By Stephen Smoot
As many West Virginia telecommunications companies and officials, elected and otherwise, continue to creatively develop ways to extend broadband service, under the radar of most, a case slowly made its way through the Byzantine recesses of the federal court system.
On the United States Supreme Court’s final decision rested the future of whether thousands living in remote areas of the state would ever see modern telecommunications extended into their homes.
Many more could have seen rates skyrocket.
Said Derek Barr of Hardy Telecommunications, the wrong ruling “would have been devastating for the state of West Virginia.”
The backbone of telecommunications service in areas both rural and remote comes in the form of a $9 billion Universal Service Fund. Incarnations of this date back to the New Deal era and the Communications Act of 1934 when the federal government reimbursed non profit telephone cooperatives for extending landline telephone service.
In 1996 an updated Telecommunications Act enabled the USF to also help to expand modern communications, such as broadband internet service. Section 254 of that Act enables the process by which the fund is collected and administered.
According to Broadband For Breakfast, an online trade publication, the “Federal Communications Commission program supports rural broadband networks, plus internet discounts for low-income households, schools and libraries and healthcare centers. It’s been funded since the 1990s by fees on interstate voice revenue, with the accounting work delegated to the Universal Service Administrative Company, which the FCC set up for the purpose.”
Consumer’s Research, which operates Consumer Reports, claimed, according to the syllabus of Federal Communications Commission et al v. Consumer’s Research et al (2025) that the FCC “violates the nondelegation doctrine” by giving the United Service Administrative Company an unconstitutional power to tax.
The organization went on to argue that “For those statutes, Congress must set a definite or objective limit on how much money an agency can collect—a numeric cap, a fixed tax rate, or the equivalent. Section 254 contains no such limit, so, in Consumers’ Research’s view, it is unconstitutional.”
Constitutional questions over the USF served since 2022 as a Sword of Damocles over an important mechanism by which current and future service is provided to rural and remote areas in West Virginia and across the nation. Barr explains that the USF has four purposes under current law. It supports a high-cost fund, e rate programs for libraries and schools, rural health care initiatives, and support for low income households to remain connected.
While the BEAD, the Broadband Equity Access and Deployment program receives a lot of attention as it slowly sees implementation, the USF has done much heavy lifting of extending and providing service.
Hardy Telecommunications, for example, relies heavily on the high-cost fund. The FCC provides a lengthy list of potential targets for expansion to a participating company. It then has five years to connect all on the list to receive reimbursement from the USF over a 15-year period. “If the USF was gone,” explained Barr, “we would have spent money to build that does not make financial sense.”
That is because the targets are found in areas of difficult terrain, remote location, or have some other factor that makes extending to such areas too costly to do profitably. For profit telecommunications companies, such as Frontier and CityNet, also use the high cost fund.
High costs also come from maintaining service to such areas. The NCTA, originally the National Telephone Cooperative Association and now NTCA-the Rural Broadband Association, shared that many existing rural customers could have seen their bills go up an average of $72 a month.
As Barr explained, Consumer’s Research filed their 2021 suit in numerous federal circuit courts. Though ruled against once by the Fifth Circuit earlier, they subsequently received a judgment in their favor.
The United States Supreme Court ruled in a six toe three decision that Barr called “decisive” that the fund was Constitutional. The decision explained that the “Court declined requests to create a special nondelegation rule for revenue-raising legislation. The test Consumers’ Research proposes also would throw a host of federal statutes into doubt, as Congress has often empowered agencies to raise revenue without specifying a numeric cap or tax rate.”
One guideline exists in lieu of a hard cap, the word “sufficient.” This provides both a flexible floor and ceiling for the fee that ties it to the need and not to a specific number. The Court majority ruled that “sufficient” was sufficient.
Justice Elena Kagan delivered the majority opinion for Chief Justice Roberts, Brett Kavanaugh, Amy Coney Barrett, Sonia Sotomayor, and Ketanji Brown Jackson. Though Samuel Alito expressed concerns at one point about ruling against the USF, he joined Clarence Thomas and Neil Gorsuch, who wrote the dissent, in voting against.
Kagan wrote in the majority opinion that “the universal-service project arose from the concern that pure market mechanisms would leave some segments of the population without access to needed communications ser vices,” which echoes Barr’s concerns.
The Fifth Circuit’s ruling stated that the FCC provided a power to tax “without supplying an intelligible principle to guide (its) discretion,” but ignored the question over whether the FCC could delegate the power at all.
Kagan stated that Congress had delegated its power by an “intelligible principle.” In such cases, especially when the effect of striking something down would have significant negative national impact, Kagan stated that the Court has generally not questioned Congressional authority.
Also, upholding Consumer’s Research position would “throw a host of federal statutes into doubt.”
Gorsuch’s dissent explains the origin and history of the USF and how the purpose of the fund and even the definition of “universal service” expanded greatly over time. He also argued that the fee served as a tax under another name and that the procedures used, including the company established to administer it, go farther than the Constitution allows.
He thus concluded that “so, in the end, it is consumers who pay for the agency’s universal-service programs.” Gorsuch then examined the “intelligible principle” test and failed to find “sufficient” sufficient as a guideline, pointing out that the USF fund expanded considerably since the Telecommunications Act of 1996.
In short, the dissent saw the fee as a tax, ultimately on consumers themselves, and the guidelines imposed as too vague to represent a meaningful restraint given the history of the fund and continued expansion of what it pays for. Gorsuch posits that “suppose tomorrow the agency decides to ensure ‘every American [has] a cell phone and a cell phone plan’” and states that no limits exist on what the FCC could require to make that happen.
Regardless of the arguments that both offer considerable merit the USF remains in place and will continue to help fuel the expansion of broadband service in the more remote areas of the nation.
