News - September 19, 2023

INCOMPAS and The Brattle Group Release Economic Study on USF Contribution Reform

WASHINGTON, D.C. – September 19, 2023 – Today, INCOMPAS, the internet and competitive networks association, discussed a new economic report with The Brattle Group during a webinar with INCOMPAS President Angie Kronenberg and Brattle Principal and former Chief Economist of the FCC’s Wireless Telecommunications Bureau, Paroma Sanyal. The report analyzes the most economically efficient solution to stabilize the Universal Service Fund (USF).

“The Universal Service Fund is one of our nation’s most critical connectivity programs. Millions of families, community anchor institutions, and small businesses rely on it for affordable phone and broadband services,” said Kronenberg. “However, with the contribution factor reaching historic heights, the Fund is in grave danger of becoming unsustainable. That is why we have been diligently working on this issue to present reasonable, impactful solutions to contribution reform that ensure the Fund meets its mission for the long term. This new economic report underscores the key findings in the USForward Report, including broadband internet access revenues is the most efficient way to drive down the contribution factor, stabilize the Fund, and correct its distortionary impact. It is also a solution that can be acted upon immediately by the FCC.”

“We are at a pivotal moment in communications history where connecting every American to broadband has never been more important,” Kronenberg continued. “The USF is a key component in bridging the digital divide and we hope the Commission will do what is necessary to act swiftly and put the Fund on a sustainable path forward.”

Key highlights of the report:

  • The Brattle Group Report underscores a key point in the USForward Report, which shows that telecom revenues are in decline while broadband revenues are on the rise.
  • The report predicts that, without reform, the factor will be 44% in 2025 and almost 50% in 2027.
  • The report shows that broadening the contribution base to include broadband internet access service revenues is the best way forward to create a sustainable future for the Fund and meet its mission.
  • By including broadband internet access revenues in the base, the data indicates that consumers will not face a significant price increase. In fact, many will achieve savings due to the significant decrease of the contribution factor on their phone service.
  • The report also shows that proposals that suggest including tech in the contribution base are problematic because it would greatly distort the marketplace and harm competition.
Read the full report here.