Key facts
- The Fifth Circuit Court of Appeals ruled the FCC exceeded its authority in establishing the Universal Service Administrative Co.
- The Universal Service Fund collects approximately $9 billion annually.
- The ruling would not go into effect for at least two months.
A U.S. federal appeals court on Thursday invalidated the Federal Communications Commission's authority to operate a nearly 30-year-old telecom subsidy program. The Fifth Circuit Court of Appeals ruled that the FCC exceeded its authority in establishing the Universal Service Administrative Co in 1997 to collect funds and set contribution rates for the Universal Service Fund.
The Universal Service Fund collects about $9 billion annually from telecom carriers, with the costs largely passed on to consumers. The fund subsidizes basic communications services for millions of Americans in rural and low-income areas, as well as enabling schools, libraries, and rural healthcare facilities to obtain essential communications services.
The FCC stated that the court's order would not go into effect until two months from now, at the earliest, and that the agency was considering all options. In 2024, the program benefited 7.5 million low-income households and provided $4.2 billion to telecom companies for high-speed internet in rural areas. It also provided $7 billion over three years for internet service to 118,000 schools and libraries, serving 54 million students.