Appeals Court Invalidates Basis of FCC's $9 Billion Telecom Subsidy Fund
A U.S. federal appeals court ruled on Thursday that the Federal Communications Commission exceeded its authority in the late 1990s when it set up the Universal Service Fund, a telecom subsidy program of about $9 billion a year, according to Reuters.
The fund is collected from telecom carriers through a private company, the Universal Service Administrative Co (USAC), and subsidizes basic communications for rural and low-income consumers, tribal lands, schools, libraries and rural health facilities. Writing for a three-judge panel of the Fifth Circuit, Judge Edith Brown Clement held that Congress never specifically authorized the FCC to establish USAC, so the agency violated the Government Corporation Control Act.
An FCC spokesperson said the commission was considering all options, noting the order would not take effect for at least two months. In 2024 the program benefited 7.5 million low-income households and paid telecom companies $4.2 billion for high-speed internet in hard-to-serve rural areas; schools and libraries received $7 billion over three years for 54 million students.
The ruling raises a different issue from the Supreme Court's June 2025 decision endorsing the FCC's funding mechanism; this time the court targeted the authority to create USAC itself.
Published by GSM · USA (original Chinese edition)
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