Fifth Circuit Rules FCC Exceeded Authority in Setting Up $9 Billion Telecom Subsidy Fund
A U.S. federal appeals court ruled on Thursday that the Federal Communications Commission exceeded its authority when it set up a telecom subsidy program in the late 1990s, according to Reuters.
A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit held that Congress never specifically authorized the FCC to establish the Universal Service Administrative Co (USAC) in 1997 to collect the funds and set contribution rates, and that doing so violated the Government Corporation Control Act. Judge Edith Brown Clement wrote the panel's opinion. The Universal Service Fund collects money from telecom carriers through the private company to subsidize basic communications services for consumers in rural and low-income areas, drawing about $9 billion a year, with most carriers passing the cost on to customers.
An FCC spokesperson said the commission was considering all options available to it, and noted that the order, which addresses a decision made almost 30 years ago, would not go into effect until two months from now at the earliest.
Beyond low-income and rural areas, the fund has widened services to Native American tribal lands and helped schools, libraries and rural health care facilities obtain essential communications services. In 2024, the program benefited 7.5 million low-income households, paid telecom companies $4.2 billion to provide high-speed internet in hard-to-serve rural areas, and had provided $7 billion over three years to 118,000 schools and libraries serving 54 million students, according to the report.
In June 2025, the U.S. Supreme Court endorsed the way the FCC funds the program, overturning an earlier Fifth Circuit decision that had called the mandatory-contribution mechanism a misbegotten tax; Thursday's ruling challenges the program on the different ground of the agency's authority to create its administrator. (GSM, based on Reuters reporting)
Published by GSM · USA (original Chinese edition)
Photo: 图：光纤电缆铺设施工现场（资料图）。摄影：Rubin Observatory/NSF/AURA，CC BY 4.0，来源：Wikimedia Commons
