If you’re an eagle eyed reader of your monthly phone statement, you’ll recognize the Universal Service Fund (USF) charge among the various government taxes and fees. Congress created USF in 1996 as a dedicated revenue source to connect hard to reach areas in the United States so everyone could have access to reliable telephone service. 

Today the fund focuses on broadband connectivity (more on that in a moment), but with cracks in the 25-year-old program starting to show, now is the time to put USF on sound footing.

The reality: USF is currently on an unsustainable financial path, funded by a regressive surcharge on a shrinking base of telephone customers. If it isn’t fixed, and fixed quickly, the fund won’t be able to meet its mandate and fulfill its connectivity promise – not just to the next generation, but to the current one. 

Let’s back up. USF started with a small fee on the phone portion of every customer’s bill. That worked well enough for a decade until ubiquitous phone service gave way to the high-speed internet that revolutionized communications and transformed our lives. 

As USF evolved into a program to increase broadband connectivity for homes in high-cost rural areas, for low-income consumers, and for schools, libraries and healthcare providers, the funding mechanism stayed the same – a fee on a rapidly shrinking base of telephone-only customers.

To keep USF solvent for these essential universal service programs the fee or "contribution factor" applied on phone service is rising. From five percent of a monthly telephone bill in 1996…to 10 percent in 2005…to 20 percent in 2018. 

In fact, the factor crossed the 30 percent threshold in the first quarter of 2021, increased again to 33 percent in the second quarter and is on pace to hit 40 percent by the end of this year. The problem is accelerating – not going away.  

In the face of our current pandemic, Washington, to its credit, has increased funding for broadband affordability and access. In December, Congress passed the Emergency Broadband Benefit Program, $3.2 billion to provide up to $50 a month ($75 on tribal lands) for broadband service and $100 for a connected device. President Biden recently signed a plan providing more than $7 billion to expand connectivity for at home learning.

That’s a welcome start, but that money will run out. And soon. If only half of eligible households take advantage of the emergency benefit, it will cost about $800 million a month and be exhausted in six months or less.

So how do we fix USF? 

First, Congress should provide more direct and sustainable funding. The FCC just raised more than $80 billion in a blockbuster auction of airwave rights that will carry 5G and other next generation connectivity. Congress should direct a significant portion of that money to universal broadband service or make direct appropriations to shore-up the fund.

Another option – one that should be explored even if Congress appropriates additional funds: broaden the base of USF contributors beyond the shrinking pool of telephone customers to include other players in the internet ecosystem. If Congress doesn’t appropriate funds, then it’s almost a certainty USF will implode absent structural reform. Congress needs to pass legislation – with guidance on how to expand the base – directing the FCC to reform USF.

Congress should also consider whether some of the largest of our nation’s technology, streaming and internet platforms, which don’t currently support our shared networks (but couldn’t have reached trillion dollar market caps without them), should contribute to the costs of ensuring universal connectivity.

A group of top tech and business CEOs recently called on Congress to promote broadband deployment and connect all communities in America. Right on. But it’s time for actions and dollars to meet words. 

Because of access issues or affordability challenges that predate, but were put in sharp relief by the pandemic, our country must step up to connect everyone. Everywhere. This starts with a plan to more broadly share responsibility for universal service. 

We can debate who should ultimately contribute to USF (and how much), but there’s no denying: the system needs fundamental fixing. If we are to build back better, universal broadband access and affordability are nothing short of foundational. Congress and the FCC should meet this connectivity moment and set the country (and USF) on a better path.

Jonathan Spalter is President and CEO of USTelecom – The Broadband Association.

How would you assess the success of legislation passed more than two decades ago to promote competition in the local telephone market? You might first ask what the purpose of the statute was and if, in the intervening 23 years, that goal was achieved.

This is precisely the question the FCC has teed up to consider in a draft item on the future of “unbundling and resale” rules enacted as part of the 1996 Telecom Act.

The current rules require incumbent local exchange carriers – regulatory speak for America’s facilities-based carriers – to unbundle and resell access to parts of their networks at below-market rates set by regulators. Congress devised these rules to break open the 1996-era marketplace when incumbent companies dominated the local telephone market.

Just writing ‘local telephone market’ feels strange given how far we have come, but that was the purpose of the 20 century unbundling rules.

So, has it succeeded? Yes.

Since the adoption of these mandates, there has been a precipitous decline in ILEC local voice subscriptions: 186 million in 2000 to about 35 million in 2018. Today, only 11 percent of U.S. households have an ILEC local voice line.

In fact, 60 percent of Americans have abandoned wireline voice service altogether. Of the remaining 40 percent, a majority get service from a non-ILEC, typically cable or voice over internet protocol.

Competition within the broadband market is also fiercely competitive. ILECs provide about 20 percent of high-speed residential broadband subscriptions, and the enterprise market is equally competitive.

Translation: competition has arrived – especially in urban markets and for business applications. (More on that later).

So why does this matter?

Because the FCC is seeking comment on whether network sharing rules that apply exclusively to ILECs still belong on the books.

Defending the status quo are competitive local exchange carriers that buy the unbundled network elements from incumbent providers at government-set rates – even in areas where other providers have deployed networks actively competing with ILECs (and without a government handout).

Two points about the FCC’s proposal to modernize the unbundling rules:

First, there is no rational argument in 2019 to subject incumbent wireline providers (who face stiff competition from a range of competitors and technologies) to outdated and intrusive rules that do not apply to other providers. These rules inhibit the transition to next generation networks by adding unnecessary costs and disincentivizing new competitive network deployment.

Remember, unbundling regulations were supposed to spur facilities-based competition (mission accomplished), not provide discount access rates to competitive carriers in perpetuity after competition arrived.

Second, and notwithstanding USTelecom members’ historic and enduring commitment to connectivity and fiber deployment in rural America (greater than any industry segment, by far), the FCC is proposing to update the rules in areas where ILECs are subject to competition from providers not dependent on unbundling subsidies. In short, no rural customers are at risk of losing service from the FCC’s reasonable proposal to bring unbundling requirements into the 21 century.

The FCC is proposing to limit relief to urban census blocks and to specifically exempt network elements used to provide residential broadband service in rural areas. Look it up, it is on page 16. This is important because, in urban areas, competition is especially fierce – more than 97 percent of urban housing units have access to cable broadband service in addition to a wireline internet service.

At USTelecom, we are all about building bridges to broadband with network infrastructure that has brought the power of connectivity to hospitals, schools and small businesses everywhere; that links the global digital economy; and sets the stage for 5G and other next generation technologies.

Maintaining price regulation on incumbent companies in areas already subject to competition will not speed this progress; it will do the opposite. For this FCC, modernizing regulations on behalf of consumers has always been a key mission, and the unbundling fix falls squarely under that rubric.

Everything has changed since 1996.

Real competition has arrived.

The marketplace is dynamic.

The consumer experience is leaps and bounds better.

Technology has transformed our lives and evolved again… and again.

Everything has changed. Everything but the 1996 rules.

It’s time those changed too.

Jonathan Spalter is president and CEO of USTelecom – The Broadband Association

"In spite of growing bipartisan momentum in Washington and among technology companies about the need to act, the absence of a single federal privacy policy has encouraged states and international governing bodies to fill the vacuum and effectively dictate how Americans operate online." -Jonathan Spalter, USTelecom

Whether or not Congress flips blue or remains red after the election, there is a purple issue the next Congress must immediately tackle. It is bipartisan, affects America’s global leadership, and is a priority for every consumer who uses the internet: digital privacy.

In our hyper-connected digital lives, consumers across the political spectrum expect and demand strong internet privacy protections. Internet users should be certain that sharing images, exchanging messages, visiting websites, engaging in commerce and sending sensitive data are the types of acts the entire internet ecosystem is obligated to respect and protect.

We agree.

America’s innovative broadband providers are united by the principle that digital privacy is sacred and government has a role in ensuring that consumers can both confidently use the internet and maintain their privacy to the degree that they are comfortable.

In spite of growing bipartisan momentum in Washington and among technology companies about the need to act, the absence of a single federal privacy policy has encouraged states and international governing bodies to fill the vacuum and effectively dictate how Americans operate online.

Unless Congress steps up on privacy, others are going to keep stepping in with well-meaning but counterproductive privacy plans.

The new California Consumer Privacy Act (CCPA), for example, gives consumers the right to prevent their personal information from being sold to third parties. This seemingly innocuous provision does not distinguish between sensitive and non-sensitive information and could impact how consumers receive online advertising or valuable discounts associated with store rewards programs.

The European Union’s General Data Protection Regulation (GDPR) includes a similarly expansive definition of personal information and makes consent to use or share information more difficult to obtain.

These first-mover laws have made constructive contributions to the privacy conversation and deserve credit for responding to mounting consumer concerns. But at the end of the day these patchwork approaches risk creating consumer “confusion” in the name of consumer “protection” and turns the EU, or a single state, into the de facto regulator of digital privacy in the United States.

Instead, all players in our internet economy should be working together to avoid further policy fragmentation and build on the strengths of existing approaches to develop our own comprehensive, unified privacy blueprint that puts consumers first, builds digital trust and applies to all companies interacting with individuals on the internet.

Congress should lead that effort by developing a framework with privacy principles that include: effective security, ample consumer choice and flexibility, and reliable notifications when breaches occur – also applied uniformly to all companies operating on the internet. This framework should have mechanisms that are interoperable with existing multinational privacy regimes.

We know the ones and zeroes of our digital infrastructure are neither red nor blue. From our largest global enterprises to our smallest digital entities, millions of consumers are counting on Congress – regardless of who wins the midterms – to come together to develop a pro-investment and pro-innovation privacy plan that delivers peace of mind to consumers.

Our companies are committed to doing our part to shore up digital trust and give Americans the confidence that no matter what platform, device or network they choose, guardrails will be in place to protect their digital privacy and support our growing and interdependent internet ecosystem.

Jonathan Spalter is the president and CEO of USTelecom, a telecommunications industry trade association representing broadband service providers, manufacturers and suppliers in the world of internet-based communications and entertainment.

USTelecom took the offensive in its blog on the July 12 Internet Day of Action, which organizers meant as a protest of the FCC's planned rollback of Title II.

USTelecom president Jonathan Spalter said the real issue in the net-neutrality protest was protecting the bottom lines of "large, powerful internet companies." Among the participants in the protest are Google, Twitter, Facebook, Netflix and Amazon, for example.

"Net neutrality is something we all strongly support, and ISPs are committed to modern rules that protect the universally-embraced principles of no blocking, no throttling and no slow lanes," said Spalter, the last a reference to the no paid prioritization rule. "From Amazon to Twitter to Netflix to, yes, even Pornhub [also an Action Day participant], these online giants want consumers to insist to the FCC that only 100 pages of heavy-handed regulations written in 1934 can 'save net neutrality.' These are the same companies that grew to supremacy in the absence of this heavy-handed framework, yet suddenly now they want consumers to believe it is essential."

Read More: Complete Internet Day of Action Coverage

ISPs have argued that Washington is hyper-focused on them as gatekeepers, while keeping a hands-off approach on edge providers as though they were still struggling garage-innovators, rather than behemoths with staggering valuations and market power.

"When you log on today and see the 'spinning wheel of doom,'" Spalter wrote [the protest includes online graphics simulating those endlessly spinning "load" icons], "keep in mind that some of the biggest and most dominant online companies in the world don’t need you to fight their battles for them, but they are asking anyway."

As with other ISP groups weighing in on Advocacy Day, USTelecom wants Congress to step in. Spalter said the solution to regulatory certainty is "clean, modern net-neutrality rules that safeguard consumers’ online freedoms without sacrificing their equally keen interest in stronger, faster broadband networks — and all the innovation it makes possible."

He said FCC chair Ajit Pai, in proposing to roll back Title II for wired and wireless ISPs and interconnections, eliminating the general conduct standard and rethinking the other rules, "should be commended for seeking that balance in his net-neutrality proceeding."

But Spalter also said Congress should "do right by all consumers to make these protections permanent under the law."

Related: Rep. Walden Advocates for Internet Bill

That is a tall order in a bitterly divided Congress, with some Democrats feeling that coming to the table is not a winning strategy on net neutrality or much else.

Jeremy Pederson has joined USTelecom as vice president of government affairs.

Pederson comes from Frontier Communications, where he was senior manager of federal legislative affairs.

Before that he was counsel to House Energy & Commerce Committee chairman Rep. Gus Bilirakis (R-Fla.). He also has a connection with a good man to know these days, having been a summer clerk to then FCC commissioner Ajit Pai, now chairman.

"He brings a trifecta of policy experience to our work," USTelecom CEO Jonathan Spalter said of Pederson.

USTelecom, which represents major telco ISPs, was rooting on FCC chair Ajit Pai's business data services (BDS) proposal, which deregulates rates for incumbent providers like USTelecom members AT&T and Verizon where there is competition.

Pai has said he thinks that comprises a lot of places. But the association was pushing even further, saying the item could have been even more deregulatory.

Pai has scheduled a vote on his proposal for April 20.

USTelecom execs, including group president, Jonathan Spalter, told Paiin an April 10 meeting that the proposal to "reduce" the FCC's "price setting role" was "relatively constrained," and pointed to the benefits of more broad price relief, including a finding that incumbent telecoms are no longer de facto dominant, according to an ex parte filing on the meeting.

USTelecom argued that the FCC data on BDS understates the current level of competition and that its competitive market test -- for price deregulation -- may be too conservative.

Critics of the BDS proposal argue that it is overestimating the competition and have called on the FCC to release the data on which markets meet the test or delay the vote.