Rosenworcel Open to Carr's USF Proposal

FCC acting Chairwoman Jessica Rosenworcel welcomed Commissioner Brendan Carr’s proposal to make Big Tech pay into USF (see 2105240037). The idea is “intriguing,” Rosenworcel said in a statement to us Friday, and the commission “should be open to new ideas.” The funding mechanism is “hopelessly outdated” and the program is “on the verge of collapse,” Carr wrote last week. Under his proposal, Congress would pass legislation that “ensures Big Tech contributes an equitable amount” to USF, he said. Rosenworcel agreed it’s “clear that this would require action from Congress.”

Carr has been speaking with other members of the Federal-State Joint Board on Universal Service about his proposal, he said. South Dakota Public Utilities Commission Chairman Chris Nelson, who sits on the Joint-Board, gave Carr “great credit for acknowledging that the current Universal Service Funding mechanism isn’t sustainable or fair and his willingness to look for a solution.” Other members of the Joint Board didn’t comment Tuesday.

The Universal Service Administrative Co. projected the lowest quarterly revenue in USF’s history for Q3. The contribution factor is projected to decrease from 33.4% during Q2 to 31.8%, “mainly because of the large decrease in demand,” emailed analyst Billy Jack Gregg. Gregg said projected revenue for the four quarters ending Q3 is $3.16 billion less than the year-ago period.

“Finally, somebody said what needed to be said and said it clearly,” said Internet Innovation Alliance co-Chair Kim Keenan. Congressional funding isn't a long-term solution, Keenan said, and having Big Tech contribute to USF is “something that's worthy of being considered” by the FCC. Carr was a “clarion call” for action, she said. It makes sense for Rosenworcel to be open to the idea, Keenan said. “I think she understands how important it is to get this right,” she said. “It's not something that requires mass change.”

"Anything that would put [USF] on a stable, and hopefully an expanding contribution base, would be very advantageous," Gregg said: Congressional appropriations would be more problematic because it's "always subject to politics as opposed to a mechanism that operates on its own by something that presumably would be agnostic, like the number of connections."

Carr is “highlighting the urgent need to address the meltdown of the current subsidy program for low-income Americans,” said AT&T Executive Vice President-Federal Regulatory Relations Joan Marsh. AT&T has backed direct congressional appropriations in the past, Marsh said, and welcomes the proposal to broaden the contribution base to “include companies that benefit directly from broadband networks.” Verizon didn’t comment. T-Mobile declined to comment.

The Rural Wireless Association thinks “it's far past time to modernize the contribution methodology,” said General Counsel Carri Bennet. “Allowing Big Tech to skate by, burden free on the backs of those delivering the content, needs to come to an end.” Facebook, Google and Netflix didn't comment Tuesday. The Internet Association didn't comment now; it previously told us it hopes the FCC doesn't “punish innovative, high-quality streaming services.”

Others were unpersuaded. The National Taxpayers Union said it's the “wrong approach to take” and direct appropriations would be “more straightforward.”