The recent decision by the Fifth Circuit to declare the Universal Service Fund (USF) fee unconstitutional marks a pivotal moment in the ongoing debate over how best to ensure widespread access to telecommunications and broadband services. This ruling, which creates a split among the federal circuits, signals a potential Supreme Court review and opens the door for a much-needed reevaluation of how we fund and expand our nation’s digital infrastructure.
The Universal Service Fund was initially established to provide telephone service to remote areas, but its scope later expanded to include internet access. The Telecommunications Act of 1996 empowered the Federal Communications Commission (FCC) to set the USF rate, which was subsequently delegated to the Universal Service Administrative Company (USAC). The Fifth Circuit's ruling in Consumers Research v. Federal Communications Commission deemed this "double delegation" unconstitutional, asserting that such power should not rest with a private entity.
This decision underscores a fundamental principle: the power to tax and set rates must remain transparent and accountable, adhering strictly to the constitutional framework. MSPC echoes the sentiments of the Fifth Circuit's majority, advocating for a market-driven approach where efficiency, innovation, and growth are prioritized over bureaucratic control.
The majority opinion clearly stated that allowing the Universal Fee Setting to stand would mean "American telecommunications consumers are subject to a multibillion-dollar tax nobody voted for."
One powerful analogy from the majority decision noted:
"Congress could not say: 'The defense budget is whatever Lockheed Martin wants it to be, unless Congress intervenes to revise it.' To make law, Congress must affirmatively adopt the statutory text, pass it bicamerally, and present it to the President for signature."
As the Supreme Court prepares to potentially review the constitutionality of the USF fee, there is an opportunity to reinforce the principles of limited government and free market economics. The Court’s recent trend of reining in agency powers suggests a move towards greater accountability and a reduction in unwarranted delegation of authority. This aligns with our belief that the market, rather than bureaucratic entities, should drive these decisions.