Amicus Curiae Brief — Federal Communications Commission, et al., Petitioners v. Consumers' Research, et al.

Supreme Court briefJan 15, 2025

Ask Donna

What actually matters in this document.

Text

Nos. 24-354 and 24-422

In the

Supreme Court of the United States

FEDERAL COMMUNICATIONS COMMISSION, ET AL.,

Petitioners,

CONSUMERS’ RESEARCH, ET AL.,

_____________

Respondents.

SCHOOLS, HEALTH & LIBRARIES

BROADBAND COALITION, ET AL.,

Petitioners,

CONSUMERS’ RESEARCH, ET AL.,

_____________________________

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

_____________________________

BRIEF OF WTA – ADVOCATES FOR RURAL BROADBAND

AMICUS CURIAE IN SUPPORT OF PETITIONERS

_______________________________

Michael F. Smith

Counsel of Record

THE SMITH APPELLATE LAW FIRM

1717 Pennsylvania Avenue N.W.

Suite 1025

Washington, D.C. 20006

(202) 454-2860

smith@smithpllc.com

Counsel for Amicus Curiae

GibsonMoore Appellate Services, LLC

206 East Cary Street♦ Richmond, VA 23219

804-249-7770 ♦

www.gibsonmoore.net

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES....................................... ii

INTEREST OF AMICUS CURIAE ........................... 1

SUMMARY OF ARGUMENT .................................... 2

ARGUMENT .............................................................. 3

I. There was no impermissible delegation............... 3

A. Universal Service History ............................... 3

B. The Fifth Circuit Mischaracterizes the

Operation of FCC’s USF Program .................. 6

II. WTA Members and their Customers will be

Significantly Harmed if the Fifth Circuit

Decision Stands ................................................... 13

CONCLUSION ......................................................... 34

TABLE OF AUTHORITIES

Cases

Page(s)

Consumers' Rsch. v. FCC,

63 F.4th 441 (5th Cir. 2023) ................................. 6

Consumers' Rsch. v. FCC,

67 F.4th 773 (6th Cir. 2023) ................................... 6

Consumers' Rsch. v. FCC,

88 F.4th 917 (11th Cir. 2023) ................................. 6

Lucas v. Forty-Fourth Gen. Assembly,

377 U.S. 713 (1964) ............................................. 34

McGirt v. Oklahoma,

591 U.S. 894 (2020) ............................................. 19

MCI Telecomms. Corp. v. FCC,

750 F.2d 135 (D.C. Cir. 1984) ............................... 5

National Ass'n of Reg. Util. Com'rs v. FCC,

737 F.2d 1095 (D.C. Cir. 1984) ............................. 5

Rural Cellular Ass'n v. FCC,

685 F.3d 1083 (D.C. Cir. 2012) ............................. 9

Texas Off. of Pub. Util. Couns. v. FCC,

183 F.3d 393 (5th Cir. 1999) .............................. 6, 9

Trump v. United States,

603 U.S. 593 (2024) ............................................. 33

Statutes and regulations

Broadband Deployment Accuracy and

Technological Availability Act (“Broadband

DATA Act”) (47 U.S.C. 641 et seq) ........................ 7

iii

Statutes and regulations (cont’d)

Communications Act of 1934, ch. 652, 48 Stat. 1064

(47 U.S.C. 151 et seq.) ........................................... 3

47 U.S.C. 151......................................................... 3

47 U.S.C. 254..........................................2, 5, 6, 7, 8

47 U.S.C. 254(a) .................................................... 6

47 U.S.C. 254(b) .................................................... 6

47 U.S.C. 254(b)(3) .......................................... 5, 34

47 U.S.C. 254(b)(6) ................................................ 5

47 U.S.C. 254(d) .................................................... 5

Congressional Review Act,

(5 U.S.C. 801 et seq) .............................................. 8

5 U.S.C. § 801 ........................................................ 8

5 U.S.C. § 802 ........................................................ 8

Consolidated Appropriations Act, 2021,

Pub. L. No. 116-260 .............................................. 7

Further Consolidated Appropriations Act, 2024,

Pub. L. No. 118-47 ................................................ 7

Telecommunications Act of 1996,

Pub. L. No. 104-104, 110 Stat. 56..................... 3, 5

47 C.F.R. 54.502 ......................................................... 9

47 C.F.R. 54.503 ......................................................... 9

47 C.F.R. 54.709 ....................................................... 10

47 C.F.R. 54.717 ....................................................... 10

47 C.F.R. 69.601 ......................................................... 5

47 C.F.R. 69.603 ......................................................... 5

Other Authorities

Fed. Commc’ns Comm’n:

Before the Federal Communications

Commission Nov. 4, 2024, Alaska Connect

Fund, https://docs.fcc.gov/public/attachments/

FCC-24-116A1.pdf

(last visited January 13, 2025)........................ 9

Before the Federal Communications

Commission, Order of October 25, 2024,

https://docs.fcc.gov/public/attachments/DA24-1104A1.pdf

(last visited January 13, 2025)........................ 9

Connect America Fund,

26 FCC Rcd. 17663 (2011) ............................. 10

Connect America Fund: A National

Broadband Plan for Our Future High-Cost

Universal Service Support, et al.,

38 FCC Rcd. 7040 (2023) ................................. 9

Federal-State Joint Board on

Universal Service,

12 FCC Rcd. 8776 (1997) ............................... 10

Lifeline and Link Up Reform and

Modernization et al.,

31 FCC Rcd. 3962 (2016) ............................... 10

MTS & WATS Market Structure:

Third Report and Order,

93 F.C.C. 2d 241 (1983) ................................... 4

Prescription of Procedures for Separating

and Allocating Plant Investment, Operating

Expenses, Taxes and Reserve Between the

Interstate and Intrastate Operations of

Telephone Companies,

26 F.C.C. 2d 247 (1970) ................................... 4

Other Authorities (cont’d)

Fed. Commc’ns Comm’n (cont’d):

Promoting Telehealth in Rural America,

WC Docket No. 17-310,

33 FCC Rcd. 6574 (2018) ............................... 10

Schools and Libraries Universal Service

Support, Mechanism A National Broadband

Plan for Our Future,

25 FCC Rcd. 18762 (2010) ............................. 10

Streamlined Process for Resolving Requests

for Review of Decisions by the Universal

Service Administrative Company,

29 FCC Rcd. 11094 (WCB 2014) ................... 11

S.J.Res. 34, 115th Cong. 1st Sess. (2017) .................. 8

Miscellaneous

About Hart County,

https://hartcountyga.gov/aboutus.html

(last visited January 13, 2025) ........................... 21

About Kalama Telephone Company,

https://kalamatelephone.com/about/

(last visited January 13, 2025) ........................... 32

About Tenino Telephone Company,

https://teninotelephone.com/about/

(last visited January 13, 2025) ........................... 32

Central Arkansas Telephone, Who We Are,

https://catc.net/about/who-we-are/

(last visited January 13, 2025) ........................... 18

Miscellaneous (cont’d)

Connecting the Wild Country to the World: A

Family-Owned Business Keeps Remote West

Texas Communities in Communication,

Landscapes (Summer 2016),

https://www.findfarmcredit.com/landscapesarticles/connecting-the-wild-country-to-the-world

(last visited January 13, 2025) ........................... 14

Hart Telephone Company, Our History,

https://www.htconline.net/history/

(last visited January 13, 2025) ........................... 21

The History of CTC Telecom,

https://ctcweb.net/our-history

(last visited January 13, 2025) ........................... 16

J. Burger, Sulphur Residents Helping Neighbors

Despite Their Own Uncertainties Following

Tornado Outbreak, KOCO-TV (April 29, 2024),

https://www.koco.com/article/sulphur-oklahomatornado-damage-helping-others/60634657

(last visited January 13, 2025) ...................... 19-20

Matanuska Telecom Ass’n, Alaska Plan,

https://www.mtasolutions.com/about/alaskaplan/

(last visited January 13, 2025) ........................... 22

Mescalero Apache Telecom, Inc.,

https://www.matinetworks.net/about.html

(last visited January 13, 2025) ........................... 24

The National Congress of American Indians

Resolution #RAP-10-009,

https://archive.ncai.org/attachments/Resolutio

n_PRgyVhwGXgnpechTBriZtnmGKcpIgxqqtu

pPWDqGZZNqoDTLPFs_RAP-10-009.pdf

(last visited January 13, 2025) ........................... 20

vii

Miscellaneous (cont’d)

Northeast Nebraska Telephone Company,

About NNTC, https://nntc.net/about/

(last visited January 13, 2025) ........................... 26

NortheastTel – Our History: How we got here!,

https://pelicanbroadband.com/about/

(last visited January 13, 2025) ........................... 25

Rally Networks, Meet Rally,

https://rallynet.us/about-us/

(last visited January 13, 2025) ........................... 31

Shawnee Communications, Our Mission and

History, https://shawnee.com/mission-history/

(last visited January 13, 2025) ........................... 27

Smithville Communications, Keeping You

Connected!, https://www.smithville.com/about/

(last visited January 13, 2025) ........................... 29

Telecommunications: Administration of

Universal Service Programs Is Consistent

with Selected FCC Requirements, GAO-24106967, Publicly Released: Aug 22, 2024

(https://www.gao.gov/assets/gao-24-106967)

(last visited January 13, 2025) ........................... 11

INTEREST OF AMICUS CURIAE

Amicus curiae WTA – Advocates for Rural

Broadband (WTA) is a national trade association

representing approximately 400 rural local

telecommunications carriers (RLECs) that provide

voice, broadband and other services to some of the

most remote, rugged, sparsely populated, and

expensive-to-serve areas of the United States. 1

Founded as the Western Telecommunications

Alliance from the 2004 merger of two regional

associations that collectively represented the rural

industry west of the Mississippi for 105 years, WTA

now represents rural telecommunications providers

and industry vendors coast-to-coast.

WTA members have long constructed and

operated their rural networks – very often as

providers of last resort – in high-cost farming,

ranching, mining, mountain, forest, and desert areas,

as well as on Native American reservations and other

Tribal lands. The typical WTA member company

serves fewer than 5,000 customers per service area

and has fewer than 50 employees. All of WTA’s RLEC

members are Eligible Telecommunications Carriers

(ETCs) that receive high-cost Universal Service Fund

(USF) support from Petitioner FCC – approximately

53 percent receive model-based support from the

Enhanced Alternative Connect America Cost Model

(E-ACAM) and earlier ACAM support programs, and

approximately 47 percent receive cost-based support

from the Connect America Fund – Broadband Loop

1 No counsel for a party authored this brief in whole or in part,

and no counsel or party made a monetary contribution intended

to fund its preparation or submission. No person other than

WTA, its members or its counsel made such a monetary

contribution.

Service (CAF-BLS) and High-Cost Loop Support

(HCLS) programs, plus Alaska RLECs that receive

support from the Federal Alaska Connect Fund. Most

WTA members also receive Connect America Fund –

Intercarrier Compensation (CAF-ICC) support, and

many also receive funds from one or more other USF

programs, including the Lifeline program, the Schools

and Libraries (E-Rate) program and the Rural Health

Care program. As detailed below, WTA members and

customers throughout their vast service areas have

extensively relied on USF support for current and

long-term operations, and will suffer significant harm

if the Fifth Circuit’s decision is not reversed.

SUMMARY OF ARGUMENT

Congress in enacting Section 254 delegated

neither legislative nor governmental power, nor

otherwise acted unlawfully under the Fifth Circuit’s

novel “combination” theory. It merely codified the

long-standing system of telecommunications services

providers contributing to the funding of universal

service support, and expanded that support to ensure

that affordable service was available to all schools,

libraries and health-care providers throughout our

vast Nation. In doing so, it acted well within its

constitutional authority.

Further, the Fifth Circuit decision misstated key

component factors of FCC’s USF program, as well as

its history. If not reversed, its ruling will have

calamitous effects on millions of customers for whom

the program is a lifeline connecting them to the

modern world – individuals, schools, hospitals and

others in rural and Tribal areas throughout the

country.

ARGUMENT

I. There was no impermissible delegation.

A. Universal Service History

When Congress adopted the universal service

provisions of the Telecommunications Act of 1996 at

issue here, it was not writing on a clean slate.

Universal service has been a Federal (and State)

policy for over 90 years. Congress, in the original

Section 1 of the 1934 Communications Act (1934 Act),

incorporated the universal-service principle as an

FCC goal:

For the purpose of regulating interstate and

foreign commerce in communication by wire

and radio so as to make available, so far as

possible to all the people of the United

States a rapid, efficient, Nation-wide, and

world-wide wire and radio communication

service with adequate facilities at

reasonable charges. 2

Congress, however, did not elaborate on that principle

until some six decades later.

Rather, since early last century FCC, State

regulators and the telephone companies implemented

universal service policies by using long-distance

revenues to subsidize local service rates and to

encourage small local entities to serve outlying highcost and sparsely populated rural areas that the

larger carriers found unprofitable. The costs for the

local carriers were allocated between the State and

Federal jurisdictions based on a separations manual

developed by FCC and the States’ National

47 U.S.C. 151 (emphasis added).

Association of Regulatory Utility Commissioners

(NARUC), with the former Bell System making

payments to large and small independent telephone

companies or transfers to the local Bell companies

under the Settlements and Separations processes to

reimburse these “Federal” local service costs. In 1970,

the regulators and the phone companies agreed to

modify the separations manual to more than triple

the “over-allocation” of costs to the Federal

jurisdiction in order to subsidize local service under

the “Ozark Plan.” 3

However, with the introduction of competition for

long-distance service in the mid-1970s and the breakup of the Bell System in the early 1980s, the previous

approach of using AT&T’s interstate long-distance

revenues to provide the subsidies to keep local service

rates affordable was unsustainable. Thus, Petitioner

FCC, in concert with State regulators as well as

industry stakeholders, made significant changes to

the separations/subsidy plan. FCC froze the

percentage of non-traffic costs assigned to the Federal

jurisdiction (the Subscriber Plant Factor) at 25%,

established a program for HCLS for companies whose

costs significantly exceeded the national average, and

required all interstate long-distance carriers to

contribute to covering these costs. 4 This new and

more transparent industry subsidy program was

equitable and justified by the “network effect” – that

is, the value of the services provided by long-distance

Prescription of Procedures for Separating and Allocating Plant

Investment, Operating Expenses, Taxes and Reserve Between the

Interstate and Intrastate Operations of Telephone Companies, 26

F.C.C. 2d 247 (1970).

MTS & WATS Market Structure: Third Report and Order, 93

F.C.C. 2d 241 (1983).

and other carriers increases as more people are

connected to the network and can be reached via it.

This program was implemented through access

charge tariffs, with the HCLS and pooled tariffs

administered for RLECs by the National Exchange

Carrier Association (NECA), which was created by

the telecommunications industry under FCC

supervision. 5 These FCC, Joint Board and industry

arrangements were upheld on appeal. 6

With the subsequent emergence of local-service

competition in the 1990s, Congress specifically

addressed universal service in the context of

comprehensive telecommunications law reform

through the Telecommunications Act of 1996. In

doing so, Congress in Section 254 codified the longstanding system of telecommunications services

providers contributing to the funding of universal

service support, 7 as well as expanding that support

to ensure that affordable access to telephone service

and advanced services was also available to all

schools, libraries and healthcare providers. 8 In

addition, Congress in Section 254 provided guidance

on how FCC, working with the States through the

Joint Board, was to design and run the newly

47 C.F.R. 69.601 and 69.603.

6 National Ass'n of Reg. Util. Com'rs v. FCC, 737 F.2d 1095 (D.C.

Cir. 1984); MCI Telecomms. Corp. v. FCC, 750 F.2d 135 (D.C.

Cir. 1984).

47 U.S.C. 254(d) (“Every telecommunications carrier that

provides

interstate telecommunications

services shall

contribute, on an equitable and nondiscriminatory basis, to the

specific, predictable, and sufficient mechanisms established by

the Commission to preserve and advance universal service.”).

47 U.S.C. 254(b)(3) and (b)(6).

expanded universal service programs. 9 Not long

after FCC adopted its new universal service

program rules, the USF program’s constitutionality

was challenged and upheld. 10 More recently,

Consumers’ Research et al. filed several challenges

to the USF contribution mechanism, which were

rejected by the Fifth, Sixth and Eleventh Circuits, 11

before being upheld by the en banc Fifth Circuit

judgment under review here. Pet. App. 1a. That

decision is an outlier, which as explained below

ignored the history behind Section 254 and FCC’s

oversight of the Universal Service Administrative

Company (USAC).

B. The Fifth Circuit Mischaracterizes the

Operation of FCC’s USF Program

The Fifth Circuit’s judgment misstates several

important factors concerning FCC’s USF program. As

an initial matter, it mischaracterizes the USF history

when it asserts that “Congress allowed [AT&T] to

charge supra-competitive rates to urban customers in

exchange for requiring it to provide services it might

not otherwise provide to high-cost rural customers.” 12

As explained above, while Congress did incorporate

the universal-service principle as a purpose of the

1934 Act, universal service was a long-standing

industry and regulator-driven program funded by the

47 U.S.C. 254(a) and (b).

Texas Off. of Pub. Util. Couns. v. FCC, 183 F.3d 393, 426-429

(5th Cir. 1999).

Consumers' Rsch. v. FCC, 63 F.4th 441 (5th Cir. 2023);

Consumers' Rsch. v. FCC, 67 F.4th 773 (6th Cir. 2023);

Consumers' Rsch. v. FCC, 88 F.4th 917 (11th Cir. 2023).

Pet. App. 2a.

industry, which Congress codified and expanded in

Section 254 of the 1996 Act.

The decision below also mischaracterizes

Congressional oversight of FCC, in asserting that

Section 254 “insulates FCC from the principal tool

Congress has to control FCC’s universal service

decisions—the appropriations power.” 13 In fact,

Congress retains (and exercises) authority over FCC

through the appropriations process when it annually

sets FCC’s budget. Indeed, recent appropriations

legislation has directed FCC with regard to the

universal-service program, 14 as well as requiring FCC

to report to Congress on designated matters within a

specified time frame. 15 Moreover, Congress regularly

13 Pet. App. 31a; see also Pet. App. 40a (“§ 254 delegates to FCC

the power to make important policy judgments, and to make

them while wholly immunized from the oversight Congress

exercises through the regular appropriations process”).

E.g., Further Consolidated Appropriations Act, 2024:

SEC. 511. None of the funds appropriated by this Act may be

used by the Federal Communications Commission to modify,

amend, or change its rules or regulations for universal

service support payments to implement the February 27,

2004, recommendations of the Federal-State Joint Board on

Universal Service regarding single connection or primary

line restrictions on universal service support payments.

E.g., Consolidated Appropriations Act, 2021:

Broadband Maps.-- In addition to adopting the House report

language on Broadband Maps, the agreement provides

substantial dedicated resources for the FCC to implement

the Broadband DATA Act. The FCC is directed to submit a

report to the Committees on Appropriations within 90 days

of enactment of this Act providing a detailed spending plan

for these resources. … The FCC is directed to report in

writing to the Committees every 30 days on the date,

amount, and purpose of any new obligation made for

broadband mapping and any updates to the broadband

conducts oversight hearings of FCC and also has

authority under the Congressional Review Act to

disapprove FCC regulations with which it

disagrees. 16 Congress is not some helpless bystander

as the Fifth Circuit suggests.

Similarly, the judgment below mischaracterizes

USAC’s independence in claiming that FCC

unlawfully delegated authority to a private entity.

According to that decision:

FCC has delegated government power—the

power to dictate the size of the universal

service contribution amount, which controls

the size of a tax levied on American

consumers—to

USAC

and

private

telecommunications carriers.

But USAC and the private carriers do not have

authority to dictate the contribution amount’s size. 18

mapping spending plan. [166 Cong. Rec. at H8440 (daily ed.

Dec. 21, 2020)].

5 U.S.C. 801 and 802. Indeed, Congress exercised such

disapproval authority with respect to FCC’s Open Internet

privacy rules. S.J.Res.34, 115th Cong. 1st Sess. (2017).

Pet. App. 48a-49a; see also, Pet. App. 53a-54a (“The decision

of how much money should be set aside to execute FCC’s

universal service policies—the very decision FCC has delegated

to USAC and private carriers—is an independent decision that

requires independent judgment. … So even if we thought FCC

correctly described the role of private entities, we would still

conclude that dictating the contribution amount is an exercise of

government power”) (citation omitted).

18 Despite the Fifth Circuit’s characterization of the contribution

factor as a tax, Section 254 codified prior practice, and as

explained above, the USF and its predecessor support

mechanisms have been financed by the industry for more than

70 years. Indeed, other courts that have addressed this issue,

Rather, USAC performs the ministerial acts of

collecting information from carriers regarding their

expected telecommunications-services revenues for

the upcoming period, determining the expected

payment amounts based on the authorized

expenditures, and then advising the FCC on the

calculation of the contribution factor.

FCC also uses myriad tools to control the amount

of funds to be distributed to service providers under

the various universal service programs. For the

Schools and Libraries program, FCC annually issues

a list of eligible services 19 and it requires healthcare

providers, schools and libraries to obtain service

through a fair and open bid process, with notice of the

request for bids posted on the USAC website. 20 With

regard to the high-cost fund, many of the telephone

companies receive model-based support, with a cap on

the per-line support. 21 In addition, FCC has set

budget caps for each of the four universal service

including the Fifth Circuit, concluded it was not a tax. Rural

Cellular Ass'n v. FCC, 685 F.3d 1083, 1091 (D.C. Cir. 2012);

Texas Off. of Pub. Util. Couns. v. FCC, 183 F.3d at 440.

47 C.F.R 54.502. FCC recently released the eligible-service

list for 2025 -- Modernizing the E-Rate Program for Schools and

Libraries, DA 24-1104, released October 25, 2024,

https://docs.fcc.gov/public/attachments/DA-24-1104A1.pdf.

47 C.F.R. 54.503.

E.g., Connect America Fund: A National Broadband Plan for

Our Future High-Cost Universal Service Support, et al., 38 FCC

Rcd. 7040 (2023)(Enhanced ACAM Order); Connect America

Fund; Alaska Connect Fund, et al., FCC 24-116, released Nov. 4,

2024, https://docs.fcc.gov/public/attachments/FCC-24-116A1.pdf

(Alaska Connect Fund).

programs. 22 The expenditures, which determine the

contribution factor, are closely controlled by FCC.

Clearly FCC has not delegated authority to USAC

and/or the private telecommunications carriers to

dictate the USF contribution factor.

Moreover, even assuming arguendo USAC’s

authority is not purely ministerial, the decision below

did acknowledge that

[Such] delegation is lawful only if FCC (1) has

final decision-making authority, (2) actually

exercises that authority, and (3) exercises

“pervasive surveillance and authority” over the

private entities exercising power in its name. 23

As explained above, FCC prescribes the various

elements that go into calculating the contribution

factor. Thus, it is unsurprising that FCC has rarely

found it necessary to revise the contribution factor or

the associated elements USAC calculates – though it

retains authority to do so. 24 Moreover, as explained

below, FCC exercises “pervasive surveillance

authority.”

FCC oversees and audits USAC’s work. 25

Additionally, on a monthly basis it issues a public

Schools and Libraries Universal Service Support Mechanism;

A National Broadband Plan for Our Future, 25 FCC Rcd. 18762

(2010); Connect America Fund, 26 FCC Rcd. 17663 (2011);

Federal-State Joint Board on Universal Service, 12 FCC Rcd.

8776 (1997) and Promoting Telehealth in Rural America, WC

Docket No. 17-310, 33 FCC Rcd. 6574 (2018); Lifeline and Link

Up Reform and Modernization et al., 31 FCC Rcd. 3962 (2016).

Pet. App. 49a (citations omitted).

47 C.F.R. 54.709.

47 C.F.R. 54.717.

notice addressing appeals of USAC decisions filed by

service providers, schools, libraries and healthcare

providers. 26

WTA’s members can confirm FCC’s close

supervision of USAC. Members uniformly reported

to WTA that their contacts with USAC have been

characterized by complete and rigid USAC

adherence to the letter of all relevant FCC

regulations. Many WTA members have been the

subject of various performance and/or financial

audits by USAC, while virtually all have had

substantial contact with USAC regarding the

content and filing deadlines for various USF forms

and reports. Without exception, USAC has required

complete and rigid adherence to all applicable FCC

rules and deadlines; has refused to grant even minor

exceptions (e.g., for brief delays in meeting filing

deadlines); has refused to negotiate differences in

the calculation of disputed costs or support amounts;

and has required USF recipients to seek FCC

waivers for all disputes, rather that resolving them

by negotiation and compromise.

The extent of FCC’s oversight of USAC recently

was confirmed by the Government Accountability

Office (GAO), which reviewed USAC at Sen. Cruz’s

request. 27 Among other things, GAO concluded:

Streamlined Process for Resolving Requests for Review of

Decisions by the Universal Service Administrative Company, 29

FCC Rcd. 11094 (WCB 2014).

“Telecommunications: Administration of Universal Service

Programs Is Consistent with Selected FCC Requirements,”

GAO-24-106967,

Publicly

Released:

Aug

22,

2024

(https://www.gao.gov/products/gao-24-106967) (GAO Report).

As required by the MOUs, USAC prepares

monthly reports on USF and the other

programs it administers. Our review of

monthly reports found that they provide FCC

with detailed information on actions pertaining

to the USF programs, including updates on the

18-month plans.…USAC also uses these

monthly reports to update FCC on USAC’s

operations and other programs it administers,

such as the Affordable Connectivity Program.

This can include information on program

audits, finance, and information technology

projects. According to USAC executives, the

monthly reports provide FCC important

insight to USAC activities and progress toward

meeting its goals, while also giving FCC an

opportunity to provide feedback.

USAC and FCC’s Office of the Managing

Director also meet monthly to discuss metrics

related to USF programs. During these

meetings, USAC provides updates on items

such as improper payments, ongoing audits,

and corrective actions when issues are

identified. Further, USAC executives and FCC

staff reported that they meet more frequently

when needed. 28

As GAO corroborates, FCC maintains close oversight

of USAC, hence there has been no unlawful

delegation by FCC to private parties under the

Black/Sunshine Anthracite standards enunciated by

the Fifth Circuit’s judgment.

GAO Report at 11.

II. WTA Members and their Customers will be

Significantly Harmed if the Fifth Circuit

Decision Stands.

As noted, all of WTA’s RLEC members are ETCs

that receive Federal high-cost USF support. These

programs have enabled the small RLEC WTAmember companies to upgrade their former voice

networks in recent years to bring robust broadband

services to high-cost rural areas that the former Bell

System and other large carriers long found

unattractive to serve. The low population densities,

long trunk and loop distances and often-rugged

terrains of these areas make it very expensive not

only to construct broadband networks, but also to

operate, maintain and sustain such networks on a

long-term basis.

Given their relatively small customer bases, most

RLECs lack the ability to develop and market content

and other services capable of substantially increasing

their revenues, as the large broadband providers do.

Rather, most WTA members depend upon high-cost

USF support for at least half of their revenue streams.

Termination or other significant disruption of the

USF revenue stream will have significant adverse

impacts on these community-based companies,

including cessation or suspension of ongoing

broadband upgrade and expansion projects; default or

inability to comply with existing loan-repayment

terms and schedules of the United States Department

of Agriculture’s Rural Utilities Service (RUS) and

private banks; inability to recover broadband

investments made by shareholders and other owners;

significant increases in monthly residential

broadband service rates (often to unaffordable levels);

and reductions in staffing and other operating

expenses that would adversely impact service quality.

The experiences of a representative sample of

WTA members under the current USF programs

illustrate the critical importance of high-cost USF

support to members’ efforts to deploy, upgrade, and

sustain their broadband services, and thus improve

the quality of life and enhance public safety in their

rural and/or Tribal service areas:

Big Bend Telephone Company (BBT) serves

approximately 3,200 broadband customers in an

18,000-square-mile portion of southwestern Texas’

Big Bend region. Headquartered in Alpine

(population: 6,035), BBT serves a sparsely populated

rural area (0.24 subscribers per square mile) that

includes 485 miles of the United States-Mexico

border. 29

Currently a recipient of E-ACAM support, BBT

has employed high-cost USF support to qualify for

and repay bank loans and grant-loan combinations it

has used to upgrade its original voice service network

to high-speed broadband. USF support has been

integral to BBT’s broadband deployment by allowing

it to demonstrate the viability of broadband projects

to its lender, helping it to repay its loans, and

enabling it to pay operating expenses to sustain its

network and services post-construction and

deployment. BBT currently has approximately eight

years of payments left to retire its existing debt. It has

See generally Connecting the Wild Country to the World: A

Family-Owned Business Keeps Remote West Texas Communities

Communication,

Landscapes

(Summer

2016),

https://www.findfarmcredit.com/landscapes-articles/connectingthe-wild-country-to-the-world.

completed approximately 80 percent of its ultimate

fiber-to-the-home (FTTH) network, and has deployed

licensed fixed wireless to serve more remote and

difficult to reach locations (plus hybrid low earth orbit

(LEO) service to a handful of the most remote

locations).

BBT has developed a good working relationship

with the U.S. Department of Homeland Security

(DHS) and is employing its USF-supported fiber

network to connect DHS’ Marfa-sector headquarters,

as well as its forward operations, numerous

checkpoints and tethered aerostat radar systems,

allowing DHS to utilize AI technology, facial

recognition and other data in real time to save lives

and apprehend criminals in one of the most active

regions along the Southern border.

BBT has also used its USF-funded broadband

network to enable local school districts and regional

hospitals to extend and enhance their services.

Broadband allows local schools to share teachers,

lecturers and materials among themselves, and with

more distant schools and universities via virtual

education. It also allows teachers, students and

parents to participate in classes and conferences from

home when distance or weather conditions warrant.

Likewise, broadband enables rural clinics to work

closely with regional hospitals, including the

Veterans Administration, to examine, monitor and

treat rural patients without requiring them – who in

many cases are elderly and/or seriously ill – to spend

hours travelling to and from the hospital.

BBT’s broadband network is also helping to

rejuvenate agriculture in the region by enabling

farmers to select and implement precision-agriculture

methods and increase the efficiency of water usage

where it is in scarce supply. Other BBT projects will

employ its fiber backbone to establish and serve AIenabled data centers, deep-space research and even

drone prescription-delivery services.

BBT’s nascent broadband projects create

additional revenues as a result of its fiber

investment, but given the high-cost, low-populationdensity served, these added revenues alone would

not cover the necessary operational expenses. BBT

relies upon its E-ACAM support to continue these

network upgrades, qualify for and repay its

construction loans, and sustain its ongoing operating

expenses. If its current E-ACAM support were to be

terminated or suspended for a significant period,

BBT would need to recover approximately $290 per

loop per month of additional revenue from its

residential and other customers. Such a large rate

increase would be unacceptable to customers. It

means not only that BBT’s network upgrades could

not continue and its broadband service quality would

be impaired, but also that its service to various

border security, education, health, agricultural,

data-center and science-research initiatives would

also be disrupted.

Cambridge Telephone Company (CTC)

provides broadband service to approximately 1,400

broadband customers in five exchanges within a

2,500-square-mile area of west-central Idaho. 30

Headquartered in Cambridge (population: 335), CTC

serves a rocky, sparsely populated area – much of its

territory has fewer than one person per square mile –

See generally, The History of CTC Telecom,

https://ctcweb.net/our-history.

that includes Hells Canyon, scattered small towns,

and cattle ranches and other farms.

Since 1980, CTC has been engaged in a gradual

and methodical upgrade of its former copper-voice

network to a state-of-the-art FTTH broadband

network. It first deployed fiber-optic trunks to connect

its central offices, then installed fiber trunks between

its central offices and the nodes serving various areas

and customer clusters, and is currently deploying

FTTH from nodes to individual customer locations.

This is a difficult and expensive process, since conduit

must be buried three feet below the very rocky surface

and individual customer drops often extend for a mile.

Given Idaho’s abbreviated outdoor-construction

season, CTC does not expect to finish upgrading

customer locations to FTTH until 2029.

CTC has been financing its network upgrades with

private-sector loans and credit lines since 2016 and

has outstanding construction loans needing

repayment during the next five years. It will need to

draw upon a revolving line of credit to complete its

FTTH upgrades during that time, and the loans’

repayment periods will extend as long as to 2039. CTC

will require uninterrupted E-ACAM support to

continue its network upgrade and to repay its existing

and future construction loans. It also requires its

existing E-ACAM support to cover the above-average

per customer operating costs needed to serve its

remote and sparsely populated service area. In

addition to the lack of economies of scale, CTC is faced

with rapidly increasing equipment and cybersecurity

costs. CTC estimates that removal of its current EACAM support would force it to lay off some of its 30

employees and could ultimately force it to double its

monthly residential-service rates.

As a third-generation, family-owned company,

CTC is very active in serving its rural customers and

promoting the economic and social welfare of its

service area. Its FTTH network supports education,

job training, social and healthcare opportunities.

CTC’s broadband network also provides the backhaul

services that enable wireless carriers to serve its area,

reflecting additional positive externalities of fiber

deployment.

Central Arkansas Telephone Cooperative

(CATC) provides broadband service to approximately

3,500 member-customers across a 700-square-mile

portion of central Arkansas. 31 Headquartered in

Bismarck (population: 2,332), CATC’s rural service

area includes rocky hills used for cattle ranching, and

lakes/recreational areas that have attracted many

retirees.

From 2017-2022, CATC undertook and completed

a major project to convert its network to 100 percent

FTTH, enabling it to meet the growing broadband

service demands of its rural member-customers and

to attract new ones. It also has improved the quality

of the voice and 911 emergency services available to

members. Due to the frequency of thunderstorm,

tornado and ice-storm damage and outages in central

Arkansas, CATC buried its FTTH cable. This entailed

substantial expense resulting from the rocky and hilly

terrain ($80,000 to $100,000 per mile), although

buried plant ultimately will reduce maintenance and

storm-recovery costs and minimize service outages.

CATC financed its FTTH project with $20 million in

bank loans it must repay over the next 10 years.

31 See generally, Who We Are, https://catc.net/about/who-we-are/.

CATC’s high-cost USF support has enabled it to

obtain and begin repayment of its FTTH conversion

loans and to cover the above-average operating costs

of serving its rural area. If CATC were to lose its

current E-ACAM support, it estimates it would need

to increase its present residential broadband service

rates by about $90 per month per customer – a

daunting expense for the retirees, family farmers and

small-business owners comprising the bulk of its

customers.

Chickasaw

Telephone

Company

(Chickasaw) serves approximately 3,900 broadband

customers in nine exchanges across a nearly 700square-mile portion of rural south-central Oklahoma.

Its headquarters are in Sulphur (population: 5,065)

and, like many Oklahoma companies, its service area

is exclusively Tribal land. 32

Since 1996, Chickasaw has invested over $106.6

million to upgrade its former voice network to highspeed broadband services. Much of this took place

during a FTTH upgrade that began in 2017, and

Chickasaw has converted about 90 percent of its

network to FTTH. Because its service area also is

frequently subjected to tornados and ice storms, about

99 percent of its outside plant consists of expensive

buried fiber, which costs $60,000 to $70,000 per mile

to deploy. But such investment pays off – Chickasaw

was able to remain in operation after tornados on

April 27, 2024 ravaged the Sulphur area, including

Chickasaw’s own building. 33

See McGirt v. Oklahoma, 591 U.S. 894, 897-898 (2020).

33 J. Burger, Sulphur Residents Helping Neighbors Despite Their

Own Uncertainties Following Tornado Outbreak, KOCO-TV

Chickasaw’s FTTH facilities are scalable and

capable of upgrading to meet future customer

broadband speed needs at minimal incremental cost.

Its state-of-the-art network enables its rural

customers to enjoy entertainment, education, job

training, and telehealth offerings comparable to

urban residents.

Whereas Chickasaw has paid off the privatelender loans that it needed to finance the bulk of its

broadband upgrades, it needs continuing CAF-BLS

support to recover its $106.6-million investment and

to subsidize its above-average per-customer operating

expenses. Without its current CAF-BLS support,

Chickasaw would need to increase its residential

broadband service rates by more than $100 per

month, which would render its service unaffordable

for most customers. The USF Lifeline program is

especially important in enabling many of Chickasaw’s

Native-American customers to afford voice and

broadband services. 34

Hart Telephone Company (Hart) serves over

8,000 broadband customers in a 174-square mile

(April

29,

2024),

https://www.koco.com/article/sulphuroklahoma-tornado-damage-helping-others/60634657.

34 See, e.g., National Congress of American Indians Resolution

#RAP-10-009, Ensuring Future Universal Service Support in

Indian Country and Existing Telephony During the Broadband

Transition (June 23, 2010),

https://archive.ncai.org/attachments/Resolution_PRgyVhwGXg

npechTBriZtnmGKcpIgxqqtupPWDqGZZNqoDTLPFs_RAP-10009.pdf (“…as USF reform takes place, Congress and the FCC

must not inadvertently ‘cut the only wire’ going into Indian

Country. The current analog telephone High Cost and Lifeline

and Link-Up programs are vital to Indian Country and must not

be negatively affected”).

service area in the Piedmont region of northeastern

Georgia. Headquartered in Hartwell (population:

4,470), Hart serves a rural area known for boating,

hiking, golfing and other outdoor recreational

activities on and near Lake Hartwell. 35

In 2019, Hart began a $40-to-$50 million project to

upgrade its former copper digital subscriber line

(DSL) network to FTTH. Hart has completed

approximately 60 percent of this project, and expects

to finish its FTTH deployment in 2026 if its CAF-BLS

support continues unabated. To date, Hart’s

upgraded broadband facilities and services have

enhanced the abilities of formerly commuting

customers to work from home. Hart has also improved

the 911 emergency services available to reach local

police, fire, ambulance and EMT facilities and

personnel. Finally, Hart’s upgraded broadband

network has improved the ability of local customers

and businesses that offer lodging, meals and

recreational activities to market their services to

potential visitors.

Hart is self-financing its FTTH upgrade. However,

given the $40-to-$50 million cost, Hart cannot operate

its FTTH network and recover its capital investment

within a reasonable time period by relying on monthly

customer revenues alone. Rather, it needs its current

CAF-BLS support to supplement its customer

revenues. In fact, Hart’s current USF support

constitutes approximately 55 percent of its monthly

revenue stream. If that USF support is terminated,

Hart will have to cease work on its FTTH upgrade and

See generally, Our History,

https://www.htconline.net/history/; About Hart County,

https://hartcountyga.gov/aboutus.html.

is unlikely to resume its construction and investment

within the foreseeable future. Moreover, Hart would

need to raise the residential service rates of its

existing broadband customers by approximately

$60/month per customer to replace its USF support –

an increase unlikely to be paid by many customers,

who would instead terminate their service. It would

also have to cut its operating expenses in an amount

necessary to offset the USF revenue loss, thus

reducing service quality.

Matanuska Telecom Association (MTA) is a

cooperative that provides broadband, voice and other

services to approximately 33,000 members in a

10,000- square-mile, fast-growing portion of southcentral Alaska. 36 Headquartered in Palmer

(population: 6,378), about 10 percent of the population

MTA serves are Indigenous peoples of Alaska.

MTA deployed DSL service during the late 1990s

and is currently engaged in a major network upgrade

that entails replacing 5,500 miles of copper outside

plant with high-capacity and scalable FTTH.

However, the Alaska construction season is limited to

the period between mid-May and mid-October, and

broadband deployment and maintenance is further

rendered difficult and expensive by the need to use

snowmobiles, boats and planes to reach many areas

due to the lack of roads. MTA anticipates it will take

a number of years to complete the conversion of its

network to FTTH even without any major weather,

financial or other disruptions (e.g., termination or

interruption of USF support).

36 See Alaska Plan,

https://www.mtasolutions.com/about/alaskaplan/.

MTA currently has a substantial broadband

construction loan from a private lender that must be

repaid over the next seven years. Without

continuing support from the new Alaska Connect

Fund, MTA will not be able to repay its existing

loan, continue its FTTH upgrade project, or obtain

additional

future

loans.

And

given

that

approximately 80 percent of MTA’s current Alaska

Fund support is needed to pay its very high Alaskan

operating expenses, any loss or interruption of

MTA’s USF support will immediately and adversely

impact the quality of its existing broadband and

voice services. MTA estimates that loss of its

existing high-cost USF support would require it to

increase its present service rates by at least 42

percent (or about $50/month on average).

The continuation and reliability of MTA’s

broadband services and upgrades are essential to

enable isolated Alaskan residents and villages to

participate in the 21st-Century society and economy.

Particularly in light of Alaska’s harsh weather and

lack of roads, high-speed broadband service is crucial

for distance learning, job training, and growing

telemedicine applications. MTA’s broadband is also

essential for national defense and cybersecurity, as

the cooperative serves critical military bases, radar

installations, and off-base homes of military

personnel and their families.

Mescalero Apache Telecom, Inc. (MATI) is a

Tribally owned carrier that provides broadband

service to approximately 1,130 Tribal members in a

750-square-mile area of the Mescalero Apache Tribe

Reservation in New Mexico. 37 It is headquartered in

Mescalero (population: 891).

Since 2021, MATI has constructed and deployed

buried or aerial FTTH facilities and services

throughout its entire service area. It has financed this

broadband project with three RUS loans totaling $25

million – one of which has been repaid, but the others

remain due over 10-year and 20-year periods.

MATI’s broadband project has brought first-time

service to virtually all of its 1,130 Tribal customers. 38

It has improved health and safety on the Reservation

by providing 911 connectivity and enhanced

education by permitting students to attend school

online from home during the COVID quarantines and

on snow days. MATI’s network also provides the

backhaul functions necessary to enable wireless

service throughout the Reservation. MATI is working

hard to encourage and expand use of its broadband

network for cultural preservation, job training,

telehealth and other functions that improve Tribal

life.

High-cost USF support has been essential to

enable MATI to obtain and repay its RUS loans and

to sustain the high costs of operating and maintaining

its aerial and buried fiber trunks and lines in rural

New Mexico. Tribal Lifeline support is also necessary

to enable almost a third of MATI’s customers

(approximately 400 households) to afford service.

Termination of high-cost and Lifeline support would

be a massive setback for MATI’s progress and plans.

See generally, Mescalero Apache Telecom, Inc.,

https://www.matinetworks.net/about.html.

Ibid.

There is no possibility that MATI’s customers could

pay the additional $300 per month in residential rates

needed to replace its USF support, and also no way

that MATI could continue operating, much less to

repay its RUS loans, without the high-cost and

Lifeline dollars that comprise over 85 percent of its

revenue stream.

Northeast Louisiana Telephone Company

(NortheastTel) serves approximately 1,100 voice

and/or broadband customers in a 270-square-mile

portion of Morehouse Parish in northeastern

Louisiana. 39 Although its service area is a sparsely

populated and high-cost agricultural area (its main

town is Collinston, population 274), NortheastTel has

deployed FTTH facilities capable of serving 100

percent of its customer locations. However,

NortheastTel is obligated to repay over the next eight

or nine years the Broadband Infrastructure Plan

(BIP) and other Federal loans it needed to finance its

FTTH construction, and is reliant on continued USF

payments to meet those obligations.

The organization recently acquired CamptiPleasant Hill Telephone Company, Inc. (C-PH), which

serves approximately 2,900 voice and/or broadband

customers in a 510-square-mile area encompassing

parts of four northwestern Louisiana parishes. This is

a sparsely populated, high-cost area primarily

comprising pine forests and swamps, where logging

and oil/gas production are primary activities. C-PH

has brought FTTH to approximately 30 percent of its

service area and is taking out a 15-year line of credit

See generally NortheastTel – Our History: How we got here!,

https://pelicanbroadband.com/about/ (click on “Company

History”).

to help finance its deployment to the remaining 70

percent.

Broadband service is critical in rural Louisiana for

public safety (especially during hurricanes and other

natural disasters), economic development, schooling,

job training and rural healthcare. Without high-cost

USF support, NortheastTel (which is transitioning

from CAF-BLS to E-ACAM) and C-PH (which

recently moved from ACAM to E-ACAM) would not be

able to obtain or repay the loans necessary to deploy

high-speed broadband in most parts of their service

areas or to sustain their existing broadband services

and operating expenses. Moreover, NortheastTel

estimates that termination of the existing E-ACAM

support received by the two companies would require

an increase in residential broadband-service rates by

about $160/customer per month – a rate increase that

would put broadband service out of reach for most.

Northeast Nebraska Telephone Company

(NNTC) is a co-operative serving approximately

5,100 broadband and 3,500 voice member-customers

in 30 communities scattered throughout a 2,364square-mile portion of north and central eastern

Nebraska. 40 Its service areas are non-contiguous and

sparsely populated farming and ranching regions.

Headquartered in Jackson (population: 202), its

population

densities

range

from

2.2

subscribers/square mile in its eastern service areas to

fewer than 1 subscriber/square mile in its western

areas.

NNTC obtained a substantial RUS loan in 2009,

with which it extended buried FTTH broadband

See generally About NNTC, https://nntc.net/about/.

facilities and services to its member customers during

a project completed in 2015. Because NNTC is a

cooperative, all customers must be offered service

regardless of the distance or cost to reach them.

Although FTTH network construction was completed

during 2015, the RUS loans will not be fully repaid

until 2036.

In large-scale agricultural regions like NNTC’s

service area, broadband is important not only for

economic development, employment, distancelearning and rural healthcare purposes, but is also

becoming increasingly critical for precisionagricultural and video livestock auction purposes.

NNTC needs continued high-cost USF support not

only to repay its loans, but also to sustain its

operations in a large area where lengthy trunks and

lines entail expensive maintenance activities and

repair calls, and low population density limits

economies of scale for customer-service and

cybersecurity functions. NNTC estimates that it

would have to increase its members’ residential

broadband service rates by about $90/month if its EACAM support became unavailable.

Shawnee Communications (Shawnee) serves

approximately 7,000 broadband customers in a 650square-mile area in southern and central Illinois. 41

With offices in Lovington and Equality (population:

1,024 and 504, respectively), its service area includes

corn, soybean and livestock farms, communities

decimated by coal-mine closures, and the rocky

terrain of the Shawnee National Forest and

surrounding areas. Shawnee has relied on the FCC’s

See Our Mission and History, https://shawnee.com/missionhistory/.

high-cost program to ensure that its customers have

access to advanced services at rates reasonably

comparable to urban areas.

In 1994, Shawnee began deploying fiber-optic

cable into its network interexchange facilities.

Shawnee realized in 2002 that, with over 160 miles of

fiber throughout its network, DSL services would be

an inadequate long-term technology to keep pace with

subscriber demands, and that FTTH technology

would be needed to meet rapidly increasing consumer

demands for higher broadband speeds and increased

reliability. Shawnee relied upon consistent USF

support when it secured RUS loans to upgrade its

communities to FTTH beginning in 2007 and

completed a major effort to convert all of its exchanges

by 2014 – both the core towns and surrounding areas,

servicing an average of 3.67 subscriber locations per

mile. Finally, in 2017 Shawnee converted its recently

acquired Lovington exchange to FTTH and fiber-tothe-premise (FTTP) using an RUS loan.

Shawnee was able to finance these FTTH and

FTTP conversions primarily with Federal loans from

RUS by relying on consistent, predictable and ongoing

USF programs and will require E-ACAM support for

repaying tens of millions in outstanding RUS loans

between now and 2036. Additionally, ongoing USF

support assists Shawnee with operating costs,

including occasional government mandated highwayrelated network relocations, capital maintenance

costs, and most important, keeping rural service rates

comparable to urban rates. USF support has been and

remains critical to the availability and affordability of

services and sustainability of Shawnee operations.

Shawnee’s FTTH network has provided

opportunities for its customers to enhance their job

skills and employment opportunities, established

high-speed connections for local schools, connected

critical hospitals and medical clinics, and supported

remote education and telehealth. It has enhanced

economic development in areas affected by coal-mine

closures, and created growth opportunities in

economically challenged communities. Shawnee

estimates that if its high-cost USF support was

suspended or terminated, it would result in monthly

service-rate increases of over $100/subscriber and/or

necessitate employee layoffs. As one of the largest

anchor employers in its economically depressed

regions, these likely layoffs would produce significant

negative impacts to customers’ rates, customer

service, and network services, as well as cause

irreversible harm to fragile local economies.

Smithville Communications (Smithville) has

been upgrading its residential broadband offerings

that serve roughly 20,000 customers in 12 exchanges

in an approximate 1,067-square-mile area of southern

Indiana. 42

In 2008, Smithville took out a major RUS loan to

finance the transformation of its residential

exchanges to high-speed FTTH technology. It

expended these funds during 2008-2014 to complete

substantial network upgrades, but still has five years

of loan repayments left. Smithville continues to

convert remaining DSL facilities to FTTH, and during

2023 invested $18 million of its own funds in these

and other continuing broadband upgrades.

See generally Keeping You Connected!,

https://www.smithville.com/about/.

Smithville launched a Bright Communities

Initiative in 2024 to showcase how high-speed

broadband elevates the quality of life for rural

Indiana residents. It also launched a best-in-class

Learning and Development and Talent program to

foster a culture of continuous learning and

development, and is offering next-generation services

to its customers through its “Smithville at Home” and

“Smithville at Work” services. Finally, Smithville is

supporting telemedicine and telehealth initiatives in

its rural service areas.

Continuing high-cost USF support is essential to

complete the upgrade of Smithville’s residential

network facilities to FTTH, repay the remaining

balance of its RUS loans, earn a sufficient return on

its own investments, and sustain its ongoing

operational and cybersecurity expenses. Without

substantial ongoing USF support, there is no business

case to justify owner and shareholder investment in

broadband facilities to serve many rural customers.

Smithville has found that it costs as much as

$250,000 per location to extend FTTH service to many

of its rural customer locations. Assuming that the

company generates $75 per month from the

broadband customer at that location (and ignoring the

time value of money and assuming that none of the

$75 is needed to cover operating expenses), it would

take approximately 3,333 months (277 years) to

recover the investment. Without substantial USF

support to supplement customer revenues, these

extremely high-cost locations would not be upgraded

to robust FTTH broadband.

Rally Networks (Rally) owns and operates 17

different RLECs in rural portions of Oregon,

Washington, Idaho, Missouri, Oklahoma and

Arkansas. Rally’s general business plan is to acquire

RLECs with substantial fiber backhaul facilities that

provide DSL services and then upgrade them as much

as feasible to provide FTTH service. 43

For example, Rally’s five Oregon RLECs serve

approximately 4,000 broadband customers in a

roughly 4,000-square-mile area (or about one

customer per square mile). To date, Rally has

deployed FTTH service to approximately 90 percent

of its Oregon customers. During 2002-2004, it used

some $70 million in RUS loans for a major FTTH

upgrade and still has outstanding loan repayments

for the next five years. It is currently working with a

50/50 RUS ReConnect grant/loan to deploy FTTH

service in the most remote and expensive portions of

its Oregon service areas.

In addition to the typical economic, social,

educational and healthcare services, Rally has

connected its Oregon FTTH networks via middle-mile

trunks to urban data centers. It also uses its

broadband networks to provide backhaul for cellular

towers and to provide connections and transport for

FirstNet emergency services.

Tenino Telephone Company (Tenino) and

Kalama Telephone Company (Kalama) are

commonly owned RLECs that serve rural areas in the

western portion of Washington state. Tenino serves

the city of Tenino (population: 1,870) and surrounding

areas in the south Puget Sound region and has

approximately 1,400 broadband customers within its

100-square-mile service area. Kalama serves the city

of Kalama (population: 2,959) and surrounding areas

See generally Meet Rally, https://rallynet.us/about-us/.

in southwestern Washington along the Columbia

River and has approximately 1,500 broadband

customers within its 120-square-mile service area. 44

Both companies have been upgrading their

original copper-voice networks to broadband since

1996 and, by the early 2000s, had upgraded most of

their dial-up Internet access services to higher-speed

DSL. Starting in 2016, both companies began

replacing their copper network facilities with scalable

FTTH technology that will enable them to continue

upgrading their networks at reduced incremental

costs to meet evolving customer demands for everincreasing broadband speeds. Today, both companies

have converted about 40 percent of their customer

locations to FTTH service. Kalama has received a

RUS ReConnect grant (for which it has to furnish 25

percent of its own funds) and expects to have deployed

FTTH to 90-95 percent of its customer locations by the

end of 2028. However, providing FTTH to the last 5

percent or so of its customers will be extremely

difficult and expensive due to the rough terrain that

must be passed to reach their remote locations. For its

part, Tenino is continuing to upgrade its network but

needs a comparable RUS ReConnect or other Federal

grant to increase its FTTH deployment pace to that of

Kalama.

In addition to the economic, educational and

healthcare benefits of high-speed broadband, both

companies have used their fiber networks to connect

and monitor the water reservoirs and distribution

systems and fire/emergency-response facilities within

See generally About Tenino Telephone Company,

https://teninotelephone.com/about/; About Kalama Telephone

Company, https://kalamatelephone.com/about/.

their service areas – extremely critical functions in

western Washington state. Kalama also has provided

broadband capabilities and services that have

enabled the Port of Kalama to attract businesses and

jobs and preserve its status as a leading West Coast

port for exporting soybeans, corn and wheat.

Tenino and Kalama have thus far not incurred

substantial debt to upgrade their networks to FTTH.

However, their customer revenues alone are wholly

insufficient to cover their above-average rural

operating expenses, much less to recover their

broadband investments. The companies estimate that

Tenino would need to increase its residential

broadband rates by $93/month, and Kalama’s by

$86/month, to offset termination of their existing

CAF-BLS support. Those amount to roughly a

doubling of existing rates, and likely would be

unaffordable for most customers.

*******

Certainly, a practice’s lengthy pedigree may

illuminate the issue of its constitutionality. See

Trump v. United States, 603 U.S. 593, 643-646 (2024)

(Thomas, J., concurring) (prosecution of the former

President also may be unconstitutional because a

private citizen appointed Special Counsel by Attorney

General did not occupy office “established by law”,

“[l]ongstanding practice from the founding to today

comports with this original understanding that

Congress must create offices by law”). As even the

Fifth Circuit acknowledges, “Congress has long

pursued

policy

providing

universal

telecommunications service to all residents and

businesses in the United States.” Pet. App. 2a

(cleaned up, citation omitted). As is shown by the

above experiences of the various WTA members

nationwide, USF programs have been and remain

critical to deploying and sustaining highly beneficial

broadband services in rural America – progress that

is threatened by the Fifth Circuit’s proposed

termination of FCC’s USF program.

“Montana with its vast distances is not Rhode

Island with its heavy concentrations of people.” Lucas

v. Forty-Fourth Gen. Assembly, 377 U.S. 713, 749

(1964) (Stewart, J. dissenting). This Court, situated

on the densely populated and pervasively connected

Eastern seaboard, should not lose sight of the fact

that affirming the Fifth Circuit will greatly disrupt

the extremely successful high-cost USF support

programs. It will bring to a screeching halt the

progress RLECs have made to reduce the “digital

divide” and deploy the reasonably comparable and

affordable broadband services required by 47 U.S.C.

254(b)(3) that have done so much to improve the

economic, educational, health, public safety and social

circumstances of our Nation’s long-neglected rural

service

areas.

Terminating

significantly

interrupting the existing high-cost USF support

programs would cripple the availability and quality of

broadband services and benefits in many or most

RLEC service areas, and relegate their inhabitants to

second-class (or worse) broadband service, impairing

their full participation in the online world.

CONCLUSION

The judgment of the United States Court of

Appeals for the Fifth Circuit should be reversed.

Respectfully submitted,

/s/ Michael F. Smith

Michael F. Smith

Counsel of Record

The Smith Appellate Law Firm

1717 Pennsylvania Ave. N.W.

Suite 1025

Washington, D.C. 20006

(202) 454-2860

smith@smithpllc.com

Counsel for Amicus Curiae

WTA – Advocates for Rural

Broadband

January 15, 2025

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.