5th Circuit Court Rules Against FCC Universal Service Fund
The 5th Circuit Court of Appeals has just made a decision that has sent a lightning bolt through the internet and telecom industry.
The court has ruled that the Universal Service Fee tax is a “misbegotten tax” and is unconstitutional.
The industry has already announced it plans to appeal the decision to the Supreme Court.
Misbegotten Tax
If you look at your service bill from your cell phone provider, you will see a Universal Service Fee on there.
This is a tax charged to providers to help provide phone and broadband service to low-income earners.
This tax is then passed on to the consumer.
Well, the courts have just ruled that the tax is unconstitutional, and the industry is now having a fit that it may be forced to cover this charge.
The dissenting opinions in the case blasted the majority, with one stating, "The majority finds neither an unconstitutional delegation of legislative power nor an unconstitutional exercise of government power by a private entity.
“Supreme Court precedent dictates these answers, which is why every other circuit to consider these questions stopped there and the Supreme Court denied petitions for review of those decisions.”
The dissent added, "Make no mistake, there is nothing narrow about this ruling.
"This decision invites lower courts to leapfrog the Supreme Court; creates a split with all other circuits to have considered the issue; ignores statutory criteria and regulations; and upends the political branches' decades-long engagement with each other, industry, and consumers to address the technology divide."
Telecom attorney Andrew Jay Schwartzman also opposed the decision, stating, "Today's majority opinion attempts to break new ground by ignoring Fifth Circuit and Supreme Court precedent.
"The majority's hostility to the policies underlying the Universal Service Fund is palpable. That, plus the bipartisan group of seven dissenters, makes it almost certain that the Supreme Court will agree to hear the issue.
“And, given that two other Circuits have recently ruled the other way, I think there is a strong likelihood that the Supreme Court will uphold the constitutionality of the Universal Service Fund."
As we noted above, the decision will be appealed to the Supreme Court, so we will have to wait to see if this decision holds up or not.
