Satellites Have Made This Costly Broadband Subsidy Obsolete
Johnny Kampis
September 18, 2026
This op-ed was originally published in Real Clear Science.
For decades, taxpayers have been forced to prop up an increasingly outdated broadband subsidy program with billions of dollars a year. Now, advocates for new broadband-deployment technologies are calling on the Federal Communications Commission (FCC) to finally pull the plug.
In a recent FCC filing, SpaceX calls for the Commission to “wind down outdated and redundant High Cost programs that now clearly provide diminished – or even negative – returns and redirect these resources to an enhanced affordability program that will deliver clear and impactful benefits to consumers.”
The comments to the FCC pointed out the Commission’s own data show that 97 percent of Americans have access to two or more broadband providers. The small number of U.S. residents on the wrong side of the divide can be serviced better by low-earth orbit (LEO) satellite providers, the letter argues.
“The architecture of next-generation satellite systems is optimally suited to provide high-capacity, low-latency broadband services that are durable, cost-efficient, and economically self-sustaining – even in areas that are the most challenging and expensive to serve for terrestrial networks.”
The High-Cost Fund is the most expensive of the four components of the Universal Service Fund (USF), costing taxpayers about $4.5 billion annually, which represents more than half of the USF’s $8 billion to $8.5 billion annual budget. The program distributes funding to providers to deliver internet service in rural areas where market forces cannot support the significant cost of deploying terrestrial-based network infrastructure to provide connectivity.
This is particularly true in sparsely populated and/or areas with rugged terrain where the cost to deploy fiber networks is prohibitive. Alternative technologies such as LEO satellite and fixed wireless are a growing sector of broadband deployment that can provide high-speed internet at lower cost. In addition to services such as SpaceX’s Starlink, Amazon LEO is expected to begin operations later this year.
The push against the immense expense of the High-Cost Fund comes at an opportune moment, as Congress finally takes a hard look at reforming the USF. Working groups have examined how to fix the fund in the face of mounting budget shortfalls, but lawmakers should be wary of “reforms” that simply squeeze more money out of consumers.
The Telecommunications Act of 1996 mandates that telecom carriers pay a percentage of their revenues into the fund. 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. A 2025 report from the Computer & Communications Industry Association estimated U.S. gross domestic product would drop by an estimated $82 billion annually if a USF fee of 7 percent was implemented on cloud services.
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.
Then there is the waste. The U.S. Government Accountability Office (GAO) has repeatedly warned about overlap in federal broadband programs and the taxpayer dollars squandered as a result, as the Taxpayers Protection Alliance has reported. The Broadband Equity, Access, and Deployment (BEAD) Program is designed to provide quality internet to unserved areas, which is precisely what the High-Cost Fund is supposed to do. The GAO diplomatically notes that “determining whether program overlap results in duplicative support can be challenging.” Taxpayers should not have to pay twice for the same connections while Washington sorts out the confusion.
The answer is straightforward. USF reform must include phasing out the High-Cost Fund. New technologies are already filling the broadband gap without the need for duplicative subsidies, and cutting them would shrink the contribution factor tax that inflates Americans’ phone bills every month. Consumers deserve lower costs, not another decade of paying for a program that has outlived its purpose.