Supreme Court Protects FCC School and Library Internet Subsidies

Finally, E-Rate applicants received a favorable outcome from the U.S. Supreme Court, which likely upheld the legality or continuation of the E-Rate program or the broader Universal Service Fund (USF) mechanism. This decision provides stability and continuity for schools and libraries that rely on E-Rate subsidies.

However, our battle is not over.

In 2001, the USF contribution factor was 7% and in the third quarter of 2024, it increased to 34.%. This increase is due to expanding program costs, a shrinking contribution base from traditional voice services, and growing demand for universal service programs. Congress is now contemplating adding a tax to the Internet, which would immediately provide a much-needed boost to the fund. 

Consider this solution: if Congress imposes a tax on Internet services, E-Rate applicants will include the fee in their Form 471. If Congress were to impose a 3% tax on Internet service, the revenue would fully support all four eligible programs.