The Future of Broadband: Revisiting Universal Service Fund Reform - Episode 603 of the Community Broadband Bits Podcast

Mike Romano (00:07):
The problem does come into how to pay for that. The current Universal Service Fund is paid for based upon assessments, largely upon legacy telecom services of which consumers are buying less and less today. There's just no room to roll into that and have that be sustainable.

Christopher Mitchell (00:22):
Welcome to another episode of the Community Broadband Bits podcast. I'm Christopher Mitchell at the Institute [00:00:30] for Local in St. Paul, Minnesota, where it is a bit rainy, but when you're listening to this, hopefully it's beautiful out. Mike Romano is our guest today, executive Vice President at NTCA, the Rural Broadband Association. Welcome,

Mike Romano (00:45):
Christopher. Thank you for having me. It is sunny and bright here for the first time in days, so I'm sorry you've got our rain, but look forward to catching up and talking up through a bunch of issues today.

Christopher Mitchell (00:54):
That sounds good. For people who are unfamiliar, NTCA [00:01:00] is not the Cable Association. You're one transposition of letters off from that and you represent a lot of the small incumbent telephone companies, a lot of the co-ops that I'm constantly talking about, family owned companies and that sort of thing.

Mike Romano (01:19):
Right, so we represented about 850 small rural broadband providers around the country. Historically, these were the incumbent telephone companies and obviously all have made the transition into the broadband world. [00:01:30] I think there were some of the early leaders there in part just because they live in the communities they serve. To your point about community-based providers, these are folks who live and breathe and sleep in the beds that they make. So the decisions they make with respect to networks lasts in their communities. It's the networks their kids are going to use, it's networks their schools are going to use, so it's vested in the communities they serve.

Christopher Mitchell (01:51):
Now, you have been vocal about a number of preferences around how we have an ongoing discount program for [00:02:00] Internet access. As we talk today, as we're recording this, the Affordable Connectivity Program is I think officially out of funds. We knew that this day was coming and your members have long been beneficiaries of universal service. I think my understanding the whole beginning of universal service was about making sure that we took the profits basically in urban areas and then spread it out to rural areas to make sure that everyone could have high quality telephone service. And [00:02:30] it feels like we are stuck in a situation of how to make sure that everyone can actually afford decent Internet access. And so we're going to talk today about some of the things that are on the table around not just USF reform, universal service reform, but more importantly I think some of the specific opportunities within that in terms of how to go about doing that. I will say that I did speak a few episodes ago, it could be a little longer with Greg Guice and Angela Siefer about [00:03:00] why this was important. I think this is going to be a little bit more about in the weeds of the details about how to do it, but if people are, this is the first time we've heard of Universal Service Fund reform, welcome. Start with that podcast and come back to this one.

Mike Romano (03:15):
Right, right. Yeah, universal service. I mean, I think just as a backdrop, and it's important to set the stage for this, right, so Universal service, the concept hasn't been around for a hundred years in a variety of ways. You're right, Chris. It started initially as how do we make sure we get rural America [00:03:30] connected to the telephone? And so what you had as much of small community-based providers pop up in areas that the MA Bell system left behind and the MA Bell system subsidize them essentially almost paid, I don't want to go there, so I will pay to help you go there instead. And so that was sort of the transfer that occurred, and it was more implicit. There were settlements and the like. Then we got into long distance charges that sort of achieved that same purpose and access charges. Starting around 1996, Congress set up the Universal Service Program, which was a more explicit mechanism aimed at doing.

(04:00):
[00:04:00] It really expanded to some degree it had been before, but really expanded into four areas, making sure rural America, low-income, Americans, schools, hospitals, and libraries and rural healthcare clinics were going to be able to get and stay connected. That's an important piece of the puzzle I think to talk about here too. And so over time, you had this, initially you had this mechanism that was set up to fund subsidized support all of these different purposes, and it has worked reasonably well. There are always quibbles about how [00:04:30] to do it and needs updating all the time too, but it's done a reasonably good job of achieving each of those objectives. But there's always this question about how do you pay for it right now it is paid for based largely upon the same system that was in place in 1997, which is assessing legacy telecommunication services.

(04:47):
That's not a good long-term proposition for hopefully some reasons we can get into here. But the Affordable Connectivity program is sort of the catalyst for a discussion right now about this because the Affordable Connectivity program, ACP was created [00:05:00] by Congress and it's really a compliment to, but there's a lot of the same things in many ways has the same sort of core universal service mission that USF does and especially the Lifeline program. And so now there's a debate around how do you pay for that? And that really, I think shines a spotlight back on how do you fund the entirety of the universal service mechanism. The ACP in many ways is a canary in the coal mine. It tells you what happens when you run a universal service style mission on the vagaries of an annual appropriations process. Congress [00:05:30] in 1996 wanted universal service to be predictable and sufficient, and the reason it set up a contribution mechanism to do that was because it knew, I think in many respects that appropriations were not the right way to achieve this mission. ACP has just proven that out, I think unfortunately. And now I think it becomes a question of how do you do the kinds of things that ACP highlighted need doing in connection with a broader question about universal service

Christopher Mitchell (05:54):
For people who they've heard the term and they've heard it more in terms of cultural [00:06:00] appropriation than money, I wanted to note that you can think of funds that come from the government can come from a variety of ways. One of the ways that a lot of things are spent, like for instance, spending on highways and things like that, is that every few years, Congress appropriates money. They set aside a bunch of money and that money is spent down, and when it runs out, it runs out. Another way that government sends money is through an executive agency like the Federal Communications Commission, which takes in money [00:06:30] through this fee that is imposed on certain older services. And then they're able to redistribute that. They don't need Congress to act to be able to keep the Universal Service Fund going. And that's what you're saying is that's what Congress envisioned then because they didn't want under a comparatively functioning Congress, they recognized the dangers of that.

(06:50):
One of the things that I think your members and certainly tribal ISPs that I work with and a variety of others that invest in rural areas, they recognize is that [00:07:00] if they're going to invest in a home, it's going to cost thousands of dollars and they need many years of revenue from that home to justify that investment or else they're going to be in financial trouble for their business. And that's whether they're a nonprofit or a for-profit or whatever, they need revenue. And if they have low-income families that they want to connect and that they don't know if that low-income family will be able to afford the connection in the future, it makes it much harder to justify borrowing money to build out these networks. So [00:07:30] this is where predictability really matters.

Mike Romano (07:33):
It does. It does. And I want to come back to your point about appropriations because I think I'm so glad you brought that up. That's a really important distinction. So you're right. There are several ways the government pays for things or helps to pay for things. One of them is Congress literally every year passes a law and sometimes doesn't a variety of bills, but sometimes in a single omnibus bill, a big bill that basically says, we're going to spend X amount of dollars for this year here, agency or whatever it is, do this. The Federal Universal [00:08:00] Service Fund is still a creation of Congress, a creature of Congress. Congress ultimately controls that fund. It's told the FCC specifically, here are the principles that guide how you should go about gathering this money, collect this money, here's who you should collect it from. Here's the type of purposes to which you should put the money.

(08:16):
Here are the bounds on which you can collect it. So it's still a creature of Congress, but it's not subject to that same every year needing a new vote from Congress to have it happen again. It basically, Congress puts those wheels in motion, sets the guardrails up, sets the intelligible [00:08:30] principles up, and then the FCC collects the money within that. So it's really important. And to your point now about the ongoing viability, I think part of the vision of this was you hear people say from time to time, when is universal service achieved? When is it done? Why do we keep needing this program? You need this program because universal service is an ongoing mission. Each and every day a customer has to make or each month has to make a decision whether to purchase broadband each and every month a provider has to figure out how to pay back a loan.

(09:00):
[00:09:00] It has to figure out how to charge the customer in the areas our members serve. We did a survey last fall, I think it was. We looked at it and said, if the Universal Service Fund went away, our members would have to charge customers on average over a hundred dollars a month more for broadband than they do right now in order to continue to provide service and repay the loans they've taken out to do that. So this is an ongoing mission. The ongoing mission of ACP or Lifeline, for example, is to make sure that each month a subscriber can continue to choose and keep the service they bought [00:09:30] without having to pay a rate that's unaffordable for it and therefore not in many cases being able to buy it at all. Right.

Christopher Mitchell (09:35):
This is where I want to say that. I will note that for those who want to write to me and say that good riddance, the ACP just gave incumbents a bunch of money for things that they weren't really doing. I am frustrated with the amount of money from the ACP that went to wireless companies who I feel like weren't really delivering the level of service that we would like to see that really make a difference for [00:10:00] kids doing homework, people having economic opportunities and stuff like that. A lot of the money went to a few cable companies that I'm frustrated with where we haven't moved toward a structural solution, but there will always be a need for subsidies in some of the areas that we're talking about. Like an hour north of Brainerd, you need to send a technician out to drive around 15 different lakes to get to a home. It's going to take a while. Those homes are always going to need some kind of subsidy and low income homes will probably need a subsidy on top of that in [00:10:30] order to make sure that there's an affordable service there. And so there is a need, even if in my world where we had a program that resulted in investment in networks that were, I think really focused on the subscribers first, we would still need something to address these issues in many rural areas.

Mike Romano (10:48):
That's right. I mean, the way I always think of it and try to explain it is you've got urban costs and you've got rural costs and rural costs are spread out across a much smaller subscriber base. So you've got more cost per [00:11:00] customer, which means you would charge more to the customer. So the high cost Universal Service Fund, that portion of the Universal Service Fund helps to essentially normalize, it puts rural and urban rates more reasonably comparable. It doesn't actually subsidize the rural rate down to the urban rate, but it gets at least closer. And then think of it as sort of nesting dolls or an umbrella atop that. You have low income programs like ACP like Lifeline that help to make sure that low income consumers, regardless of whether they're urban or rural, can buy the service at an affordable rate that [00:11:30] is discounted to what the average urban or rural user would pay.

(11:33):
So they work in concerts, they're not in conflict, they're not duplicative, they are complimentary and incredibly important for the reasons you described and something, look, we had issues with some of how ACP was executed, right? I mean, I'll give you an example that's pertinent to rural areas, particular you mentioned a couple issues you saw with it. I think one of the biggest issues we saw was in some rural areas, eligibility [00:12:00] was determined by the school district's participation in certain USDA school lunch programs. And what ended up happening was as a result of that, you had subscribers who without any real need, just by virtue of their kids attending a certain school, had the opportunity to take and did take ACP support. But I think that's one of the things that there's a legitimate debate to be had about how one might change ACP to make it better going forward, but that [00:12:30] is not a criticism of the program and the goals itself and frankly should be part of a discussion of calibration rather than elimination.

Christopher Mitchell (12:37):
Now, as we talk about rolling the ACP into Lifeline, there could be a future in Lifeline is that program, the FCC that focuses on low income families, but there could be a future in which a commission was to say, alright, we're just going to impose that fee on the telecommunication services that we have in the past, and we're just going to have an ACP [00:13:00] style program and it's going to be a 50% tax on business services and certain phone lines that use certain technologies or whatever. That's not a great idea, and I don't think many people want that to happen, but it is entirely foreseeable that that could happen.

Mike Romano (13:17):
I think the way to think about it's ACP really is it was set up as a creation of Congress and relation to growing out of pandemic related emergency broadband benefits. But in many respects, it essentially [00:13:30] is broadband Lifeline. I mean, at its core what it's, and so you could see a future in which there's Lifeline maybe for voice services with a $9.25 cents subsidy, which is what it provides today. And then there's an ACP like program for broadband services, which helps low income consumers get a higher subsidy or support level for broadband. That would be a perfect world. The problem does come into how to pay for that. The current Universal Service Fund is paid for, as you mentioned, based upon assessments largely upon legacy telecom services of which consumers are buying [00:14:00] less and less today. There's just no room to roll ACP into that and have that be sustainable because the contribution, the burden on those legacy services, many of whom the buyers of which are largely rural or more elderly populations, you basically are now sort of subsidizing your broadband future on the backs of the most vulnerable rate payers.

(14:20):
Right.

Christopher Mitchell (14:21):
And a small fraction of them at that. And that's one of the issues is that for people not aware without a dollar of the [00:14:30] Universal Service Fund today going to an ACP like program, we are unable to afford it arguably, right? I mean, it's like a 30% tax right now. I mean, there's been concerns that could hit 43%, but I think frankly, the mismanagement of RDOF has resulted in a lower I think fee than it was expected. But we could have been in a world in which is 35 to 40% fee on those services, which is it's already beyond the point at which we need a different solution. We need to what, this is the famous term, [00:15:00] broaden the base, right? So let's talk about how we do that.

Mike Romano (15:03):
Yeah, this is a political problem. It's a math problem. It's a political problem first and foremost. There's been some evolution of ideas on how to do this over time, but by and large, certainly for about 10 years, there hasn't been that much evolution in the thinking about how to do this. And the problem, this issue really has been on the horizon. I think people have seen since even a few decades ago, 2008, 2009, the contribution methodology, reform docket that the FCC has got to discuss these issues [00:15:30] is dated from 2006. So it knew it had an issue that it needed to sort of update. There's always been sort of a, well, we'll deal with this later, or it's not a big enough problem right now, or political figure pointing about, well, if we do X, that's going to gore somebody's ox over here, so we can't do that.

(15:46):
Let's do this and that in turn go somebody else's ox. But you're right, broadening the base is key. And I'll say for NTCA's perspective, we have really been in an all of the above camp so far because we think the more you broaden the base, the [00:16:00] less the impact is on any one of those people to whom fingers have been pointed, and it's a more stable base. You see less fluctuation, less sort of volatility in it. If you put all your rigs in one basket, inevitably the baskets can get holes. People are going to find ways to create holes in it to get out of paying the assessment. The more you broaden the base, the less incentive there is and less ability there is to do that and certainly would love a conversation, but the different levers you pull to actually get there,

Christopher Mitchell (16:25):
Right? One way, the natural way to broaden the base might be all telecommunication [00:16:30] services, including if people are now hearing the term bias, broadband Internet access service, which would mean that I as a home subscriber would have to pay some amount that is politically unpopular. I mean, I remember back in the late nineties already like, don't tax the Internet. You can't tax the Internet. And for the life of me, I don't understand why the Internet is special. We tax gasoline, which people need all over the place to move around. We tax all kinds of things and we use it hopefully in a wise way. For instance, we [00:17:00] tax gasoline in order to make sure that we have roads that are able to be driven on and things like that. So one of the things that I see is this idea that we should raise revenues by only taxing powerful monopolies like Facebook and Google and some of the big tech companies.

(17:18):
I think what you're saying is you're happy to see the base broadened, but you don't want to necessarily just, you're not going to pick sides necessarily to say, we should only use one. I'm with you. I will say that my only concern, and [00:17:30] I am a big fan of broadening the base very widely because then you have a lower tax amount on that each individual entity. But I would like to see it be simple. And so from my point of view, I would say all companies that have a certain amount of digital revenue that basically implicates just four companies or whatever, it's whatever. There's a broad cutoff. I don't want to see 10,000 businesses having to figure this out. I'd be happy to see all of the people who take telecommunication services with a simple tax and a simple tax for Facebook [00:18:00] and the other big companies, and then that would be my ideal. But I think you probably have a more nuanced reaction than let's go get those guys.

Mike Romano (18:07):
Well, yeah. No, absolutely right. And I think, again, if you put all your eggs into one basket of four big companies, those four big companies will ultimately find a way. It's like water finding cracks in the foundation. Ultimately they'll find a way to create seepage that then results in the factor having a problem again. So I think that's precisely the problem, and that's the incentive you want to avoid setting. And by the same token, if you just [00:18:30] assess consumers, I think you missed the boat on what I think should be a guiding principle of universal service, which is everybody that uses or benefits from the existence of these networks and services should contribute to their health and wellbeing, to their availability and affordability and sustainability. And so if you take it from that perspective, from that mantra, I think you get to a much broader group of folks who are not contributing today.

(18:54):
You get to broadband services. So our service providers, we recently looked at this and said, if you just [00:19:00] assessed included broadband services in the current base and you did it on a per connection basis, for example, you could charge 69 cents a month to the customer. And I think that's a reasonable rate. It's something that basically says you're going to be paying a couple cents a day for supporting universal service. No one's going to drop their a hundred meg service because they're getting a 69 cents charge. Again, that's just including broadband. But I do think that's not necessarily just the way to go. You should be bringing in larger tech companies. And by the way, I would just say that [00:19:30] the connections based charge, I think is also simple, right? It's a simple thing the customer can understand. A number of states have already done this in their universal service mechanisms.

(19:37):
If you use broadband revenues, that's how voice is already assessed today. You could do that too. Those are simple. If you assess edge providers, yes, you have to figure out the widget, right? The unit by which you assess them. But if you bring them in, you could push down even further how much burden's placed on the broadband consumer and share it with these other companies through digital advertising revenue and like, and there are a number of proposals that have been put forth [00:20:00] legislatively to do that in a relatively simple way and to make sure it doesn't track to the smallest innovator in the edge provider marketplace, the new company, it's really grabbing 10, 15, 20, whatever, it's the largest firms. And having them spread that again along with broadband users. So you're spreading it widely. And then the last one I'll mention is cloud service platforms. It's been unclear to the extent to which they've had to contribute in the past, honestly.

(20:26):
And that's sort of been used to potentially evade contribution obligations [00:20:30] as well. And so bringing them into, you could spread it even further still and you could assess it based upon connections or revenues. Again, at the end of the day, you can come up with a widget that is accessible and auditable, and that's the simple piece to it. And there's always going to be sort of arguments over debates over different pieces. But at the end of the day, there are three different buckets of users and beneficiaries who are not contributing today, who you could find widgets that are simple to make them contribute and ultimately spread that burden so widely [00:21:00] that no one party, no one entity, no one sector bears that burden disproportionately.

Christopher Mitchell (21:05):
My sense is that Chair Rosenworcel has drawn a line in the sand more or less, and presumably with the support of the other commissioners, although I don't know, which is that we should not impose this fee on broadband subscribers. And there's what I've seen of her statements, and I don't track it nearly as closely as you do, is that she was talking about multiple dollars per month being way too much. And you're saying that [00:21:30] it doesn't have to be that high, but I would say let's steelman it. And I would say that I would like to see a lower tax rate on low income families. However, our bills go up three to $5 per year, more or less on the regular. And this would at least be for a good cause. And so I don't at all support those who will say, well, we can watch as people have to pay more and more every year just because Comcast executives want a boost. And I'm not saying that's [00:22:00] the only reason why someone would raise prices, but for the cable companies, it does seem like that for the big ones. And I know that you and I may have philosophical differences, so you're not signing onto that. But nonetheless, the argument is that it is too much to put on a home.

Mike Romano (22:16):
Well, it is ironic that many of those who who've carved most loudly about the and expressed woe is the consumer based upon a US effort reform that assesses broadband or also those who included inflation charges on their bills during the pandemic, [00:22:30] right? I mean, somehow it was okay to do that, but a 69 cent charge or a couple dollars charge, my gosh, you're going to see consumers fleeing the broadband marketplace,

Christopher Mitchell (22:39):
Right? The Internet is no longer worthwhile to me,

Mike Romano (22:41):
Right? It rings disingenuously. But that being said, so let me come back to your point about chairwoman Rosenworcel because look, we were disappointed in the net neutrality order when she forego from assessing broadband because we thought that that would be a good step toward a broader mission.

Christopher Mitchell (22:56):
So let me explain that quick for people who might not be familiar. [00:23:00] And this is actually, I mean, this is not as hard as people might think if you're cringing right now, it's not hard to understand when the FCC basically changed the rules and made Internet access for homes a telecommunication service rather than an information service that gave the FCC wide ranging tools to do a lot of things that most people agree it shouldn't do. Some people disagree around the edges, but one of the things that the FCC has done is said, we will never use these tools [00:23:30] when it comes to Internet service and one of those, and that's called forbearance. One of the things that they did was they said that we will not impose a fee on the home for universal service, which I and you both thought was unnecessary and creates more problems to really solving this.

Mike Romano (23:46):
Right? And to be clear, they didn't say never. They said, look, we're not closing this door forever, but we're going to foray. We're going to hold back at this time from doing this assessment, which otherwise would've sort of kicked in because we want to study this more. As we noted, even [00:24:00] if it had kicked in, they would've had to study it more. It is not just like snap of fingers. All of a sudden the charge appears at the bottom bill. They would've had to implement it, which would've given them the time to do it. So they did not need to do this additional legal step of saying, we're definitely not going to do it for now. So that's snapshot. But to be fair, so chairwoman Rosenworcel has basically said, I mean, I think what she's essentially said is, I want Congress to tell me how to do this. I want them to tell me what their preference is and all of that. I don't think she needed to tie the hands quite so tightly on assessing broadband through forbearance. She could have simply said, we're not going to [00:24:30] assess this at this time while we study it. It would sure be helpful if Congress looked at this and came in,

Christopher Mitchell (24:34):
You could say, all options should be on the table. Why are we await Congress's direction? I don't think that that's the kind of leadership I would like to see, but that would've been a reasonable way to go forward.

Mike Romano (24:45):
We would've preferred that sort of the tone says a lot, right? The messaging says a lot, and I think that's one of the issues we stumbled over a bit here is what tone message that sends to Congress when you forebear like this. And especially because I think the forbearance cited, as you noted [00:25:00] these studies that said, well, it's $18 a month more increase in broadband fees if you do this right? And I don't know why that was cited candidly, because those studies, for example, the one that said that it could be $18 more a month was premised upon not assessing anybody who's assessed today and not assessing mobile broadband at all, only wired broadband. So to use that study as an example was I don't even understand why it was cited because it sets up a straw man that is so false, is [00:25:30] nothing the commissioner would ever do Another study put forward a few years ago said it was going to be more in the range, but $4 a line.

(25:36):
And that's because it was looking at revenues versus connections. So again, you choose a different widget, you get a different result slightly, but it's all in a range of more reasonable outcomes. I do think what the chairwoman has teed up though, and really now at this point of sort of forced, is Congress to step in and give direction to the commission about which way to go. And I think that's where, again, looking at this holistically is [00:26:00] so important. You've got some folks who are more inclined to say, well, I don't want to tax the Internet. That's what broadband is. Or other folks who say, well, tax the Internet is taxing big tech. The Internet, everything's the Internet is Netflix and Google and Amazon. So at the end of the day, you're going to have to find some way to bring all of these parties in and have them all as users and beneficiaries be subject to this assessment. Because if you do not, you're going to have a system that continues to crumble and you're going to have the networks that you want to see built being supported [00:26:30] by the networks of Y year that they're replacing, which makes no sense whatsoever. And it's not a long-term sustainable proposition. And for our members who are heavily reliant upon universal service to deliver broadband at an affordable rate on very high speed networks, that's not a very promising proposition and it makes it harder to keep investing in these networks going forward.

Christopher Mitchell (26:49):
My sense of it is one of, I feel like the commission really needs to act like an expert agency, move forward with a process. And as you noted, there is nothing [00:27:00] that stops Congress from saying, you know what? That's not what we intended. And so the commission can move forward, almost certainly would be a 12 month or multi-year process to really fully establish this. And at any point, Congress would be able to say, you know what? We want you to do it this way. And I am just get frustrated with someone who aspires to leadership and then says, I need someone else to tell me how to handle this when it's like, this is desperate. And so I would say that whether it's President Trump or President Biden [00:27:30] or some other president next year, I want to see a FCC chair that is going to deal with this. We've kicked the can enough. It's been many, many different administrations, and we need someone that's going to say, this is the priority. We're going to deal with it. And if Congress wants to do something different, okay, it's their prerogative.

Mike Romano (27:47):
What would be great is if in the wake of the net neutrality decision that we talked about in the wake of a future universal service report a few years ago that also largely said, boy, it'd be great if Congress could tell us some things. Ideally, I would love to see the [00:28:00] FCC now come forward and say, look, the hard part is, and again, this is part of what may be hanging up the chairwoman a little bit in the FCC a little bit is the FCC doesn't necessarily have authority to assess big tech edge providers right now. So it does need commerce to do that.

Christopher Mitchell (28:13):
Very

Mike Romano (28:13):
Good point. And there's a perspective that want to do this all at once. We want to tie this all together. If you only assess broadband, well, you'll never assess anybody else. And then you end up with a similar sort of one side gets more, right? So I can see the thinking behind that. So [00:28:30] ideally, given all of that, what I would say is next step from the FCC, what would be great is even if they don't want to necessarily proceed forward with implementing one regime where they assess one group of contributors, let's start that conversation and let's say, look, here's how we would do this with respect to broadband where we do have authority today. Here's the conversation about if we were to have authority to talk about big tech, how we might approach that going forward. And Congress could look that and say, boy, the FCC is signaling to me that they're ready [00:29:00] to do this.

(29:00):
Let me think about starting to give them the authority. And there are conversations in Congress now happening, the FCC pointed to that even in the net neutrality order to say, look, we know Congress is talking about this. We're going to hopefully see what they say. I think it's a symbiotic relationship. Congress also needs to hear from the FCC, this is sort of what I'm thinking, and if we could do this, maybe we can get the authority together to have that happen. So I think both sides need to be sort of giving each other messaging that we want to solve this problem. And if we can do that, I think there's some momentum, especially [00:29:30] in Congress right now on a bipartisan basis to fix this interest, to fix this. And that in turn to bring it full circle, could then help to fix ACP and provide us with the foundation we need to get that program back on track.

Christopher Mitchell (29:43):
One of the things that I want to note before we draw to a close is that a lot of this conversation I feel like could have taken part during any Congress, but this Congress, recent congresses, I would say, have not been very serious. And by that I don't [00:30:00] just mean that the wrong party is in power or something like that. I mean, so many of the funding decisions are what is called CRS or continuing resolutions. Congress by historic standards is not doing its job. And so I do want to note that this is a situation in which the FCC I think needs to show leadership and needs to figure out how to navigate in a time when we all wish Congress took more responsibility. There are those who would say that the more we take responsibilities out of Congress and solve them at the FCC [00:30:30] or at the Supreme Court, the easier it is for Congress to refuse to do its job. And I don't know how to handle that, but I want to give that argument credence. But I do want to say for people that there is a scenario in which in five or six years we're still arguing about this and we haven't moved forward, and I really want to avoid that happening.

Mike Romano (30:47):
Well, and let me introduce another externality that we haven't even talked about yet when you bring up the court system. So there is a challenge. There are challenges pending to the very constitutionality of the fccs universal service contribution mechanism. [00:31:00] They don't argue the FCC did something wrong necessarily, although they do as a side argument in the first instance, their argument is Congress did something wrong 28 years ago when it gave the FCC the authority to assess contributions at all, that it did not give the FCC sufficient guidance and guardrails when it came to that. Thus far, we've had three courts that have ruled that that's not the case. In fact, Congress did give the FCC adequate direction, and when it was giving that authority, one of those courts has agreed [00:31:30] to rehear that and the challengers. Meanwhile, I've asked the Supreme Court to basically take up review of the other two courts decisions that are standing.

(31:41):
So this could become very much in terms of Congress, a break glass in case of emergency moment. If a court were to rule that the FCC can't collect contributions because Congress could never give it that authority in the first place, Congress may very well have to step in at that point. So I think the work that Congress is doing now is really important. Again, I just hope [00:32:00] that we can make enough foundational work toward that, that if we do need to break glass in case emergency, the court case does go the wrong way. Congress is closer to ready to adopt fixes that would respond to the court case and allow these mechanisms to continue. Because I'll tell you, if the bottom falls out in universal service, you're going to have consumers paying hundreds of dollars more a month for service in rural areas. You're going to have certain rural areas where service is going to become unavailable because companies can't afford to continue to pay text to roll two hours around lakes to get to destinations, [00:32:30] what have you.

Christopher Mitchell (32:31):
It's even worse than that, I think. And so I might be about to step on a rake. I don't fully grasp this, but you can tell me because you're the right person here. Let's just say for a second that tomorrow a court throws out USF, and presumably it would do it in a way that says you have 90 days or six months to comply or something to recognize that you can't just do this overnight. But nonetheless, the way that the programs work for a lot of rural, I always think of CTC and UP in Minnesota here, [00:33:00] when they're getting support from the federal government, they get a check every month for some amount based on a variety of criteria that's well known, and they've gone out and borrowed money in order to be able to build a network that then they use that check each month, which is probably a transfer, I'm sure, to help pay back that loan. And if the federal government suddenly says, you know what? We're not allowed to write you checks anymore. Well, they still have a loan, and that bank that they got it from is [00:33:30] a bank that actually provides loans probably to a heck of a lot of infrastructure providers across the United States. It would be disastrous. And so this is something where you say Congress would have to act. You are not joking. This could be huge.

Mike Romano (33:45):
It could be, and I'll even double down on the irony here. The biggest bank probably in this space is the Department of Agriculture. So you've got basically now a ruling that puts at risk basically [00:34:00] the loan portfolio of certain borrowers within another federal agency. So it compounds as a problem because now you've got basically taxpayer backed loans that are at risk. So this is a real conundrum. We continue to hold out hope that we've seen court after court rule in favor of this, continue to see Congress on a bipartisan basis, express support for these programs. And we've seen good progress in Congress. And I understand this goes back to the point of the chairwoman [00:34:30] of the SEC looking to Congress. I think in part she's looking to Congress because she knows that they're already talking about it, and there's some potential ideas and momentum there. But yeah, this court cases could be the sort of flying the ointment all of a sudden that really changes things here and causes something to have to move even more quickly than anybody anticipates. And it could have spillover complications, consequences for providers, consumers, anchor institutions, schools. I mean, schools can be able to afford Internet [00:35:00] access if they don't get their E-Rate discounts. That could be a real problem.

Christopher Mitchell (35:04):
Yes. So hope that the courts continue to recognize that even though the ideology of the judges may change over 28 years, it is a bad idea to go back and to make these kinds of changes so rapidly. Well, Mike, I really appreciate you coming on and sharing not only your knowledge, but your enthusiasm. I always enjoy talking to you about these things, so thank you.

Mike Romano (35:29):
You as well. Thank you [00:35:30] for having me. Great to catch up and look forward to following your stuff going forward as well.

Ry Marcattilio (35:34):
We have transcripts for this and other podcasts available @communitynets.org/broadbandbits. Email us @podcastmuninetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow community nets.org, stories on Twitter, the handles at muni networks. Subscribe to this and other podcasts from ILSR, including Building Local Power, [00:36:00] local Energy Rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly [email protected]. While you're there, please take a moment to donate your support in any amount. Keeps us going. Thank you to Arnie Sby for the song Warm Duck Shuffle, licensed through creative comments.