While it’s not common for an FCC issue to face the court of last resort, two combined lawsuits recently heard before the bench—Federal Communications Commission v. Consumers' Research and Schools, Health & Libraries Coalition v. Consumers' Research—could put millions of anchor institutions, rural communities and American families nationwide in real jeopardy of losing connectivity.

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The Universal Service Fund (USF) is a decades-old telecommunications subsidy program managed by the Federal Communications Commission (FCC). USF serves populations in need through four mechanisms:

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• High-cost support (or the Connect America Fund)
• Low-income support (or Lifeline)
• Schools and libraries support (or E-rate) 
• Rural health care

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USF provides financial support to assist a public library in providing internet access to students trying to complete assignments, or how a rural healthcare provider delivers telehealth services to veterans and the elderly. However, not only is the longstanding USF program facing questions about its survival—it’s also a flashpoint for constitutional lawyers’ debate over how much power federal agencies across the government can delegate with or without congressional approval.

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At issue is whether the FCC legally delegated authority to the Universal Service Administrative Company, a non-profit entity, to administer the program. In short: is the USF constitutional? Consumers’ Research, a conservative nonprofit, says no. But many industry and public interest groups—including the Schools, Health & Libraries Broadband (SHLB) Coalition, Benton Institute for Broadband & Society, MediaJustice and National Digital Inclusion Alliance, parties to the case—say yes and affirm its necessity for digital opportunity. 

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At the Glen Echo Group, we’re lucky to work with some of the brightest minds across the broadband ecosystem. While we note that oral arguments don’t always reflect the outcome of a case, we asked our partners for their takes following oral arguments and their projections for the future of USF: 

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• Chief Justice Roberts and Justices Kavanaugh and Coney Barrett are likely to be the deciding votes on the case. How did you interpret their questioning during oral arguments? Did anything surprise you?‍
  
  • “I think their questioning indicated an openness to finding that USF is constitutional, in line with the 6th and 11th Circuit decisions. Going into the argument, I think folks that have been following this expected these three justices to be skeptical of the claims by Consumers’ Research, but it was a bit surprising at how skeptical they found the claims.” – Greg Guice, Chief Policy Officer, Vernonburg Group
  • “I was surprised by how much time the Justices devoted to this case, spending nearly three hours questioning attorneys for both sides. The court spent a lot of time pushing on whether or not Congress set appropriate limits and guardrails on the USF. The Justices expressed increasing skepticism of Consumers’ Research’s core argument that the current limits and guardrails weren’t sufficient. They seemed to express some surprise that Consumers’ Research wanted the entire program invalidated while also conceding that their challenge could be defeated by Congress simply adding a dollar amount limit to the statute.” – Raza Panjwani, Senior Policy Counsel, Open Technology Institute at New America

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• What did you find to be the most compelling argument by the U.S. government? By Consumers’ Research?
  
  • “The public interest and industry groups represented at the oral argument appeared to have convinced at least several of the swing Justices that Congress set effective boundaries for the FCC to use in administering the USF. Several of the Justices seemed to understand how important the USF programs are for Americans who would otherwise have little or no access to the internet.” – Andrew Schwartzmann, Counsel for the Benton Institute, MediaJustice and National Digital Inclusion Alliance in the litigation
  • “The government and intervenors excellently laid bare the superficiality of the argument against USF. They highlighted the FCC’s long history of establishing universal service policies dating back to 1934; its role in setting up the precursor to the modern USF in the 1980s after the break-up of AT&T; and the practical limits set by Congress in the 1996 Telecommunications Act. Compelling points raised by the government and intervenors included that the size of the USF has remained steady in recent years, demonstrating that the FCC has operated the USF within limits set by Congress; and that Congress has authorized similar fee-collections by other agencies with descriptive limits rather than strict dollar limits (such as the National Parks Service entrance fee and special use permit programs).” – Raza Panjwani, Senior Policy Counsel, Open Technology Institute at New America

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• Do you predict the Court will uphold the USF’s current framework? Why or why not? 
  
  • “Based on the oral argument, we are cautiously optimistic that the current framework of the USF will be upheld. It seems likely that the Court will uphold the USF framework. If so, we won’t have to start from scratch in making the changes necessary to adapt the USF to meet the future needs of schools, libraries, health care providers and rural and Tribal area residents.” – Andrew Schwartzmann, Counsel for the Benton Institute, MediaJustice and National Digital Inclusion Alliance in the litigation
  • “USF has for thirty years worked to close the digital divide around the country. This includes over 50 million K-12 students in this country who attend schools that receive E-Rate support. SHLB’s hope is that the Supreme Court will find the fund constitutional and that Congress and the Commission can return to the hard work of ensuring the fund is predictable, sustainable and successful in the long run.” – Joey Wender, Executive Director, SHLB Coalition

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• With Commerce Secretary Lutnick simultaneously pursuing changes to BEAD, what are the implications for future USF and federal broadband programs?
  
  • “USF remains relevant as part of our nation's policy arsenal for addressing the digital divide separate and apart from the BEAD program’s efforts. I think the BEAD program can help inform reforms to USF, but it is not a replacement as there are parts of the digital divide, like affordability and network maintenance and upgrading, that we will need to continue to invest in long after the BEAD funding has run out.” – Greg Guice, Chief Policy Officer, Vernonburg Group
  • “While BEAD is poised to address our rural broadband access issues, it won’t unlock its full potential if communities can't afford service. Whether Sec. Lutnick chooses to significantly redistribute funds away from fiber and toward LEO service—or if the modifications are more marginal—affordability will remain a chief impediment to rural broadband access. If the Senate picks up where the USF Working Group left off last Congress and, depending on the outcome of the Supreme Court case, moves to reform or reconstitute the program, it would be wise to incorporate the lessons of the Affordable Connectivity Program (ACP) into the USF. A more robust Lifeline benefit, modeled after the now-expired ACP, could help stimulate demand in BEAD’s newly connected markets—where the difference between five and seven subscribers per mile can make or break a business.” – Nat Purser, Government Affairs Policy Advocate, Public Knowledge

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If the Court strikes down the program, it’ll be up to Congress to legislate how to fix it—something even Justice Alito admitted would be “even more difficult right now than it has been at times in the past.” In the meantime, millions of Americans will be placed on the wrong side of the digital divide—including students, elderly, veterans, job seekers and low-income families—while needlessly damaging the U.S. economy and technological competitiveness.

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If the Court rules to uphold the USF’s framework, it’s nearly universally agreed upon across the industry that the program’s funding mechanism is still outdated and unsustainable. Industry, public interest and Congress (including the bipartisan USF Working Group) have been closely watching and waiting for the Court’s ruling on this case. However, proposals for how exactly to reform the program are highly contested, including: 

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• Assessing broadband internet access services, or BIAS
• Assessing Big Tech companies
• Making USF subject to congressional appropriations

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There are many other creative suggestions on the table, including assessing digital ad revenue, cloud services or even online gambling. Additionally, with the lapse in funding for the Affordable Connectivity Program (ACP) last year, advocates have also called for folding the program into USF and therefore reservicing over 23 million households who benefited from ACP before its expiration.

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‍As we’ve written before, universal service is a necessity that benefits all Americans, not a nice-to-have, in today’s digital world. Glen Echo will be keeping a close watch as we wait for the Court to issue its decision this spring. In the meantime, stay connected with us for insights on what this means for the broadband ecosystem and American consumers.