The fate of the $8 billion Universal Service Fund (USF) now lies in the hands of the Supreme Court, which has the power to determine whether the subsidy program is unconstitutional.
The Court on Friday agreed to hear an appeal of the Fifth Circuit’s ruling that the Federal Communications Commission’s (FCC) method of funding the USF is unconstitutional.
The legality issue concerns the FCC’s choice to delegate the administration of USF programs (Connect America Fund, Lifeline, E-Rate and Rural Health Care) to a private third party – the Universal Service Administrative Company (USAC).
The Sixth and Eleventh Circuits have already ruled to uphold the constitutionality of the USF’s current funding mechanism. New Street Research policy analyst Blair Levin thinks the Supreme Court will side with their decision, but the outcome is “far from certain.”
We probably won’t know the Supreme Court’s decision until June 2025. But one key factor weighing on the USF’s future is Elon Musk’s influence on telecom policy.
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