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Universal Fees Shouldn't Burden Broadband Users, and The FCC Agrees ... For Now

As the debate over Universal Service Fees on internet service continues, recent official comments shed light on the concerns facing states like Idaho, Montana, Wyoming, and Washington. The imposition of Universal Service Fees could have significant implications for broadband affordability and market dynamics, especially when grappling with minimum pricing policies demanding a low-cost option.

The good news is that the Federal Communications Commission (FCC) decided not to impose Universal Service Fees on internet service - for now. FCC Commissioner Nathan Simington stated:

“…when Americans look to Congress and the Commission for leadership on modernizing the USF (Universal Service Fees), we must continue to consider what measures will best sustain the system for another generation and avoid expedient but ineffective short-term measures.”

Proponents of imposing similar fees on broadband argue for spreading the burden more evenly across telecommunications services and bolstering the USF. However, such measures risk disrupting the stability of the current system and burdening consumers with additional costs.

When asked about "Universal Service Fees," Ramón S. Hobdey-Sánchez, the State Broadband Program Manager at the Idaho Office of Broadband, stated that there had not been federal pressure to implement such programs within Idaho's borders. However, inquiries from the National Telecommunications and Information Administration (NTIA) regarding the calculation of a low-cost option on the state's scoring matrix raise questions about potential future federal requirements.

In distinguishing between USF's and minimum pricing requirements, it's important to recognize their distinct roles and implications within the broadband landscape.

Universal Service Fees primarily aim to fund programs that promote universal access to telecommunications services, ensuring that all Americans, regardless of location or income level, have access to essential communication tools. Minimum pricing requirements set a floor price for broadband services, often intended to prevent predatory pricing practices and ensure a baseline level of service quality. However, the difference between intention and reality can be stark.

Within a competitive market, providers are incentivized to offer affordable and accessible services to attract and retain customers. Imposing Universal Service Fees or minimum pricing requirements could distort this competition and lead to inefficiencies.

While both mechanisms seek to address different aspects of the broadband market, their goals can be similar in their impact on affordability and market dynamics. Striking a balance between fostering competition and ensuring equitable access to broadband services remains a central challenge for policymakers faced with these complex issues.

In response to NTIA inquiries, Hobdey-Sánchez clarified that Idaho does not set or require a baseline fee, and its current low-cost option on the state's scoring matrix is based on the 2023 FCC Urban Rate Survey for service of 100/20Mbps. Idaho's current low-cost option Is at $70. To provide an example, for broadband service with 100/20 Mbps speeds and an unlimited monthly usage allowance, the reasonable comparability benchmark for the U.S. is $105.03, and the benchmark for Alaska is $124.06.

As states in our region navigate the complexities of broadband affordability and access, it is essential to prioritize transparency, accountability, and consumer welfare in regulatory decision-making.

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