The ruling creates uncertainty around the future of the E-rate program, which was established in 1997 and provided more than $4.9 billion in funding this year for broadband services in schools and libraries throughout the United States. That money comes from the USF, which is funded by telecommunications fees.
The lawsuit against the FCC was spearheaded by Consumers’ Research, a nonprofit organization that aims “to tell corporate America: Focus on your customers, not woke politicians,” according to its website.
In its 9-7 decision, the Fifth U.S. Circuit Court of Appeals in New Orleans states that it is unconstitutional for the FCC to rely on “telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the nation.”
The ruling places three other FCC universal service programs at risk in addition to E-rate. A July 24 statement by the nonprofit Schools, Health & Libraries Broadband Coalition (SHLB) called the ruling “outrageous.”
“We are deeply dismayed by the court’s decision today,” SHLB Executive Director John Windhausen said in the public statement. “The USF provides essential broadband services to anchor institutions throughout this country, and we will continue to support the FCC as it combats these claims.”
The FCC is expected to fight the ruling, rather than dismantle the nearly 30-year-old USF and find new funding for the programs it supports, which were created in response to the Telecommunications Act of 1996. FCC Commissioner Geoffrey Starks said in a public statement that the decision “runs contrary to two circuit courts — the Sixth and 11th — that recently found the Universal Service Fund to be constitutional.”
“This decision is a monumental blow in our long-running effort to close the digital divide and will particularly harm Americans that rely on USF for connectivity, including vulnerable households, those that live in rural areas, and our youngest learners,” Starks’ statement read. “I am reviewing the decision and how the agency can continue to fulfill one of the core mandates of the Communications Act: universal service.”