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Communications United States

5th Circuit Court Upends FCC Universal Service Fund, Ruling It an Illegal Tax (arstechnica.com) 137

A U.S. appeals court has ruled that the Federal Communications Commission's Universal Service Fund, which collects fees on phone bills to support telecom network expansion and affordability programs, is unconstitutional, potentially upending the $8 billion-a-year system.

The 5th Circuit Court's 9-7 decision, which creates a circuit split with previous rulings in the 6th and 11th circuits, found that the combination of Congress's delegation to the FCC and the FCC's subsequent delegation to a private entity violates the Constitution's Legislative Vesting Clause. FCC Chairwoman Jessica Rosenworcel criticized the ruling as "misguided and wrong," vowing to pursue all available avenues for review.
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5th Circuit Court Upends FCC Universal Service Fund, Ruling It an Illegal Tax

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  • by kackle ( 910159 ) on Thursday July 25, 2024 @02:28PM (#64655436)
    I guess they gave them the 411!
  • Plus its a fraud (Score:5, Insightful)

    by backslashdot ( 95548 ) on Thursday July 25, 2024 @02:32PM (#64655450)

    Just like how they allocated $42 billion to rural broadband nearly 4 years ago but haven't hooked up one home with it. Also, remember all that money to be allocated for homeless housing, EV chargers? Anything to show for it? People should be in jail.

    • Re: Plus its a fraud (Score:5, Interesting)

      by Frank Burly ( 4247955 ) on Thursday July 25, 2024 @02:46PM (#64655492)

      Multiple representatives from the telecommunications industry told MinnPost this week that they had no interest in applying for a piece of Minnesota's $652 million in BEAD grants. Brent Christensen, president and CEO of Minnesota Telecom Alliance, which represents 70 Minnesota telecom companies, said, "None of them would bid for the federal grants because of the regulations that would come with itâ"especially the requirement to provide low-cost services to low-income households in exchange for grants that would allow internet providers to build out their networks."

      https://reason.com/2024/06/27/... [reason.com]

      I guess it's hard to get a man to build something when he gets a larger paycheck from not building it.

      • by ScienceBard ( 4995157 ) on Thursday July 25, 2024 @05:04PM (#64655864)

        It's because they have monopoly protections and guaranteed territories. No incentive to do better. Attach a stipulation to the grants that they can be used to build service in any qualifying territory, revoking existing monopoly rights to telecom service in that area. See how fast the tune changes.

      • by AmiMoJo ( 196126 )

        Most countries have either heavy regulation for utilities like phone and internet, or they just have the government build and maintain the networks like roads.

        Stuff Americans take for granted, like unreliable electricity and no choice of ISP, are not normal in most developed countries. I know, geography, population density. Those aren't the reasons why, it's the lack of regulation and direct government ownership.

        • Australias model (which was admittedly sabotaged by the conservative govt that got thrown out a few years back, although we're in process to slowly rip out all that shitty copper and put the fibre originally planned in), the NBN is a good one in my opinion. The govt put in Fibre (and thanks to the LNP a fair amount of useless VDSL copper) and the private ISPs essentially operate over the top of it paying a fee for that fibre taken out of the customers free. Everyone gets a minimum guarantee, although again

          • by AmiMoJo ( 196126 )

            That does sound good. In Europe most countries went for Local Loop Unbundling. The copper networks were put in long ago by big telecoms companies, which were broken into retail and network businesses. The network business rents access to any phone or internet provider that wants to use them, with the same rates and terms for everyone. Now we are finally getting fibre, some of those networks are operating on the same basis.

            So it sounds similar to what you have, except that the networks are owned by private c

    • Serious question why not give the $42 billion to SpaceX, Kuiper, and OneWeb and have them provide the rural broadband? SpaceX already has 4 million rural customers worldwide, and 1000 airplanes with it. With $42 billion they could give over 3 million rural households LEO-constellation based broadband for free for a decade. Try to think logically without just hating on Elon Musk. The telco company executives are just as Republican if not more than Elon Musk, why favor them? Plus I'm not saying only give it

      • by kick6 ( 1081615 ) on Thursday July 25, 2024 @02:59PM (#64655528) Homepage

        Serious question why not give the $42 billion to SpaceX, Kuiper, and OneWeb and have them provide the rural broadband? SpaceX already has 4 million rural customers worldwide, and 1000 airplanes with it. With $42 billion they could give over 3 million rural households LEO-constellation based broadband for free for a decade. Try to think logically without just hating on Elon Musk. The telco company executives are just as Republican if not more than Elon Musk, why favor them? Plus I'm not saying only give it to SpaceX .. let Amazon/Kuiper and others in on it too.

        serious answer: Because no senator's BIL benefits.

      • What if SpaceX takes the money and does the exact same thing?

        • What if SpaceX takes the money and does the exact same thing?

          On the spectrum where one side is "known telecom thieves" and the other is "SpaceX, which usually provides something for the money they take." I'd lean ever so slightly toward SpaceX, just because I haven't seen any big string of proof that they take government money, stuff it down their shorts, then ask for more money after to do still more nothing with it. The telecoms? Um. Yeah. That's been decades of government funds for promises broken.

        • What if SpaceX takes the money and does the exact same thing?

          That's socialism. Musty will never take it. He is fully against any government subsidies. /s
      • Re: (Score:2, Insightful)

        by ebunga ( 95613 )

        Starlink is slow and expensive compared to terrestrial fiber. Next.

        • Re: (Score:2, Insightful)

          by Anonymous Coward

          Starlink is slow and expensive compared to terrestrial fiber. Next.

          But we aren't comparing starlink to terrestrial fiber.
          That $42 billion didn't lay a single strand of terrestrial fiber.

          We are comparing starlink to nothing. Starlink is very fast compared to nothing. Anything is expensive compared to nothing.

          Next, qed, kluls, lame.

          • by Revek ( 133289 )
            I'm comparing it to that. Libraries use erate to get cheaper internet. We couldn't afford the bandwidth we have now without it. Get rid of erate and watch hospitals, schools and libraries network access degrade.
        • There's just no way! The rural broadband Initiative is to provide rural households and businesses with 25/3 broadband. That 25 mbps download, 3 up (reference https://www.usda.gov/broadband [usda.gov] ) whereas Starlink provides 100 mbps (standard, up to 220 if you pay more). Plus, Starlink can provide coverage anywhere. You could live dozens of miles from anything or in mountainous areas and still get it .. whereas rural broadband would cost a million dollars just to get one person a link.

        • Starlink is slow and cheap compared to fiber in low-density rural areas.
      • Re: (Score:2, Troll)

        by NaCh0 ( 6124 )

        Leftist NPCs have been told Space Man Bad.

        The exclusion of StarLink is government bureaucrat punishment for Elon allowing non-official narratives on X.

        Wasting $47 BILLION dollars is nothing to them. Just keep that money away from the "wrong" people.

    • by ebunga ( 95613 )

      You're very wrong on that. The fiber is being deployed. I've seen the work being done with my own eyes and used the fiber. It's just one of those things that isn't instantaneous. Also, one of the strings attached to the grants are that the companies have to deploy it *before* they get the money, and that's actually one of the big stumbling blocks.

      • This is my perspective. I live on the Southern Oregon coast. Fiber going in all over on the roadways. And your statement would explain why they wanted a commitment, albeit with unconditional opt-out all the way up to installation. I was impressed with the terms and wanted an alternative to Starlink, the only comparable competition in the area. I wanted the fiber literally for posterity. Resale value. I don't need it, but now my home has fiber to it. My neighbor upstream--asleep at the wheel. Whoever lives t

      • I have no issue with it taking a reasonable time. But this complaint is now decades old. They've had government handouts to provide better rural access based on fees for the entirety of the century so far IIRC or close enough.
        And we've been paying the fees for that long. So if that money hasn't been used for what I paid for I want it back.
      • Thatâ(TM)s because the telco has to haggle with every town, city, county, borough, land owner, and power company over taxes access fees and rights of way. And thatâ(TM)s before you get into environmental permitting studies

    • Seriously, there was some drama as they stopped at the next house over and wanted a two year contract. The landscape is challenging and the road crews weren't up to it so they stopped. But the fiber is going in. Via Spectrum, which I am not happy with, but they give great deal. Minus a modest installation equaling about one month on discount. It's half of of Starlink's pedestrian tier. No datacaps(!) 50-300Ms regularly. No line of sight requirements. My router, their free/monthly free modem. Actual non-prom

    • Also, remember all that money to be allocated for homeless housing, EV chargers? Anything to show for it? People should be in jail.

      Why should anyone be in jail? Everything is working exactly as planned. Do you want to destroy America? Throwing all of these fearless leaders into jail would make America no longer great again. (the fact that America is getting eaten alive by their antics is irrelevant)

  • by Eunomion ( 8640039 ) on Thursday July 25, 2024 @02:35PM (#64655456)
    The 5th circuit will instantly forget its constitutional reasoning if it takes up a case about the constitutionality of delegating prisons to private companies.
    • by Shaitan ( 22585 ) on Thursday July 25, 2024 @03:19PM (#64655586)

      Now do you want your mind blown... the reasoning you just agreed is correct AND the constitutionality of delegating [federal] prisons to private companies are both things the courts couldn't correctly rule on previous due to Chevron deference. They'd have to defer to whatever the agency made up for itself, which violated the JUDICIAL vestment clause Article 3, Sec 1.

      The whole scheme was always wrong from a Constitutional perspective and it was allowed to go on for a long time, so someone wanting to trash talk fixing it can point to dozens of legitimately good calls agencies have made to scare you. But there are hundreds of bad ones as well and good or bad, those calls were never theirs to make.

      This court rules in favor of the left all the time, in fact, most of the time. But they've been willing to rock the boat on some of the old precedents that anyone with a brain can see don't mesh up with the Constitution; rulings that have stood purely because they'd kick up a bunch of dust and possibly include some poorly founded but popular outcome. Yes this seems partisan because the law which exposed is older and therefore more conservative but that's temporary and with such disruptive rulings, don't forget there is lots of agency policy established by conservatives upended as well... there is no guarantee the outcome of following the proper Constitutional process leans right when the dust settles. And there are ways to change it over time regardless. I approve because the outcome should be more consistent the Constitution and since all our rights depend on it the Constitution shouldn't be some advisory text that we shove aside the minute it helps us get our way or beat the Republicans or the Democrats.

      Some things are hard to change, well, we can band together and do hard things and that makes it hard to break them after we do.

      • Excellent analysis. No mod points or you'd get an enthusiastic "Insightful" from me.
      • Striking down the entire post-Depression US government is far from necessary to hold second-hand delegation of power unconstitutional. Executive powers are not property, to be traded around, nor are they discretionary: They are required to be carried out, and carried out by exactly who is assigned.
        • by Shaitan ( 22585 )

          We aren't talking about executive powers we are talking about legislative and judicial authority that has been improperly hijacked by executive agencies. They've literally been writing their own fake law and running their own fake courts. There is nothing sacred about it just because they've been getting away with it since the depression era, it wasn't legal then and it isn't legal now.

          This ruling is actually quite narrow to the FCC and Chevron didn't strike down the entire post-Depression government but it

          • "legislative and judicial authority that has been improperly hijacked by executive agencies."

            The judiciary has literally never been designed as a fine-grained mechanism for daily governance over the minute details of Executive decisions, nor has such a radical revision gone through any sort of major political review or scrutiny. A handful of people occupying stolen seats on the Supreme Court pulled that doctrine out of thin air to achieve a desired outcome to the case, with every appearance and likelihood

            • by Shaitan ( 22585 )

              "The judiciary has literally never been designed as a fine-grained mechanism for daily governance over the minute details of Executive decisions"

              Luckily that isn't what is being discussed. Chevron covers judicial review of law and the scope of agencies powers under current law passed by the legislature, not daily operations of executive agencies within the determined scope. Unless of course you mean enforcement against people because yes, people have a right to defend themselves against executive actions in

              • "Luckily that isn't what is being discussed."

                It's exactly what's being discussed, and exactly what you just described in the guise of a rebuttal. The Executive branch implements the laws as passed by the Legislative and reconciled by the Judicial. But the Judiciary cannot just insert itself into the very thoughts of Executive branch employees and declare this thought or that thought unconstitutional; this paperclip less in keeping with the law than that paperclip.

                "Everyone was appointed legally and aside

  • The courts lately don't seem to like Congress delegating its responsibility. That's fine, but then that means Congress will need to meet 5 days/week 52 weeks a year and have daily votes to keep the nation fed, businesses running, etc.

    • Meh, get rid of the FCC and let the most powerful transmitter win already. Free market!

    • Easier solution: make those agencies administrative departments of Congress, nominally overseen by a congressional committee.

      • by gtall ( 79522 )

        No, they would just devolve into political patronage jobs. Incidentally, that's part of Project 2025 to turn the fed. gov. into conservative pay-for-play scams.

        • by DarkOx ( 621550 )

          Civil service is fundamentally undemocratic.

          All jobs should be patronage, not that wise politicians won't appoint people who can't do the job; because failure is unpopular. Look at the Secret Service right now.

          Our current system installs a lot of uncountable people. We should either create a lot more elected-federal offices, or make most of the jobs patronage / spoils. Its what a free people should demand. If we wanted technocrats, might as well just have a monarchy and an aristocracy of nobles to run e

          • ... a free people should demand.

            So, how many people vote on who should be the dog-catcher? Who votes for the district US DA? Most DA elections have a single candidate, so little will change with "free people".

            The other problem, is civil service becomes "small government": Some activist doesn't like the drawings in a children's book, she can demand the elected authority ban it. The elected authority now has to obey, or be dismissed from office: Repeat until the activist gets an answer she likes. This is another version of buying po

          • Some 'accountable' people will do the wrong (but popular) thing to keep their jobs, avoiding the right but hard choice. Some 'unaccountable' people will do the right thing even if hard and unpopular.

            On the presumption that you want people who are going to do the right thing, it's much easier to select the right person in the second category than it is to persuade a mass to select the right person in the first. Both systems have weaknesses however.

            It comes down to whether you want people who will make the ha

            • by DarkOx ( 621550 )

              In a democracy, the ONLY time its wrong to do the popular thing is when that thing would violate some higher law like the Constitution, which can also be amended by popular action.

              If the Constitution lacked an amendment process I would say it would be ethically wrong to even respect and follow it in the first place. It has one though, having an extra high bar to require a greater level of support to alter some core principles and guard rails, while giving everyone a little time to cool of is good - for eve

      • Isn't that what the executive branch is for?
        • by flink ( 18449 )

          Executive would enforce the changes to code and regs congress approves, I guess. They'd have to split each agency into a congressional rule-making division and an executive enforcement division.

      • by Shaitan ( 22585 )

        Almost. You make the same mistake as him in that you are pretending executive function and legislative are one and the same. Congress makes the rules, the executive carries them out, the courts mediate any disputes. Congressional committee's having more authority and direct say is part of the puzzle and the courts filling in where legislation hasn't is another part and disputes but most of the fear mongering around this is suggesting that means the agencies execute their day to day operations which is false

      • by flink ( 18449 )

        They'd still have to vote in each change the committee recommends. Imagine the future where each line item change to the national electric code is subject to open debate, filibusters, a floor fight, and has 20 amendments hanging off it.

    • This is by design so the “series of tubes” politician is now trying to understand the finer points of carrier power and transmitter harmonics. This is going to get much worse.

    • Re: (Score:3, Insightful)

      by Zurk ( 37028 )

      Oh noes! You mean Congress will actually have to do its job like a proper government organization ? what do we do ? the sky is falling! head for the hills!

      • Re:No delegation? (Score:5, Insightful)

        by ArchieBunker ( 132337 ) on Thursday July 25, 2024 @02:59PM (#64655526)

        You want congress to have to pass legislation to approve a new drug instead of the FDA? That’s where this is headed.

        • You want congress to have to pass legislation to approve a new drug instead of the FDA? Thatâ(TM)s where this is headed.

          The FDA shouldn't exist as it does. Congress should only ever make laws that prohibit actions, since by default, everything is permitted. There is no need to legalize any particular chemical combination as they are all legal by default.

          But somehow or another, some folks got it into their head that only authorized things can happen and that everything else is, by default, prohibited. How does that square with the Constitution of the United Stated of America?

          That being said, there is a place for an institutio

      • No, in any situation where "Congress will actually have to do its job," that job just won't get done on any reasonable schedule. The job Congress will do (has done) is make it illegal to penalize Congress for failing to do its job. The other things Congress does will happen at about the rate and for about the reasons they have been done in the past.
    • Re: (Score:2, Insightful)

      That's fine, but then that means Congress will need to meet 5 days/week 52 weeks a year and have daily votes to keep the nation fed, businesses running, etc.

      I'm trying to find the negative here... You mean this change will force congress to do its job?

      • The job of congress is to make the laws. It's the job of the executive to enact the laws. This has generally meant that the executive deals with the fine details, from the beginning of the union until a few weeks ago. If congress authorizes a department to do X, then the executive should be able to do X without getting permission for each and every memo. Why should congress be the ones that lists every drug the FDA is allowed to approve, when congress has zero experts (or negative with the current makeu

      • by gtall ( 79522 )

        Meeting 5 days a week won't do the trick, there are waaaay too many complications for any law they pass. That is why the Fed. Agencies were created, well that and the congress-critters realized they were ditzes when it came to science and technology. Try sitting down sometime and crafting a bill taking into account all the ramifications, it will take you 5 years before you accumulate enough knowledge of the area to make it airtight and by that time it will be moot.

      • Think of the people in Congress, now imagine them doing everything required of the federal government, then imagine what the consequences will be for the nation. No thank you, I'll pass. I'm fine with delegation to agencies staffed with professionals following the laws set forth by Congress.
    • by kick6 ( 1081615 )

      The courts lately don't seem to like Congress delegating its responsibility. That's fine, but then that means Congress will need to meet 5 days/week 52 weeks a year and have daily votes to keep the nation fed, businesses running, etc.

      That number of hours worked would be more fitting for the wealth they accumulate.

    • by Shaitan ( 22585 )

      First, it doesn't matter. The Constitution is the law, they are bound to rule according to that, not usurp it with their opinion of what would be a more sensible law.

      Second, the Constitution doesn't really give the Congress authority over most of that... actually the federal government has very little say in anything which impacts individuals and more so exists to regulate trade/disputes between the states and interact for the states collectively in international matters.

      Finally, this stops congress from de

      • by flink ( 18449 )

        Ah, I see, so you want to go back to the days of being sold milk with arsenic in it, flour with sand in it, and drinking mercury to cure your cold.

        • by Shaitan ( 22585 )

          No, I don't credit the federal government with fixing all those things. Even if I did, that doesn't mean it would be possible for industry to get away with those practices in the modern world. Do you have any idea how fast arsenic poisoning associated with contaminated milk would go viral on social? It's a lot faster than a federal agency mobilizes, I can tell you that.

          We have thousands of crufty, mostly outdated regulations that slow innovation and progress and raise the cost of entry to competitors. All t

        • It's amazing how all that was perfectly legal to do right up until 1984.

    • The courts lately don't seem to like Congress delegating its responsibility. That's fine, but then that means Congress will need to meet 5 days/week 52 weeks a year and have daily votes to keep the nation fed, businesses running, etc.

      I believe you hyperbolize, but I'd still gladly take that over letting non-elected biased individuals just invent law. Like when the EPA declared 97% of the country was "navigable waters" just so they could expand their Clean Water Act power grab in Sackett: https://www.scotus [scotusblog.com]

    • Are you retarded? The court said that the FCC couldn't further delegate the taxing power beyond themself. Which means that the FCC could have administered the tax itself as delegated to them by Congress, but that spinning up a private company, staffing it with industry personnel, and saying they get to administer the tax is something they can't do.

    • That's fine, but then that means Congress will need to meet 5 days/week 52 weeks a year

      They should be doing that ANYWAY...working schedules just like the rest of the majority of us....

      They should all have to show UP at the congressional meetings too!

      I get disgusted seeing clips of people talking to an empty room on CSPAN.

  • Isn't it weird how federal judges keep getting assigned to hear cases whose objective legal merits happen to line exactly with the politics of the political party that appointed them?
  • by The Cat ( 19816 )

    Turns out only Congress can levy a tax. Who knew?

  • Good riddance (Score:5, Insightful)

    by WaffleMonster ( 969671 ) on Thursday July 25, 2024 @03:38PM (#64655636)

    I had no idea FCC was farming out management of USF to a private company. Personally I blame the FCC for a lot of what is wrong with telecommunications in the US.

    USF is a regressive tax on everyone with a phone rich or poor and for this reason alone I encourage everyone not to support it.

    Instead of policies that drive down costs the FCC intentionally concocts schemes like wide area spectrum auctions that favor the organizations with the deepest pockets and lock everyone else out. The US government has made hundreds of billions of dollars in revenues on these auctions off the backs of Americans who pay for telecommunications services while at the same time promulgating schemes that effectively reinforcing monopoly positions further costing Americans money.

    My personal view is the FCC is hopelessly captured by industry and is in dire need of disruptive restructuring.

    • You are a little off track there with your analysis. The way we handle spectrum allocation in the US is actually a rare example of good policy.

      Spectrum is a limited natural resource, and as such, it should also be a PUBLIC resource. It is also a SCARCE and inelastic resource, so it naturally generates rent. The question is who gets the rent.

      The way this should be managed, and is close to the way it actually is managed, is for the spectrum to belong to the government, who then lease it out to the highest bid
      • The way we handle spectrum allocation in the US is actually a rare example of good policy.

        Strongly disagree. In addition to my prior statements geographic extent of majority of the allocations preclude local operators from participation biasing allocations to national carriers.

        Spectrum is a limited natural resource, and as such, it should also be a PUBLIC resource. It is also a SCARCE and inelastic resource, so it naturally generates rent. The question is who gets the rent.

        In what way is extracting hundreds of billions of dollars in taxes from the PUBLIC and then turning around and granting monopolies over that spectrum to giant corporations compatible with its status as a PUBLIC resource?

        The way this should be managed, and is close to the way it actually is managed, is for the spectrum to belong to the government, who then lease it out to the highest bidder using limited leases.

        Strongly disagree. The government should maximize utility and public good not quantity of dollars flow

        • And how does the government decide the best use of the spectrum? By pure omniscience? More like whoever bribes the right people get the spectrum, and then they get to profit off of it. With an open auction, companies bid up to the limit where they can pay the most possible and still make some money, and all the surplus goes to the government. I suppose you either want the surplus to go to private parties that you feel deserve it more.
  • https://www.usac.org/about/uni... [usac.org]
    The law adopted explicit goals to guide the implementation of universal service policies. These goals include:
    + Promoting the availability of quality services at just, reasonable, and affordable rates.
    + Increasing access to advanced telecommunications services throughout the nation.
    + Advancing the availability of such services to all consumers, including those with a low income and those who live in rural, insular, and high cost areas, at rates that are reasonably comparable

  • On one hand I agree with the idea of a universal service fund.

    On the other hand the money is just being thrown at telcos, along with a bunch of tax money, to do things they aren't going and with no oversight or consequences.

    If they can't punish them for giving the money to the executives as bonuses or using it for stock buybacks then the program should be discontinued.

  • I've been paying these fees it seems like for 40 years. Can I get a refund...with interest? Let's see...it's like $1 or $2 per month for 480 months. Somewhere around $300 to $500 would be nice, but it'll never happen.

    • The purpose was to get all the people in the empty areas of the country phone service. The urban people funded it and it was done. Same with electricity. done. So we continued to fund it and they invented to new uses for that money.

      That said, I do think some kind of law should create free cell phone service for the poor that the rest of us pay for like we do for 911 service. Simply because it's a wise policy. How can you get a job to get out of poverty without a phone? no email? no car?

  • ... upending the $8 billion-a-year system.

    So, congress has to decide who has earnt a capital investment 'refund': That's sounds good. Plus, those corporate execs will have to go to Washington DC and show what good boys they are (or make ever-larger bribes, umm, campaign donations). Plus, when shareholders stop getting that corporate welfare into their own grubby hands, they'll demand that congress do something.

    This might the system working as designed.

The unfacts, did we have them, are too imprecisely few to warrant our certitude.

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