Narrowing the Digital Divide: A Better Broadband Universal Service Program

Abstract

Universal service has long been an integral component of American telecommunications policy. As more activities move online, it becomes increasingly important to narrow the digital divide by helping low-income Americans get online and by extending broadband networks into unserved areas.

Unfortunately, the Federal Communications Commission’s reforms are unlikely to help solve this problem. The Commission is repurposing an $8 billion telephone subsidy program to focus instead on broadband networks. But when pressed, the agency admits that it has no proof that the program meaningfully affected telephone adoption rates, and it offers little evidence that it will fare any better at boosting broadband adoption.

The Federal Universal Service Fund needs revolutionary, not evolutionary, change. Rather than modifying a problematic telephone-era program, Congress should adopt new initiatives designed to meet the unique challenges of the broadband era. Congress should offer targeted, direct, portable vouchers that improve the purchasing power of low-income households and allow them to participate meaningfully in telecommunications markets. And it should create a broadband availability block grant program to allow state public utility commissions to fund new networks through a reverse auction mechanism. Finally, it should eliminate the current USF surcharge and instead fund the program directly, which would improve congressional oversight and minimize the fraud and abuse that has historically marred the existing program.