Industry Victory: Supreme Court Upholds USF

In a major victory for rural telecommunications, the U.S. Supreme Court ruled 6–3 on June 27 in FCC v. Consumers’ Research that the Universal Service Fund (USF) is constitutional. The decision preserves a critical funding mechanism that supports voice and broadband access in high-cost, primarily rural areas across the country.

The ruling comes after a challenge in the 5th Circuit Court of Appeals, where the USF was deemed to violate the nondelegation doctrine—an argument the Supreme Court has not relied on in nearly a century. The consolidated cases, which also included Schools, Health & Libraries Broadband Coalition v. Consumers’ Research, questioned whether the USF constituted a fee or a tax and whether Congress had wrongfully delegated too much authority to the Federal Communications Commission (FCC) and the Universal Service Administrative Company (USAC).

The court’s majority firmly rejected these claims, affirming the constitutionality of the USF and reinforcing the FCC’s authority to administer the program.

The USF, which has existed in some form since 1934, plays a vital role in ensuring telecommunications access in underserved areas. It supports not only individual customers but also “community anchor institutions” such as schools, libraries and hospitals. Funding for the program is collected from telecom providers of all sizes.

On January 16, NCSC and CoBank joined 15 other organizations in filing an amicus brief underscoring their shared commitment to rural connectivity and economic prosperity.

“The USF is a key tool that many of our members use to ensure rural Americans have affordable access to the same telecommunications tools that the rest of the country enjoys,” NCSC Senior Vice President and Chief Banking Officer Joel Allen said. “This is a great victory for NCSC, our members and the rural communities we serve.”

With the legal challenge now resolved, attention is expected to turn to potential updates to the USF. Both the FCC and Congress may explore reforms aimed at strengthening the program and ensuring its continued effectiveness in a rapidly evolving digital landscape.