NTCA study warns consumer bills will 'skyrocket' without USF

NTCA–The Rural Broadband Association is releasing today the results of a survey it conducted of members on how the potential disruption of Universal Service Fund (USF) support could affect rural consumers, broadband investment in rural America, and the viability of existing rural broadband networks.

The survey was conducted in August 2024 following a July decision by the U.S. Court of Appeals for the Fifth Circuit finding the system for contributions to the federal USF unconstitutional and remanding the matter to the FCC. More than 200 broadband provider members of NTCA from 35 states responded to the survey, which sought to estimate what the loss of such support could mean for rural consumers and the continuing advancement and sustainability of broadband networks that serve them.

As background, NTCA members are based in and serve the most rural parts of the United States. Despite having on average fewer than 30 employees, these small businesses have led the charge to close the digital divide in deeply rural America, with nearly 84% of the customers in their historical serving areas on average being connected by fiber and able to receive at least 100 Mbps service (up from 58% and 57%, respectively, in 2018); more than 67% of their customers on average can receive Gigabit level service (up from 23% in 2018).

But, in the vast majority of cases, these networks were not paid for by grants—many of them were built before the flood of grant programs launched in recent years. Instead, these networks historically were built leveraging a mix of each provider’s own private capital and loans from entities like the Rural Utilities Service under the U.S. Department of Agriculture and other mission-based and cooperative lenders. In turn, ongoing federal USF support has been critical to: (1) help make the business case for such investments; (2) cover the higher operating expenses associated with delivering services in sparsely populated rural markets; and (3) enable the recovery and repayment of capital without needing to charge rural Americans far more than the average urban user would pay.

Although the Fifth Circuit's decision has no immediate impact on federal USF support pending Supreme Court review, and while NTCA is hopeful that the Supreme Court will overrule the Fifth Circuit consistent with its precedent and the decisions of other federal circuit courts, this most recent survey conducted by NTCA examines potential impacts on the mission of universal service if further judicial proceedings were to disrupt the collection of USF contributions. The survey’s key findings are:

If USF support were eliminated, rural Americans' broadband rates could skyrocket.

If USF support were eliminated, broadband network investments could drop significantly in the coming years.

If USF support were eliminated, there is substantial potential for default on outstanding network construction loans, including many held by the federal government.

The exact impact on any rural provider or any rural community would of course differ depending on how a provider tried to address the loss of USF support in the wake of an adverse court decision. The survey results overall, however, underscore that rural Americans ultimately will pay the price through a mix of materially higher broadband rates and materially worse broadband access, and that the negative ripple effects of such a ruling would also affect providers, capital markets, and even the federal budget.

Read the full press release here.

NTCA