Is Universal Service At Risk?

In Consumers' Research v. FCC, the Universal Service Fund (USF) is under legal and constitutional attack in the Fifth Circuit. A decision striking the USF would have wide-ranging impacts on the telecommunications industry and the various beneficiaries, such as consumers in high-cost areas, low-income households, schools, libraries, and rural healthcare providers. That outcome, while unlikely, is still possible.

The case involves the core funding mechanisms for the FCC's Universal Service Fund. The challengers argue that Section 254 of the Communications Act, the statute governing the USF, unconstitutionally delegates legislative and/or taxing authority to the FCC. They also attack the Universal Service Administrative Company (USAC), arguing that the FCC's use of USAC to administer the fund is an impermissible delegation of regulatory authority to a private entity.