The high court had agreed last summer to review the Fifth Circuit Court’s decision that the USF’s contribution mechanism was unconstitutional. Friday’s ruling preserves the fund, which is intended to ensure effective telecommunications across America. It also includes E-rate, which provides billions of dollars each year for high-speed Internet access at schools and libraries.
In the majority opinion, justices indicated they “reverse the judgment of the Court of Appeals for the Fifth Circuit.”
“For nearly three decades, the work of Congress and the Commission in establishing universal service programs has led to a more fully connected country. And it has done so while leaving fully intact the separation of powers integral to our Constitution,” Justice Elena Kagan wrote.
Three conservative justices, Clarence Thomas, Samuel Alito and Neil Gorsuch dissented.
“But we can and should do better. When it comes to other aspects of the separation of powers, we have found manageable ways to honor the Constitution’s design. This one requires no less of us,” Gorsuch wrote for the dissenters.
The fund “is an essential tool in the connectivity toolbox, helping to ensure that every American can access affordable, reliable communications services,” National Digital Inclusion Alliance (NDIA) Executive Director Angela Siefer said in an emailed statement, listing those who benefit from the funding, including NDIA affiliates.
“It helps connect over 100,000 schools, 12,000 libraries, 54 million students, 16,000 rural health care providers and more than 7.5 million low-income households,” she said. “For decades, it has been a vital lifeline, helping low-income families, veterans and students get and stay connected to their doctors, classrooms, jobs, communities and loved ones.”
The Fifth Circuit Court of Appeals ruled in July 2024 that the USF was unconstitutional, after the organization Consumers’ Research sued the FCC. The Supreme Court said the organization claimed that universal service contributions “are taxes,” argued that Congress failed to impose a “definite or objective limit” on how much money the FCC can collect, and that the fund mechanism is unconstitutional, according to the court syllabus.
The fund, worth about $8 billion a year, helps keep telephone and broadband services affordable in rural and low-income communities. Telecommunications providers — including wireline and wireless carriers and interconnected voice over Internet protocol companies — pay into it based on their end-user revenues.
The concept of universal service dates to the 1934 Communications Act, which created the FCC and mandated that communications should be available to all. Congress expanded that with the Telecommunications Act of 1996, which directed the agency to formalize funding. Programming now includes E-rate, Rural Health Care, Lifeline and High Cost support.
Nonprofit organizations including the American Association for Public Broadband, the American Library Association and the Schools, Health and Libraries Broadband Coalition lauded the high court’s decision. Many groups filed briefs supporting continuing the USF and calling the funding critical.
CoBank and the National Rural Electric Cooperative Association joined other rural groups to file an amicus brief arguing that rural telecoms rely on the funding for broadband and phone services, which in turn enable telehealth in remote areas, modern agricultural technology and remote work. They said the funding can cover anywhere from 20 percent to 60 percent of telecom providers’ operating budgets.
