Leave Our Phones Alone

by Kent Lassman, President & CEO, Competitive Enterprise Institute

Americans love their phones. In fact, there are more assigned phone numbers in the United States today than there are residents. We love the ability to connect with others. In fact, this ability to communicate from virtually anywhere at any time is one of the defining characteristics of contemporary life.

But twenty-five years ago, Congress unconstitutionally handed the Federal Communications Commission (FCC) the power to increase taxes on monthly phone bills, all for the purpose of advancing an undefined, amorphous concept of the public interest. The FCC does this through something known as the Universal Service Fee (USF).

This fee is now being challenged in the U.S. Court of Appeals for the Fifth Circuit. Earlier this week, CEI, along with the Free State Foundation and several individual scholars, filed an amicus brief arguing that only Congress has the power to lay and to collect such taxes. Congress cannot delegate that power to an agency, because doing so allows it to escape political responsibility for the highly unpopular act of levying taxes. And because Congress did not set out any clear standards for the FCC to follow, it engaged in another unconstitutional act—a “standardless” delegation of its legislative power to an agency. The Constitution assigns the job of legislating to Congress and Congress alone; it cannot turn around and hand that power off to some other part of government. Finally, to make these constitutional problems even worse, the FCC has given a private body, the Universal Service Administrative Company, the job of administering this fee.

Not surprisingly, this lack of accountability has resulted in an out of control program. The subsidies paid by this program have steadily increased, from $1.4 billion in 1996-97 to more than $8.3 billion in 2020-21. This program deserves to be invalidated, period. The USF surcharge in 1998 was only three percent. However, it has steadily increased to 33.4 percent, as of the second quarter of 2021 ultimately making inter-

net access more costly for broadband users like you.

Since our founding in 1984, CEI has remained focused on the principles of free markets and limited government. We are dedicated to fixing the problems of overregulation, and we’ll continue to fight at both the agency level and in the courts to ensure that consumer freedom prevails. ▫