The Supreme Court said it will review the fifth circuit court's decision that deemed the Universal Service Fund (USF) unconstitutional. But the USF still faces a 'bigger existential threat,' says Blair Levin.
On Friday, the Supreme Court said it would review the Fifth Circuit Court's decision that deemed the Universal Service Fund (USF) unconstitutional.
The Fifth Circuit Court issued its decision in July, but the FCC and industry groups then filed petitions for a writ of certiorari with the Supreme Court, which the court has now granted.
The USF provides funding for certain broadband programs, managed by the FCC, to the tune of $8 billion per year. Those include High-Cost programs (like the Rural Digital Opportunity Fund, or RDOF), as well as Lifeline and E-Rate, for example. The USF is funded through an assessment on voice revenues, but Congress has been debating methods of contribution reform to sustain the program.
In a joint statement on Friday, three groups that filed petitions – NTCA, the Competitive Carriers Association (CCA) and USTelecom – expressed gratitude for the Supreme Court's decision granting certiorari:
"The Fifth Circuit's decision is contrary to Supreme Court precedent and the decision of several other circuit courts of appeals, and it threatens to undermine universal service programs that, for many decades, have served to promote the availability and affordability of critical communications services for millions of rural and low-income consumers, rural health care facilities, and schools and libraries across the nation," said the groups. "We look forward to presenting arguments in defense of the USF contribution mechanism as the case moves forward, and ultimately to dispelling the uncertainty that these challenges have created in furthering our nation's mission of universal service."
FCC Chairwoman Jessica Rosenworcel issued a supportive statement as well, calling the Fifth Circuit court's decision deeming the USF unconstitutional misguided: "I am pleased that the Supreme Court will review the Fifth Circuit's misguided decision," she said. "I am hopeful that the Supreme Court will overturn the decision that put this vital system at risk."
The Supreme Court is likely to rule on this matter in June 2025.
'Bigger existential threat'
However, even if the Supreme Court overturns the Fifth Circuit Court decision, the future of the USF is uncertain under the incoming Trump administration, says Blair Levin, policy analyst for New Street Research.
In a note published on Monday, November 25, Levin said he currently expects the Supreme Court to overturn the Fifth Circuit Court decision or – if not – that the Court will at least give time for the FCC and Congress to fix existing problems.
But Levin also indicates the USF could see a major overhaul if it is subjected to the whims of Elon Musk, who the incoming president has appointed as co-head of an invented agency called DOGE, or the Department of Government Efficiency, which aims to cut $500 billion in annual spending.
According to Levin, "the most important factor in telecom policy involves the question of how Elon Musk wishes to deploy his political capital with Trump and on X."
On the USF front, Musk, CEO of SpaceX, which operates the low-Earth orbit (LEO) satellite service Starlink, may "logically regard the majority of USF funding (the high-cost fund designed to stimulate deployment in low-density areas) as supporting the overbuilding of his Starlink service," says Levin. Indeed, both Musk and Trump have taken issue with the federal government spending billions of dollars to deploy fixed broadband infrastructure through the Broadband Equity Access and Deployment (BEAD) program.
Thus, Levin said of Musk, "he may suggest that the government reverse its position on the lawsuit, concede to the petitioners, and move forward with a materially weakened and narrowed USF program."
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