Earlier this week, economist Roslyn Layton with Strand Consult published an opinion piece in The Washington Post about the Universal Service Fund (USF) and contribution reform that I found not only compelling but frankly spot on. She was able to wrap the discussion around the billions of dollars currently being invested in artificial intelligence (AI) by Big Tech, one of the hottest topics in Washington, D.C.
As humongous corporate entities (who also make up the bulk of stock market portfolios) such as Alphabet, Amazon, Meta and others continue their massive investments in the AI and data center arenas, the amount of bandwidth that they are hungrily consuming is also expanding significantly. Bandwidth and capacity are king when it comes to producing AI content, and because of the interconnected nature of our communications networks, much of that traffic finds itself riding on NTCA member networks and results in unrecovered costs for community-based providers.
So, what is the problem as we hit this crossroads between the explosion of AI, the development of new data centers and the future of the USF? These mega corporations in the tech space aren't financially supporting the networks that are required to carry this traffic to end users or other points in any way. It's like having the ability to sneak onto the Dulles Toll Road during rush hour without paying. But someone has to pick up the cost of the network carrying that traffic.
The USF has long been the primary mechanism to connect approximately 100 million Americans to the internet and ensure that rural providers have the ability to create a business case to build, maintain and sustain an affordable network to carry all traffic and ensure that all Americans, regardless of where they live, have access to the tools and services required in our digital economy.
As Layton noted in her piece, in 2025, the FCC will disburse over $8 billion through this fund, not only to support services in rural communities but to support schools, hospitals, libraries and low-income consumers. It's a big task that has rested on the shoulders, or in the wallets, of a dwindling number of consumers, primarily attached to monthly landline bills or now nonexistent long-distance users. And, while this revenue base shrinks, the demand, cost and capacity needs for an AI economy are growing exponentially.
So, what now? With the Supreme Court decision on the constitutionality of USF in the rear-view mirror, it's time for Congress and the USF Working Group to look closely at how to ensure that this critical fund operates well into the future with a rapidly changing digital economy and evolving needs of those being served.
NTCA has long held that contributions are the top priority in this space. As the use of the USF evolves from telephone to telecommunications to broadband, the base must be expanded to reflect this new economy, which includes ensuring that the core mission and congressional intent of USF as codified in the 1996 Telecommunications Act (that all Americans have access to comparable and affordable service) be achieved with the support of those who also benefit from universal connectivity.
I encourage you to read Layton's thought piece. I promise you it's worth the effort.