The Most Economically Efficient Option for Universal Service Fund Reform: Brattle Economists Discuss in a New Report for INCOMPAS

Brattle Principals Dr. Coleman Bazelon and Dr. Paroma Sanyal and Senior Associate Dr. Yong Paek recently authored a report exploring the economics of Universal Service Fund (USF) reform for INCOMPAS.

Funded by fees collected from interstate and international end-user voice revenues and other traditional telecom services , the Universal Service Fund (USF) finances a wide range of Federal Communications Commission’s (FCC) affordability and access programs, such as ones that bring broadband connectivity to rural areas. In the FCC’s recent proceeding on the future of the USF, one of the most extensively debated subjects was the possibility of modernizing the USF contributions system. The two broad proposals for modernization were (1) expanding the contribution base to include revenues from broadband internet access service and (2) broadening the USF contribution base to include entities including edge providers such as streaming video providers, digital advertising firms, and cloud services companies. The report provides a brief overview of the USF – and the economics behind it – and assesses the two main proposals for expanding the contribution base as well as alternatives. The authors find that the most economically efficient option for reform is to expand the contribution base to include broadband internet access service revenues.

The full report, “The Economics of Universal Service Fund Reform,” can be found below. Press coverage of this report can be found here.