Why A Key Federal Fund To Expand America’s Fast Internet Is In Danger

A key fund established by the United States government in the late 1990s to help pay for the expansion of fast Internet in the United States is in jeopardy, but not just from the cutting of cables, according to a new report.

the revenue pot available to the government’s Universal Services Fund to expand America’s broadband has dropped by about 63% since 2001, to about $ 29.6 billion, according to a new report by Mattey Consulting.

What’s more, that number is expected to drop to $ 22.9 billion in five years and continue to decline another 5% annually, unless something changes in the way the burgeoning telecommunications industry classifies its revenue in the digital age.

This chart shows what happened in the last decade, with revenue more than doubled in the telecommunications industry at $ 361.2 billion, but with the amount categorized as a telecommunications “contribution” to the Commission’s Universal Services Fund. Federal Communications that continues to decline.

A key fund for expanding Internet access is declining as telecommunications revenues rise.

Mattey Consulting

In other words, the funding mechanism to support the fund “is under significant pressure,” wrote Carol Mattey, author of the report.

Mattey, a former deputy director of the FCC Office of Telephone Lines Competition focused on the USF, attributed the decline in part to 20-year-old FCC rules that give companies significant leeway to rank revenue accordingly. that reduce USF commitments.

Mobile operators, specifically, have been “classifying most of their monthly service revenue as data, not voice,” Mattey wrote.

“While some may assume that the decline in the USF contribution base is due to a decline in long distance revenue or that many consumers cut off their landline voice service, in fact the most dramatic decline in revenue Retailers reported during this period has been for mobile services. “

Here’s the report’s breakdown into retail revenue declines since 2010.

Change the way income is classified.

Mattey Consulting

The changes in the fortunes of the USF come two decades since the passage of the Telecommunications Act of 1996, a law enacted under President Bill Clinton that not only opened the airwaves to more competition – and sources of revenue to private companies – but solidified the FCC’s USF as a way to pay for universal Internet access.

The pandemic highlighted America’s digital divide and the need to strengthen Internet access, not only in rural areas, but also to connect schools, hospitals and libraries with low-income households.

Watch: Opportunity in America Starts with Fixing the Internet, Says Social Investing Pioneer

The Biden administration’s plan to spent $ 1 trillion on infrastructure nationwide includes a vote to get Fast and affordable internet for everyone in the U.S.
TO PAVE,
-1.32%
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But without reforms to “stop the death spiral” of USF’s current “contribution methodology,” Mattey believes Congressional funding to expand broadband will eventually fall short.

“Even if Congress allocates additional funds to support the nation’s goal of achieving universal broadband,” the USF must have a stable financial base in order to support “critical institutions such as schools, libraries, and rural healthcare facilities” until well input the future.

Read: Should there be a ‘Netflix tax’ to return cable infrastructure to cities?

US stocks
SPX,
-0.57%

finished lower on Tuesday, with the Dow Jones Industrial Average
DJIA,
-0.84%

losing nearly 300 points, as investors grapple with elevated valuations and a backdrop in which the power of the fiscal and monetary stimulus unleashed during the pandemic may be waning.

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