Effros: What If
Commentary by Steve Effros
What’s $8 billion among friends? That’s (sort of) just one of the questions floating around Washington these days as the Courts get involved in the massive realignment going on about how the federal government works, or doesn’t, as the case may be. This particular 8 Billion dollar issue has to do with the Universal Service Fund. That’s the money the FCC collects from voice telecom providers and doles out to improve telecommunications availability (now both telephone and broadband) in schools, low income, rural and high cost areas, libraries and the like.
The USF, as it’s known, has been around for almost three decades. It generally shows up as a line item, a percentage of the consumer bill based on interstate voice revenues. In other words, we all pay it. Sort of like a tax. And that’s the underlying Constitutional issue the Supreme Court is going to take up this Spring: is it legal for Congress to have delegated authority to an administrative agency a “tax setting like” power? That’s not supposed to be something the Executive Branch (which controls the agency) is empowered to do. That’s Congress’ job. Or at least that’s the argument the 5th Circuit Court of Appeals set up in this case. Two other Appeals Courts decisions said the FCC did have the constitutional authority to run the USF. The 5th, ultra-conservative Circuit, said no.
The original USF concept in 1997 was to help pay for rural telephone facility construction. That changed in 2011 when broadband was added and the scope of where help was needed was expanded. Since then the revenue for pure telecom providers has gone down and, as we all know, the broadband industry, both as to ISPs and major tech users (edge users) has vastly increased. Hence proposals have floated to have them pay into the USF pool as well. As you can imagine, the whole debate gets very heated, but there is also seeming bipartisan support for the critical nature of telecommunications access in poorer or more rural areas, and schools, especially after COVID. This is not an easy one to make a “political” guess on.
What would happen if the Supremes decided that Congress was not constitutionally allowed to delegate what amounts to a taxing authority? Well, no one really knows. To be sure, with Congress as non-functional as it is these days, a lot of folks would be concerned that critical telecom access would be limited. And that would only be the beginning of the confusion, since if the Supreme Court decided to reinvigorate the “nondelegation doctrine” it could affect all sorts of other agency actions throughout the government as well. It would be another major blow to the “administrative state.”
I’m going through all this because, whether we like it or not, telecommunications and the FCC seem to be at the forefront of a series of fights all heading to the Supreme Court. The “what if..” questions that result should the Court decide to construe the law in a new direction have wide implications across both the government and private sectors. Cases as diverse as this USF issue about taxing, libel law as it relates to news organizations, licensing decisions regarding “public” property such as the broadcast spectrum, all could be impacted by various cases wending their way through the courts.
In this particular case, the Supremes have asked the parties to comment on some specific questions that suggest they may choose to duck, at the moment, and not decide the “nondelegation” constitutional issue. They could turn back the case as “moot,” essentially not something that needed to yet be considered because of other aspects of the case. But we don’t know. The case will be argued before the Court a few weeks from now. The decision will come in the Fall.
Steve Effros was President of CATA for 23 years and is now an advisor and consultant to the cable industry. His views do not necessarily reflect the views of Cablefax.