Congress Should Not Assess USF Fees on Tech and Streaming Companies

After the last public pool is closed and kids are back in school, lawmakers may consider legislation that would reform the contribution method for the Federal Communications Commission’s (FCC) Universal Service Fund (USF)—which subsidizes the deployment and adoption of broadband services—in the face of budget shortfalls. Expanding contributions to include tech and streaming services, as some have proposed, would be a mistake that would almost assuredly result in higher prices and diminished innovation for consumers.

At an annual cost of up to $9 billion, the FCC uses the USF to pay for broadband access and infrastructure programs that include E-Rate, High Cost, Lifeline, and Rural Health Care. The USF has been in place since the passage of the Telecommunications Act of 1996, and despite challenges to its legality, the U.S. Supreme Court (SCOTUS) ruled the USF constitutional, making its oversight even more critical.

The act mandates that telecom carriers pay a percentage of their revenues into the fund, a percentage that is now more than one-third of those revenues. Some are advocating for the contribution base to be expanded to include cloud and edge service providers.

A 2025 report from the Computer & Communications Industry Association indicates that would be a bad idea, with U.S. gross domestic product dropping by an estimated $82 billion (to $207 billion annually) if a USF fee of 7 percent was implemented on cloud services. The study said imposing the fee would lead to higher prices and less cloud adoption, resulting in less innovation and more job losses.

Unfortunately, there are a lot of misconceptions about tech and streaming companies and their wider contributions to the digital domain. Critics say they are not paying their fair share to the USF, but those companies already contribute to the USF, both directly and indirectly. Companies pay into the fund directly if they offer a USF-assessable service. They pay into the fund indirectly if they purchase telecommunications from another company to operate their service. This can include such things as a content delivery network or internal corporate network. Because those telecommunications providers must contribute to the USF, the tech or streaming company must pay more to use their services. Therefore, a direct USF assessment on those companies would force them to contribute twice to the fund.

Because tech and streaming companies don’t receive USF subsidies, they wouldn’t be able to offset their contributions in the same manner as providers who receive USF subsidies to participate in other federal programs such as E-Rate and Rural Health Care.

Forcing tech and streaming companies to contribute directly to the USF would also run counter to the Trump administration’s goals. An assessment would effectively create a federal U.S. digital services tax imposed on what is among the most vibrant sectors of the economy. That would undermine the administration’s fight against those same types of taxes being imposed on American companies by other countries. Because other nations often follow the lead of the U.S. on technology issues, this tax would encourage the adoption of similar digital services taxes and network usage fees globally.

Additionally, this would harm the Trump administration’s push for artificial intelligence (AI) growth because AI companies would be required to pay into the USF as major generators of data-transiting broadband networks.

There is also the question of statutory authority. In the Telecommunications Act, Congress did not grant the FCC authority to require information services to contribute to the USF. In fact, Congress directed the Commission not to regulate that category, which includes, streaming, cloud, and other tech products and services. Without a clear authorization from Congress, any FCC action to assess fees on information services would run against legal precedent and the plain letter of the law.

Further, the U.S. Government Accountability Office has repeatedly voiced concerns about overlap in federal broadband programs and taxpayer waste, as the Taxpayers Protection Alliance has reported. This includes facets of the USF. For example, the USF’s High-Cost Program aids deployment in costly-to-serve areas, just as the $42.5 billion Broadband, Equity, Access, and Deployment (BEAD) Program is designed to do. The GAO said the fragmentation and overlap can lead “to the risk of duplicative support” and that “determining whether program overlap results in duplicative support can be challenging.”

Slapping new USF fees on tech and streaming companies is a terrible idea. Instead of expanding a bloated and outdated program, lawmakers should look to trim the USF instead.