The Universal Service Fund and Related FCC Broadband Programs: Overview and Considerations for Congress

Summary

Introduction

• promote the availability of quality services at just, reasonable, and affordable rates for all consumers;
• increase nationwide access to advanced telecommunications services (e.g., broadband);
• advance the availability of such services to all consumers, including those in low-income, rural, insular, and high-cost areas, at rates that are reasonably comparable to those charged in urban areas;
• increase access to telecommunications and advanced services in schools, libraries, and rural health care facilities; and
• provide equitable and nondiscriminatory contributions from all providers of telecommunications services to fund universal service programs.⁵

In July 2024, the U.S. Court of Appeals for the Fifth Circuit ruled the process for funding the USF is unconstitutional.⁹ This decision conflicts with decisions by the U.S. Courts of Appeals for the Sixth and Eleventh Circuits, both of which rejected similar claims.¹⁰ The U.S. Supreme Court heard oral arguments in the case, FCC v. Consumers' Research, on March 26, 2025. A decision is expected in summer 2025.¹¹

This report provides an overview of the FCC's USF and related programs, summarizes each program and its components, and provides possible congressional considerations. The report concludes with a summary and status of legislation related to the USF in the 119^th Congress.

Section 254 directs the FCC, in consultation with a Federal-State Joint Board on Universal Service, to consider the universal service principles outlined in the Communications Act when formulating USF policies and programs (e.g., affordable rates, rural access, education, public health and safety).¹² Under the principles, the FCC has established four programs with funding from the USF:

• the High Cost Program helps expand telephone and internet service coverage in underserved areas;
• the Lifeline Program supports affordable telephone and internet services for low-income subscribers;¹³
• the Schools and Libraries Program ("E-Rate") provides discounted internet service to schools and libraries; and
• the Rural Health Care (RHC) Program provides discounted telephone and internet services to rural health care providers.

Notes: Figures are rounded to the nearest dollar. Per the USAC 2024 Annual Report, "Authorized Disbursed Support" includes all funding approved for disbursement for the above calendar years, including funding approved but not yet disbursed.

The FCC has considered a number of proposals over the years to improve and update these programs to reflect the changing needs of beneficiaries and advances in technology. Additionally, policymakers have discussed options for maintaining the financial viability of the USF, for example, by expanding the types of entities that contribute to the fund.

In addition to the USF programs regulated by the FCC and administered by the USAC, the National Telecommunications and Information Administration (NTIA), an agency of the Department of Commerce, and the Rural Utilities Service (RUS), an agency of the Department of Agriculture, administer programs intended to promote broadband deployment, accessibility, and use. The focus of this report is the USF, but it references certain other related programs.

NTIA administers several federal broadband programs, including the Broadband Equity, Access, and Deployment (BEAD) Program and the Tribal Broadband Connectivity Program (TBCP).¹⁵ The Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) created the BEAD Program in November 2021. This $42.45 billion program is intended to expand high-speed internet access and use by funding planning, infrastructure deployment, and adoption programs in the United States and its territories.¹⁶ BEAD grants are aimed at establishing service in unserved and underserved locations, which overlaps with the goals of some USF programs.

The TBCP awards grants for broadband deployment and adoption on tribal lands.¹⁷ Congress appropriated $1 billion for the TBCP in the Consolidated Appropriations Act, 2021 (P.L. 116-260), and an additional $2 billion in the IIJA. Of this $3 billion, NTIA has awarded approximately $1.86 billion to 226 tribal entities as a result of the first round of awards.¹⁸ NTIA announced a "Round Two" notice of funding opportunity in July 2023 to distribute the remaining $980 million of the TBCP funding. The application window for this program closed on March 22, 2024. NTIA started to announce the second-round awards in November 2024.¹⁹

The Trump Administration has yet to begin disbursing funds for this program, with some stakeholders questioning whether funding will be disbursed in the future.²⁰ Others have questioned whether changes may be made before funding is disbursed.²¹

RUS provides financing for infrastructure improvements to rural communities, including broadband infrastructure. Some RUS programs are similar to the USF program: the Telecommunications Infrastructure Loan Program, the Rural Broadband Program, the Community Connect Grant Program, and the ReConnect Program.²² These programs are not generally considered duplicative of USF programs.

The FCC created the voluntary Enhanced A-CAM program to "distribute roughly $18.28 billion over 15 years to carriers to deploy broadband service with speeds of at least 100 Megabits per second [Mbps] downstream and 20 [Mbps] upstream (100/20 Mbps) to more than 700,000 locations, and to improve or maintain 100/20 Mbps broadband service at approximately 2 million locations, in 44 states."²⁸ The program began on January 1, 2024, and is to award between $1.27 billion to $1.33 billion annually. Enhanced A-CAM carriers have until December 31, 2028, to complete deployment.²⁹

The FCC has used data from the National Broadband Map³⁰ and the Broadband Funding Map³¹ to determine the areas eligible for Enhanced A-CAM support. The National Broadband Map is updated twice a year. For the purposes of the Enhanced A-CAM program, all challenges to broadband availability data in the maps must have been filed by August 1, 2024, to ensure they will be adjudicated by May 15, 2025. The FCC plans to add the approved changes to the final list of eligible locations.

Telecommunications carriers receiving Enhanced A-CAM support are required to complete broadband deployment to 50% of their committed locations by December 31, 2026; to 75% of those locations by December 31, 2027; and to 100% of those locations by December 31, 2028.³² The FCC may reconsider in 2027 whether to allow a one-year extension of the December 31, 2028, deployment deadline.

The FCC originally intended for the Enhanced A-CAM Program deadlines to align with the anticipated timeline of the BEAD Program. However, the BEAD Program faced a number of delays that caused the two programs' deadlines to fall out of alignment.

A number of program participants filed petitions with the FCC for changes that would have, among other things,

• extended the program deployment milestones by several years,
• changed how the FCC will determine that a company is eligible for Enhanced A-CAM support,
• reconsidered the program's technology-neutral approach, and
• reallocated unused Enhanced A-CAM funds to the RDOF (see "Rural Digital Opportunity Fund").

On April 5, 2025, the FCC rejected all the petitions, and the requirements of the original Enhanced A-CAM Order remain in effect.³³

There are a few possible factors that led to the defaults. For example, the reverse auction encouraged companies to propose less-expensive projects, which prevented more-expensive proposals, with better chances of being fully deployed, from winning. Some companies that defaulted blamed rising construction costs, especially during the COVID-19 pandemic.

One issue associated with the defaults is that when awards were made, other applicants were eliminated from consideration, leaving no backup applicants to replace defaulted winners. While BEAD funding could have been available to the areas affected by the default, some companies defaulted after states determined the unserved locations that were eligible for BEAD funding. NTIA has directed states not to include those locations "already subject to [another] enforceable federal … commitment" to deploy broadband, leaving areas that were to be served through RDOF funding ineligible for BEAD funding.³⁸

The FCC has not started the Phase II auction. Phase II may provide up to $11.2 billion to deploy broadband to partially served areas and unserved areas that did not receive Phase I funding. In a November 10, 2022, letter from then-FCC Chairwoman Jessica Rosenworcel to Senator Roger Wicker, Rosenworcel noted that the FCC

discussed the need for future efforts like RDOF Phase II, in light of anticipated broadband infrastructure work from new programs like the National Telecommunications and Information Administration's Broadband Equity, Access, and Deployment Program. We noted that after funding from these new programs is put in place, the FCC could consider deployment initiatives for areas still lacking service or otherwise falling short of the speed and latency standards required.³⁹

If and when Phase II begins, it would present a second opportunity for companies that did not win in Phase I and were denied BEAD funding to bid for RDOF funding.

The FCC adopted its most recent rules on the 5G Fund on August 14, 2024. In its order, the FCC

• defined areas that will be eligible for 5G Fund support;
• increased the budget for the 5G Fund;
• modified how bids are accepted and awarded;
• explained how areas eligible for 5G Fund support will be defined;
• modified the schedule for transitioning from mobile legacy high-cost support to 5G Fund support;
• required 5G Fund support recipients to implement cybersecurity and supply chain risk management plans; and
• encouraged 5G Fund support recipients to incorporate Open Radio Access Network technologies in networks funded through the 5G Fund.

The FCC has not yet set a start date for either the Phase I or Phase II auctions.

As the FCC considers reorienting the High Cost Program toward broadband deployment, Congress may take an interest in monitoring these efforts and assessing whether legislative action might be necessary to provide additional congressional direction to the agency. Congress might consider several options for the High Cost Fund, discussed below.

While numerous programs provide funding for deployment of broadband infrastructure, one option for reorientation of the High Cost Fund could be a pivot from providing support for deployment costs to support for operation and maintenance costs to sustain existing networks. This concept is supported, for example, by NTCA—The Rural Broadband Association,⁴³ as well as a number of other interest groups representing various broadband constituencies.⁴⁴ Other interest groups urged postponing any programmatic changes until the FCC had assessed the impact of IIJA funding, such as the BEAD Program, on broadband deployment.⁴⁵ Congress could consider requiring the FCC to conduct such an assessment.

Many tribal lands lack the infrastructure for broadband services. In the January 2020 RDOF report and order, while the FCC recognized "the difficulty Tribal lands have faced in obtaining broadband deployment"—and although tribal entities were eligible—the FCC did not provide a tribal entity priority in the RDOF application or bidding process.⁴⁶ Tribal entities are also eligible for other federal broadband programs, but only NTIA's TBCP is established specifically for tribal entities.⁴⁷

The information in the latest National Broadband Map may allow the FCC to better evaluate future funding needs of high-cost areas, including whether future planned processes, such as RDOF Phase II, remain necessary. As there may be continued focus in the 119^th Congress on program redundancy and potential duplication of funding,⁴⁹ Congress could consider whether to eliminate the High Cost Program and instead make permanent newer broadband deployment programs, funded through annual appropriations (e.g., the BEAD Program).

Elimination of the High Cost Program could provide benefits to some consumers, such as lowering monthly charges for telecommunications subscribers⁵⁰ and reducing the potential for overlap with other broadband deployment programs (thus eliminating program redundancy and increasing efficiency).⁵¹ Further, some states, such as Texas and Pennsylvania, have their own state-specific USFs, in which funds are used for universal service efforts at the state and local level.⁵² These state USF funds could be duplicative of federal USF efforts. States without a state-level USF program, however, may rely exclusively on the federal USF.

Since much of the funding that Congress has provided is intended for deploying fixed broadband infrastructure, the FCC could proceed with providing additional support for mobile broadband deployment (e.g., potentially through the 5G Fund for Rural America). However, the FCC acknowledged that an evaluation of the impact of the BEAD and other broadband programs on future mobile deployments may be necessary before changing course.⁵³ The latest iteration of the National Broadband Map may allow both the FCC and Congress to better visualize how federal investments are closing the digital divide and which of these programs may be the most effective.⁵⁴ Further, with many federal broadband programs targeted to the deployment of fixed broadband, another consideration for Congress may be whether to transition the High Cost Fund to focus entirely (or mostly) on mobile broadband deployment.

According to one estimate, "internet service providers (ISPs) have defaulted on $3.3 billion of the $9.2 billion total in RDOF awards. ... Meaning 1.9 million of approximately 5.2 million eligible RDOF locations are no longer scheduled to receive service."⁵⁵ Some stakeholders and policymakers have deemed the RDOF Phase I auction unsuccessful because of issues such as the FCC's lack of sufficient vetting of bidders before the auction.⁵⁶ This may have played a role in the shift of recent broadband efforts (e.g., broadband funding in the American Rescue Plan Act of 2021 [ARPA; P.L. 117-2] and the IIJA) from the FCC to other agencies, such as NTIA and the Department of the Treasury. Congress could, for example, conduct oversight to examine the reasons for defaults, assess the FCC's administration of the program, and explore whether leftover funding should be added to a future phase of RDOF or whether this funding should be diverted to other purposes, such as the options described above.

Congress could also choose to leave the High Cost Fund in place within its current framework. Such a path forward could provide ongoing stability for the program but could also insert uncertainty in that it would not address the continuing issues related to the contribution factor or contribution base (see "USF Program Fund Contributions" below).

Congress may consider waiting until BEAD-funded projects have begun or been completed. If warranted, Congress might direct the FCC to reallocate defaulted RDOF or remaining 5G Fund Phase II funds to areas that did not benefit from BEAD-funded projects.

Given the number of winning bidders that have defaulted on their RDOF projects, Congress may consider directing the FCC to reconsider its use of reverse auctions in the future. Reverse auctions have been blamed for encouraging bidders to overpromise in their bids, leading to defaults. Additionally, Congress may consider requiring the FCC to award a runner-up that would be eligible for picking up the defaulted award. As noted previously, in the case of RDOF defaults, assigning only one winner has led to some areas not being eligible for any federal broadband funding, as the deadline for BEAD proposals has passed.

In its report on the future of the USF,⁶³ the FCC suggested that it might consider expanding Lifeline consumer eligibility requirements to align with the less restrictive ACP requirements. It also recommended deferring consideration of relaxing Lifeline provider eligibility requirements to align with the ACP, pending further evaluation.⁶⁴ Beyond the recommendations in the FCC's report, options for Congress could include requiring FCC action to "facilitate and fund" Lifeline consumer outreach programs similar to those established for the ACP and establish consumer protection provisions for Lifeline based on those established for the ACP.⁶⁵

The recommendations made in the FCC report, if adopted, might affect stakeholders in different ways depending on how they are implemented. Some commenters recommended that the FCC fold the ACP features into Lifeline, or vice versa, while others recommended refocusing each program on a specific type of service.⁶⁶ Other commenters advocated for retaining both of these low-income programs with different funding mechanisms—one (i.e., Lifeline) funded by the fee-based USF and the other (i.e., ACP) funded by congressional appropriations—as a safeguard against potential future lapses in congressional appropriations.⁶⁷

Members of Congress could choose to reintroduce bills similar to those in the 118^th Congress if they want to reactivate the ACP.

Thus far, no legislation has been introduced in the 119^th Congress that would address the other considerations discussed above.

FCC, "Broadband Data Task Force Releases Fifth Version of the National Broadband Map," November 15, 2024, https://www.fcc.gov/document/fcc-releases-fifth-version-national-broadband-map. The filing window for the sixth iteration of the map opened on January 2, 2025, and closed on March 3, 2025.

NTCA—The Rural Broadband Association, "NTCA Statement on FCC Future of USF Report," August 16, 2022, https://www.ntca.org/ruraliscool/newsroom/press-releases/2022/16/ntca-statement-fcc-future-usf-report.

FCC, "FCC Reports to Congress on Future of the Universal Service Fund," August 12, 2022, https://www.fcc.gov/document/fcc-reports-congress-future-universal-service-fund (hereinafter FCC USF Report).

FCC USF Report.

See FCC, In the Matter of the Rural Digital Opportunity Fund, report and order, January 30, 2020, p. 15, https://docs.fcc.gov/public/attachments/FCC-20-5A1.pdf.

NTIA, "Tribal Broadband Connectivity Program," https://broadbandusa.ntia.doc.gov/funding-programs/tribal-broadband-connectivity.

FCC, "Rural Tribal Window Updates," https://www.fcc.gov/rural-tribal-window-updates.

For example, see letter from Sen. John Thune and Sen. Ben Ray Luján to Hon. Gene L. Dodaro, Comptroller General of the United States, April 24, 2023, https://www.thune.senate.gov/public/_cache/files/e660b0df-8389-4f87-b235-2ad7dd2cad28/B461F65991D60CFD7D05BB1571907007.4.24.2023-thune-lujan-letter-to-gao.pdf.

FCC USF Report.

FCC, "Broadband Funding Map," https://broadbandmap.fcc.gov/home.

That is, recipients failed or do not plan to execute the projects they were funded to perform. Masha Abarinova, "A Rocky Road Lies Ahead for RDOF as Money Drains Away," Fierce Network, February 20, 2025, https://www.fierce-network.com/broadband/rocky-road-lies-ahead-rdof-money-drains-away. Defaulting companies are required to pay a fine.

Jericho Casper, "FCC Concludes Review of Rural Digital Opportunity Applications with More Defaults," Broadband Breakfast, January 5, 2024, https://broadbandbreakfast.com/fcc-concludes-review-of-rural-digital-opportunity-applications-with-more-defaults.

USAC, "Program Data," https://www.usac.org/lifeline/resources/program-data.

For additional information on the Emergency Broadband Benefit Program, see CRS Insight IN11612, The Emergency Broadband Benefit: Implementation and Future Policy Directions, by Brian E. Humphreys.

IIJA, §60502(a)(2).

See FCC, "Affordable Connectivity Outreach Grant Program," https://www.fcc.gov/acp-grants.

For additional information on the FCC's ACP, see CRS In Focus IF12637, The End of the Affordable Connectivity Program: Options for Consumers and Congress, by Patricia Moloney Figliola.

FCC, "Affordable Connectivity Program Has Ended for Now: Consumer Fact Sheet," June 3, 2024, https://www.fcc.gov/sites/default/files/ACP-Fact-Sheet-Post-ACP-Ending.pdf.

FCC USF Report.

FCC USF Report, p. 32.

FCC, "E-Rate—Schools and Libraries USF Program," https://www.fcc.gov/general/e-rate-schools-libraries-usf-program.

Eligible schools include public and nonprofit elementary and secondary schools, and eligible libraries include public, tribal, academic, research, and certain private libraries. Schools and libraries do not receive direct funding from the program. Instead, they receive discounts on the costs of services provided by vendors. The amount of discount each school or library can receive under the program ranges from 20% to 90% and is determined using a matrix designed by FCC, with schools and libraries located in rural and low-income areas receiving the highest discounts from the fund. The USF compensates the schools' and libraries' vendors for the amount of the discount. FCC, "Universal Service Fund," https://www.fcc.gov/general/universal-service-fund.

47 C.F.R. §§54.501, 54.502.

Category one services include telecommunications, telecommunications services, and internet access. Category two services include internal connections, basic maintenance of internal connections, and managed internal broadband services. See 47 C.F.R. §54.502(a).

USAC, 2024 Annual Report, https://www.usac.org/wp-content/uploads/about/documents/annual-reports/2024/2024_USAC_Annual_Report.pdf.

FCC, "Wireline Competition Bureau Announces E-Rate and RHC Programs' Inflation-Based Caps for Funding Year 2023," public notice, March 3, 2023, https://docs.fcc.gov/public/attachments/DA-23-178A1.pdf.

FCC, "E-Rate and RHC Programs' Inflation-Based Caps for Funding Year 2025," public notice, March 7, 2025, https://www.fcc.gov/document/e-rate-and-rhc-programs-inflation-based-caps-funding-year-2025.

American Rescue Plan Act (ARPA; P.L. 117-2), Title VII, §7402.

FCC, "Emergency Connectivity Fund FAQs," May 6, 2025, https://www.fcc.gov/emergency-connectivity-fund-faqs.

FCC, "FCC Announces over $5 Million in Emergency Connectivity Funding for Schools," press release, November 1, 2023, https://docs.fcc.gov/public/attachments/DOC-398178A1.pdf.

GAO, Broadband: A National Strategy to Coordinate Fragmented, Overlapping Federal Programs, GAO-23-106818, May 10, 2023, p. 12, https://www.gao.gov/assets/gao-23-106818.pdf.

GAO, Broadband: A National Strategy Needed to Coordinate Fragmented, Overlapping Federal Programs, GAO-23-106818, May 10, 2023, p.10, https://www.gao.gov/assets/gao-23-106818.pdf.

FCC, "Rural Health Care Program," https://www.fcc.gov/general/rural-health-care-program. The Communications Act of 1934, as amended, defines eligible health care providers as "(i) post-secondary educational institutions offering health care instruction, teaching hospitals, and medical schools; (i) community health centers or health centers providing health care to migrants; (iii) local health departments or agencies; (iv) community mental health centers; (v) not-for-profit hospitals; (vi) rural health clinics; (vii) skilled nursing facilities ... ; and (viii) consortia of health care providers consisting of one or more entities" falling into the first seven categories. 47 U.S.C. §254(h)(7)(B)(vi).

Rural Health Information Hub, "Telehealth and Health Information Technology in Rural Healthcare," March 17, 2025, https://www.ruralhealthinfo.org/topics/telehealth-health-it.

In April 2020, "the FCC established a three-year Connected Care Pilot Program [that] provides up to $100 million of support from the [USF] to help defray eligible health care providers' costs of providing connected care services and help assess how USF funds might be used to support connected care services. The [program] provides funding for selected pilot projects to cover 85% of the eligible costs of broadband connectivity, certain network equipment, ... and information services necessary to provide connected care services to the intended patient population." See USAC, "Connected Care Pilot Program," https://www.usac.org/rural-health-care/connected-care-pilot-program.

FCC, "Wireline Competition Bureau Announces E-Rate and RHC Programs' Inflation-Based Caps for Funding Year 2025," public notice, March 7, 2025, https://docs.fcc.gov/public/attachments/DA-25-199A1.pdf.

The internal cap for up-front payments and multiyear commitments will apply only if RHC Program demand exceeds available funding.

FCC, "Healthcare Connect Fund—Frequently Asked Questions," https://www.fcc.gov/general/healthcare-connect-fund-frequently-asked-questions.

Ineligible entities are permitted to participate as members of a consortium but cannot receive support from the HCF Program.

USAC, "Telecommunications Program," https://www.usac.org/rural-health-care/telecommunications-program.

47 U.S.C. §254(h)(1)(A); 47 C.F.R. §54.601(a).

FCC, "Promoting Telehealth for Low-Income Consumers COVID-19 Telehealth Program," report and order, March 31, 2020 (hereinafter FCC, First Connected Care Report and Order).

FCC, First Connected Care Report and Order, para. 83.

FCC, "Wireline Competition Bureau Announces Connected Care Pilot Program Application Filing Window Opening," public notice, November 5, 2020, https://docs.fcc.gov/public/attachments/DA-20-1315A1.pdf.

FCC, In the Matter of Promoting Telehealth for Low-Income Consumers, order, October 28, 2024, https://docs.fcc.gov/public/attachments/DA-24-1110A1.pdf.

42 U.S.C. §254(h)(7)(B)(vi).

The Communications Act of 1934, as amended, directs that every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the FCC to preserve and advance universal service. 47 U.S.C. §254(d). For more detail on the contribution rates, see CRS Legal Sidebar LSB10904, Fifth Circuit Considers Constitutionality of the Universal Service Fund, by Chris D. Linebaugh.

47 U.S.C. §254(d). For example, in 2006, the FCC relied on this authority to require interconnected VoIP providers to contribute as a means of ensuring a level playing field among direct competitors.

47 C.F.R. §54.712.

FCC, "Proposed Second Quarter 2015 Universal Service Contribution Factor," public notice, March 15, 2025, https://docs.fcc.gov/public/attachments/DA-15-326A1.pdf.

FCC, "Proposed Second Quarter 2025 Universal Service Contribution Factor," public notice, March 13, 2025, https://docs.fcc.gov/public/attachments/DA-25-223A1.pdf.

FCC, "Table 1.1," in Universal Service Monitoring Report, 2024, p. 9, https://docs.fcc.gov/public/attachments/DOC-408848A1.pdf.

USAC, 2014 Annual Report, https://www.usac.org/wp-content/uploads/about/documents/annual-reports/2014/2014-Annual-Report.pdf.

USAC, 2014 Annual Report, https://www.usac.org/wp-content/uploads/about/documents/annual-reports/2024/2024_USAC_Annual_Report.pdf.

For information about spectrum auctions, see CRS Report R47578, The Federal Communications Commission's Spectrum Auction Authority: History and Options for Reinstatement, by Patricia Moloney Figliola and Jill C. Gallagher.

For more detailed information about these cases, see CRS Legal Sidebar LSB11214, Congressional Court Watcher: Circuit Splits from July 2024, by Michael John Garcia, and CRS Legal Sidebar LSB10904, Fifth Circuit Considers Constitutionality of the Universal Service Fund, by Chris D. Linebaugh.