I've got your factor right here

 I blogged a couple of weeks ago about the importance of a bill making its way through Congress. The bills would expand the revenue base, which would lower the contribution factor. People looking to chop the E-Rate often point to the growing contribution factor as if it were a tax increase. (It isn't really.)

I thought maybe I'd update an analysis I did years ago, looking at the revenue base, the contribution factor, and the actual cost to consumers. 

So first, let's look at the contribution factor over the years:

 

That looks grim, all right. You'd think that the fee on consumers had septupled over the last 25 years. But it's not so. Most of the increase is due to this:

 

 As you can see the revenue base has been dropping steadily over the last 25 years. That makes sense; the revenue base is interstate and international telecommunications charges, that is, long distance, and when was the last time you had to pay for long distance? So just to keep program revenues flat, the FCC has had to increase the contribution factor.

But that doesn't explain the whole increase in the contribution factor. Take a look at the total fees charged to consumers to fund the Universal Service Fund:

 

 The total amount charged to consumers tripled from 2000 to 2012, and since then has been basically bouncing around between $2.5 and $3 billion.

Why did it shoot up during those 12 years? Here's a graph showing the culprit:

 

 It's that High Cost fund. The E-Rate has been bouncing along between $400 and $600 billion the whole time. Rural Healthcare has had a huge percentage increase, but it's still too small to have a big effect. The Low Income program rose to a peak in 2012, but has since fallen back to around where it was in 2000. But the High Cost fund more than doubled between 2000 and 2012, and has held pretty steady since then.

So when you hear someone say the E-Rate is driving up the contribution factor, you can say that the increase in the contribution factor has been caused by: 1) the loss of the revenue base on which the USF fee is charged, and 2) the increase in the size of the High Cost fund.

 

Dead and gone

 Net Neutality was dead, and soon it will be gone.

The FCC under then-Chair Rosenworcel had changed the rules to make ISPs regulated as "telecommunications services" instead of "information services," so that the FCC could regulate ISPs more thoroughly.

But the courts had paused the ruling, and in January overruled the Commission, thanks to the Supreme Court's Loper decision tossing the "Chevron deference" precedent, which said that the courts should generally defer to agencies' interpretation of ambiguous laws.

 Now Chairperson Carr has promised to remove the rule, so it will be not only dead but also gone.

Those who've been following along may remember that this is not the first time that a Democratic-led Commission has classified ISPs as a telecommunications service, only to have the subsequent Republican-led Commission undo the classification. The Commission made the change in 2015, and reversed it in 2017. 

No SRO this year

What's up with the USAC in-person trainings this year? Usually, the DC training fills up in a matter of hours, and the others fill up within a day or so. But this year, even with only two trainings, it seems that neither is filled up.

E-mpa™ is doing the conference in Denver this year, instead of the usual DC, so that moves dozens of people out of the DC training, but then why hasn't Denver filled up?

Maybe we've reached the point where so many applicants are using consultants (and thus don't need to attend training) that the trainings will never fill up again.

Or maybe it's that you can do the DC training virtually. Really, if it weren't for the E-mpa™ conference, I'd be hard-pressed to see the value in traveling for a one-day training. If there are enough virtual seats, the in-person trainings might be very lightly attended.

School bus Supreme

Did the Supreme Court save school bus Wi-Fi? The FCC and SHLB say yes.

In their June 18th NRC v. Texas ruling, the Supremes narrowed the criteria to challenge an agency order. The FCC and SHLB argue that given the newly narrowed criteria, the group bring the suit (Molak v. FCC, claiming the FCC did not have the authority to make school bus Wi-Fi eligible) do not have standing, so the case should be tossed.

Don't get too relieved, though: the same senators who are trying to toss home hotspots out of the E-Rate also want to throw out school bus Wi-Fi. I don't think they've introduced a kill-bus-Wi-Fi bill yet, but if this suit fails, they're likely to.

Everybody into the pool

 Here's a good reason to write to your Senators and Congressperson.

There are bills (S. 1651in the Senate and apparently not yet numbered in the House) working their way through both houses that would expand the contributors to the Universal Service fund to include ISPs and "edge providers" (companies that use the Internet to provide services like search engines, e-commerce, videoconferencing, etc.)

This may be the only initiative in Project 2025 that I agree with, though I don't agree with the reason for it. I support the bills for two reasons: fairness and stability, while Project 2025 supports the idea for one reason: vengeance. 

Currently, it feels a little unfair that USF contributions are a percentage of interstate telecommunications, while ISPs and edge providers are principal beneficiaries of the program on the provider side. Having ISPs and edge providers kick in seems only fair.

I think it will give the fund more stability because it would lower the contribution factor. Because the pool of income from which contributions come, the FCC has been forced to hike the contribution factor just to keep the USF expenditures steady. (Well, USF expenditures have been increasing, but don't blame the E-Rate.) It doesn't really matter, because we're all paying the same amount in the end, but the size of the contribution factor is frequently used by those opposed to the E-Rate. And if the pool gets small enough, the contribution factor might have to go over 100%, which would look silly. Adding ISP and edge provider revenues to the pool will bring the contribution factor down to a nice-looking number, and ensure the pool doesn't keep shrinking.

What's this about vengeance? Well, as I've already pointed out, Chairman Carr, who wrote the Project 2025 chapter on telecommunications, wants to use the USF as a stick to beat Big Tech for "its attempts to drive diverse political viewpoints from the digital town square." (p.847) 

Regardless of how you feel about Big Tech's effect on political discourse, this bill would be a positive for the E-Rate, so ask your Senators and Congressperson to co-sponsor the legislation.

Saved by the Supremes

 Did you know the Supreme Court was deliberating on whether to declare the Universal Service Fund unconstitutional? Yup, the current funding mechanism for the E-Rate (and the other 3 USF programs) was in danger of being swept away.

Well, today we can all breathe easier. The Supreme Court ruled: "The universal-service contribution scheme does not violate the nondelegation doctrine." So things go on as usual.

See, earlier, the Fifth Circuit Court had decided that the combination of Congress’s delegation to the FCC and the FCC’s “subdelegation” to the Administrator violated the Constitution, because Congress had delegated too much power to the FCC, violating the non-delegation doctrine. Fortunately, the Supreme Court did not agree.

So if you need a reason to celebrate this Friday afternoon, there you go.