural Broadband Association and WTA – Advocates for Rural Broadband. Specifically, the Bill would:

* Direct the FCC to reform the USF by expanding the contributions base to include edge providers and broadband providers.
* Limit assessments on edge providers to only those with more than 3% of the estimated broadband data transmitted in the U.S. and more than $5B in annual revenue.
* Direct the FCC to adopt a new mechanism to provide specific, predictable, and sufficient support for broadband providers.
* Limit the FCC’s authority over edge providers and broadband providers only to requiring contributions to the USF.

In its 2022 Report to Congress on the Future of the USF, the FCC discusses the increases that have occurred to the USF contribution factor, the declining contribution base, and the issue of assessing edge providers. In this report the FCC concludes that its existing authority does not provide for the ability to expand the contributions base and recommended that Congress provide that additional authority. The various Bills discussed above would presumably provide the FCC with the needed authority to address this issue.

We will keep an eye on this for you and certainly let you know of any developments.

A very Happy Thanksgiving to all!

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