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Sen. John Thune criticizes FCC for lack of investment in Universal Service Fund

Senate Commerce Committee Chairman John Thune, R-S.D., heavily criticized the Federal Communications Commission over a funding shortfall for a program that subsidizes rural broadband deployment.

"It's been more than a year since they [FCC Chairman Ajit Pai and commissioners] sat before the committee and committed to conducting thorough economic analysis of the impact of USF [Universal Service Fund] funding cuts on broadband deployment in rural areas before allowing any further reduction in the percentage of cost recovery for high-cost areas," Thune said during an Oct. 4 hearing on the topic. "Since that time, however, the cuts resulting from the FCC’s budget control mechanism have increased by almost 25 percent. There's been no economic analysis of what these cuts are doing to rural America, what they're doing to rural jobs, rural economic development."

The Universal Service Fund was created to promote universal access to telecommunications services in rural, insular and low-income areas. It is paid for through contributions from telecommunications carriers, voice over IP providers and cable companies.

In 2016, the FCC imposed a strict budget control mechanism over a portion of the universal service high-cost fund. When support is expected to exceed a total of $2 billion in any given year, the control mechanism kicks in to reduce carriers' quarterly disbursements. From June 2017 to July 2018, the budget control mechanism reduced legacy rate-of-return carrier support by about $180 million, a 13% reduction. To address this issue, the FCC in 2018 allocated $180 million to carriers as a stop-gap measure to avert budget cuts for the current funding year.

"The FCC has not conducted an analysis of what insufficient and unpredictable funding is doing to the companies trying to deploy broadband under some of the most difficult circumstances in America," added Thune. "This is simply unacceptable."

In March, the commission began a proceeding to examine the budget control mechanism and other potential changes to the USF fund.