Americans for Tax Reform led a coalition of 27 center-right groups in a letter to members of Congress urging them to reject any proposals that would impose new taxes on broadband service, including by bringing broadband into the Universal Service Fund contribution base.
The letter notes that American consumers are already dealing with the effects of inflation and do not need higher monthly internet bills. It explains that the Universal Service Fund has long relied on mandatory fees assessed on traditional wireless and wireline services. As more consumers have shifted to alternative services that fall outside that contribution base, the revenue pool has shrunk while the rate on remaining customers has climbed dramatically. In some cases, nearly 40 percent of a customer’s phone bill now consists of USF fees.
The organizations also highlight that the program has expanded well beyond its original purpose of supporting basic connectivity for rural and low-income households. Over the years, USF has been stretched to cover broadband deployment and technology for schools and libraries. With more than 130 federal broadband programs already operating across 15 different agencies, the letter argues there is little justification for using the Universal Service Fund to duplicate existing efforts.
In response to the looming funding shortfall, some lawmakers have proposed expanding the contribution base to broadband providers. ATR and Digital Liberty warn that this approach would simply transfer higher costs onto consumers. The letter cites a 2022 statement from then-FCC Commissioner (now Chairman) Brendan Carr, who cautioned that assessing broadband internet access service could raise monthly bills by as much as $17.96 — nearly $200 per year. Carr concluded at the time that “the squeeze is not worth the juice when it comes to replacing the existing telecommunications assessment with one on broadband.”
Rather than raise taxes on broadband, the letter calls on Congress to reform eligibility rules for the program and to retire the broadband subsidies, if not the entire program. The current structure outdated and poorly suited to today’s communications landscape. Passing the ballooning costs of an unreformed system onto broadband customers is not a solution.
Read the full letter here or below.