Broadband Breakfast on October 19, 2022 – Taxing Broadband Grants: Can it be Changed?

WASHINGTON, October 12, 2022 – A Broadband Breakfast event panelist doubled down last week on her call for the Federal Communications Commission to unilaterally expand contributions to the Universal Service Fund, despite the commission deciding this summer that any such change should come at the direction of Congress.

Carol Mattey, founder of Mattey Consulting LLC and publisher of a report last year calling for the USF contribution base to be expanded to include broadband revenues, said on the panel last Wednesday that the FCC has the statutory authority to transform the basic telecommunications fund from relying on declining voice services revenues.

In a report to Congress in August, the FCC said any change to the USF would have to come from legislative authority, arguing that there is “significant ambiguity in the record regarding the scope of the Commission’s existing authority to broaden the base of contributors.”

But Mattey – who previously said that the FCC should move on its own – argued that Congress would be too slow to act and described her perspective as “pragmatic,” arguing the FCC shouldn’t “wait for Congress to sort through these complex issues.”

The USF, which originated in 1997, subsidizes telecommunications projects across the country and is funded by voice-based services – costs which are generally passed on to the consumer. But those costs are increasing relative to the voice revenues from which they are derived, as fewer Americans take-up those services.

To rectify this imbalance, industry players have proposed a variety of new funding sources, including direct taxation, digital advertising revenue and broadband service contributions.

Roslyn Layton

Roslyn Layton, senior vice president of Strand Consult, proposed having big technology companies that rely on broadband to contribute to the fund. She said the vast majority of bandwidth is taken up by video streaming, an activity which – along with other services hosted by tech platforms – depends on large investments in middle-mile networks from broadband companies. Such reform of the USF would require congressional action, Layton conceded.

Angie Kronenberg, chief advocate and general counsel at industry trade group INCOMPAS, argued against funding the USF with dollars from Big Tech. She argued Layton’s proposals would be less “predictable and sufficient and transparent” than a simple tax on broadband service.

“We think doing it once, and at the [broadband-service level,] is the most efficient, effective way to do this,” said Kronenberg. “No matter how Angie Kronenberg – the consumer – wants to use my broadband, I’d much prefer to pay it one time than to pay it potentially for every click of whatever it is I’m going to do.”

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Wednesday, October 5, 2022, 12 Noon ET – How to Reform the Universal Service Fund

The Universal Service Fund has been struggling to fund its programs promoting broadband connectivity across the country. Several policy experts have suggested fundamental changes to the structure of USF’s funding mechanisms to revitalize the program. Should the Federal Communications Commission broaden the program’s jurisdiction to include broadband revenues? Can the mission of USF survive without significant structural change?

Panelists:

Carol Mattey, Founder of Mattey Consulting LLC
Roslyn Layton, Senior Vice President of Strand Consult
Angie Kronenberg, Chief Advocate and General Counsel, INCOMPAS
Drew Clark (presenter and host), Editor and Publisher, Broadband Breakfast

Panelist resources:

Broadband Breakfast articles:

Economist Warns of Customer Losses if Broadband Revenues Find Way in Universal Service Fund, Broadband Breakfast, April 21, 2022
In FCC Proceeding, Multiple Groups Recommend New General Tax for Universal Service Fund, Broadband Breakfast, March 17, 2022
Policy Groups Want Bigger Contribution Base to Shore Up the Future of the Universal Service Fund, Broadband Breakfast, February 8, 2022
Advocates Call for Universal Service Fund to Include Broadband Revenues, Broadband Breakfast, November 29, 2021

INCOMPAS policy proposals:

Research:

Carol Mattey, founder of Mattey Consulting LLC, has over 30 years of experience as a senior executive in the U.S. government, consultant and lawyer focusing on communications public policy. From 2010 to 2017, Carol was Deputy Chief of the Wireline Competition Bureau at the Federal Communications Commission, focusing on the FCC’s ongoing initiatives to reform over $9 billion in annual federal spending known as the Universal Service Fund, which supports broadband connectivity for rural areas, schools, libraries, healthcare providers and low-income consumers. She led the development and implementation of the Connect America Fund to extend broadband to unserved areas in the United States.

Roslyn Layton, PhD, Senior Vice President of Strand Consult and Visiting Researcher at Aalborg University Copenhagen, is an international technology expert focused on the economics, security, and geopolitics of broadband internet technology. She has testified before the U.S. Congress on competition in wireless technologies, spectrum reform, the security advantages of 5G versus Wi-Fi, and the empirical and ethical case for fair cost recovery for broadband networks. She is also a senior contributor to Forbes, a Fellow of the National Security Institute at George Mason University, and a Senior Advisor to the Lincoln Policy Network.

Angie Kronenberg is the chief advocate and general counsel of INCOMPAS, the internet and competitive networks association. Angie manages INCOMPAS’ policy team and its work before the federal government.

Drew Clark (moderator) is CEO of Breakfast Media LLC, the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney. Under the American Recovery and Reinvestment Act of 2009, he served as head of the State Broadband Initiative in Illinois. Now, in light of the 2021 Infrastructure Investment and Jobs Act, attorney Clark helps fiber-based and wireless clients secure funding, identify markets, broker infrastructure and operate in the public right of way.