Reforming funding of universal access to telecommunications and broadband services: Approaches for the new decade

Abstract

The FCC universal service support fund's revenue base has been shrinking while the payouts have risen. As a result, the contribution factor, an ad valorem tax on the revenue base, rose from 16.7% in 2017 to 21.2% in 2020. We propose two solutions to the funding problem: A near-term funding reform proposal that widens the revenue base by replacing the current definition of assessable services (interstate and international) with a more inclusive definition of all communication services that have a telecommunications component. A longer-term strategy is to expand the revenue base to include basic utility network revenues. This proposal assumes that it is cost effective to develop one physical broadband network (landline and wireless) in high-cost areas and use the latest software-defined technologies to allow utilities to either split the physical network's functionalities into independent or cooperative virtual networks.