Washington is spending enormous energy reforming a universal service system that cannot be fixed by reforming it. Rural America needs a new framework, not a better version of the old one.
The first article in this series established that the Universal Service Fund is under serious financial pressure. The contribution base has declined from the equivalent of $136 billion in today's dollars at its 2003 peak to $29 billion. The broadband industry that replaced voice generates $400 billion in annual revenue and contributes nothing. The factor required to sustain the fund on what remains is now projected at 42.3%. The trajectory is not sustainable.
Article 01 The fund that brought communications to rural America is running out of money The Fund That Brought Communications To Rural America Is Running Out Of Money | LinkedIn
That is the context for everything that follows. Keep it in mind.
Right now, four active FCC proceedings are consuming significant regulatory energy, industry resources, and policy attention. IP interconnection modernization. Intercarrier compensation reform. High-cost program restructuring. USF contribution reform. I documented each of them and the questions they raise collectively in an earlier piece.
Related The Sum of the Parts: Are Four FCC Proceedings Adding Up to Something Nobody Planned linkedin.com/pulse/sum-parts-four-fcc-proceedings-adding-up-something-nobody-rick-darsey-lavie
Each proceeding has legitimate goals. Each addresses real problems. Each has broad industry support in some form.
None of them is the right conversation.
The right conversation is how to build a new system. Not how to reform the old one. The ship is in dangerous waters. Maybe now is not the time to rearrange the deck furniture.
What the Original Commitment Actually Required
Section 1 of the Communications Act of 1934 established a foundational goal: to make communications service available to all Americans with adequate facilities at reasonable charges. The 1996 Act reaffirmed that goal, extended it to advanced telecommunications services, and built a funding mechanism to deliver it. That commitment is the measuring stick for everything the FCC does in this space.
Not efficiency. Not modernization. Not market competition as an end in itself. The question is whether rural Americans have access to the communications networks of their era at prices they can afford.
That question has a clear answer in 2026. Broadband is the communications network of this era. Fiber is the infrastructure that delivers it reliably for a generation. And the funding mechanism designed to ensure rural Americans have access to it is under serious pressure while Washington debates how to restructure the programs that depend on it.
The original commitment was not to maintain a funding mechanism. It was to connect rural America. Those are not the same thing, and the current policy conversation has lost track of the difference.
The four active proceedings are each, in their own way, attempts to optimize a system that cannot be optimized into adequacy. The contribution base is too small. The assessable revenue definition is too narrow. The legal classification of broadband as an information service has created a statutory barrier that no amount of rulemaking can resolve. These are not problems that better program design solves. They are problems that require Congressional action to replace the framework entirely.
The Cost of the Wrong Conversation
Every hour spent on intercarrier compensation reform is an hour not spent building the contribution framework that would stabilize the fund. Every rulemaking that questions high-cost support in areas where a commercial satellite provider has entered the market is a rulemaking that is solving for efficiency while the floor shifts under the operators delivering service. Every proceeding that treats modernization as the primary goal is a proceeding that has substituted a means for an end.
The operators experiencing this are not experiencing it as four separate policy conversations. They are experiencing it as simultaneous pressure on their financial model at the worst possible moment. Many rural operators are currently executing BEAD and Enhanced ACAM build programs with aggressive timelines and front-loaded capital requirements. The financial architecture that supports those builds is being revisited in real time, by four proceedings running concurrently, with no one modeling what the rural telecommunications financial model looks like when all four are complete.
That is not a criticism of the people running these proceedings. It is an observation about what happens when complex interdependencies are managed as separate dockets rather than as a system. The communities on the other side of these decisions are not participants in the conversation. They are the backdrop for it.
The High Cost Program was not built to fund networks. It was built to fund the ongoing economics of serving communities that the market will not serve on its own. A March 2025 survey of nearly 270 NTCA members found rural operators receive an average of more than $70 per month per broadband subscriber in USF support just to recover invested capital, repay loans, and cover operating expenses. That is not excess. That is the math of serving rural America.
The IP interconnection proceeding assumes NG911 will be deployed in rural markets by December 2028. The high-cost proceeding is questioning the support that would fund that deployment. The contribution reform that would stabilize the fund supporting both has been pending in Congress for a decade. The gap between those three realities has not been assigned to anyone to close.
The CAF-ICC proceeding adds another layer of operational consequence that rarely gets discussed in the policy record. Rural operators carry interconnection agreements with larger carriers that include origination and termination payments reflecting the cost of exchanging traffic across networks. A full transition to bill-and-keep eliminates those payments. That changes the economics of existing agreements in ways that are likely to prompt renegotiation, and potentially changes how carriers price the underlying transport arrangements those agreements have historically supported. For a rural operator, this is not an abstract policy question. It shows up in the next contract negotiation.
In the meantime, a 911 T1 circuit in Boise went from $17.22 per month to $32,291.98 per month after a carrier reclassified services following a prior forbearance grant. Actual 911 outages in California in 2025 resulted from premature TDM facility retirement. These are not hypothetical risks. They are documented events in the record of the IP interconnection proceeding. They are what happens when policy outcomes arrive before the replacement frameworks are ready.
Why Reform Cannot Get There
The instinct to reform rather than replace is understandable. Reform is incremental. It works within established legal frameworks. It does not require Congress to act. In a policy environment where Congressional action on telecommunications has been rare and slow, reform can feel like the realistic path.
On this problem, it is not.
The USF contribution mechanism cannot be stabilized by rearranging who pays what percentage of a shrinking assessable base. The legal classification of broadband as an information service is not a rulemaking problem. It is a statutory problem. The FCC cannot compel broadband providers to contribute to USF without either Congressional action to change the classification or a legal resolution that has proven elusive across multiple administrations.
The high-cost program cannot be restructured into adequacy when the fund that supports it is generating 42 cents on every assessable dollar from a base that represents a fraction of the actual communications economy. Restructuring a program that depends on an underfunded mechanism does not fix the program. It changes who receives less.
The intercarrier compensation system cannot be reformed into relevance when the voice traffic it was designed to compensate is a declining share of the total communications load and the networks that carry it are approaching end of useful life. Bill-and-keep is the right long-term framework precisely because the compensation system it replaces was built for a world that no longer exists. The same is true of the broader USF architecture.
You cannot reform your way out of a structural problem. The contribution base declined because the law never required broadband to contribute. The fix is a law that does. Everything else is a workaround.
What the Right Conversation Looks Like
The 1934 Act built a framework for the communications infrastructure of its era. The 1996 Act modernized it for a competitive telecommunications market. Section 254 pointed toward the next evolution, extending the universal service commitment to advanced telecommunications services. That evolution was never completed.
Completing it does not mean reforming the USF. It means building the Essential Communications Infrastructure framework that Section 254 anticipated. A framework that starts from the original commitment, not from the existing mechanism. A framework funded by the entire communications industry that benefits from connected rural markets, not by the shrinking remnant of the voice carriers that built them. A framework with clear obligations, clear standards, and a clear answer to the question of what rural Americans are entitled to expect from the communications networks of their era.
That framework does not exist yet. The four proceedings currently consuming regulatory attention are not building it. They are working to extend the useful life of the last one. That is worthwhile work. It is not sufficient work.
The rural call completion failures of 2013 to 2018 demonstrated what happens when rural telecommunications drift outside the regulatory safety net. Calls simply failed to complete for years before the problem was identified and addressed. It took an act of Congress to remedy it. The pressure on the USF contribution mechanism is a slower version of the same dynamic. It will not announce itself with a single outage. It will manifest as a gradual reduction in the investment that sustains rural networks and an eventual gap between what rural Americans have access to and what the rest of the country takes for granted.
That gap is the outcome the original commitment was designed to prevent. Preventing it now requires the same ambition the 1934 and 1996 Acts brought to their moments. Not better management of what exists. A new framework built for what comes next.
The next article in this series proposes what that framework looks like.
About this series
This is the second article in Single Mode Group's Essential Communications Infrastructure series. Article 01, "The fund that brought communications to rural America is running out of money," documented the trajectory of the USF contribution base. Article 03 will propose a new framework for meeting the original universal service commitment in the era of broadband infrastructure.
Sources cited in this article
Communications Act of 1934, 47 U.S.C. Section 1, fcc.gov
Telecommunications Act of 1996, Section 254, 47 U.S.C. 254, congress.gov
FCC, IP Interconnection NPRM, WC Docket No. 25-304, October 2025, fcc.gov
FCC, ICC Transition NPRM, WC Docket Nos. 25-311 and 25-208, February 2026, fcc.gov
FCC, High-Cost Program Reform NPRM, WC Docket No. 26-96, April 2026, fcc.gov
NTCA, Comments in WC Docket Nos. 25-311 and 25-208, May 2026 (March 2025 NTCA member survey, $70/month per subscriber figure)
Mondaq/CommLaw Group, "FCC Launches Sweeping All-IP Future Rulemaking," February 2026 (Boise 911 circuit pricing; California 911 outages)
Broadband Breakfast, "Universal Service Fund Contribution Factor Projected to Reach Record 42.3%," June 2026
Rick Darsey, "The Sum of the Parts: Are Four FCC Proceedings Adding Up to Something Nobody Planned," linkedin.com/pulse/sum-parts-four-fcc-proceedings-adding-up-something-nobody-rick-darsey-lavie
Single Mode Group, "The fund that brought communications to rural America is running out of money," https://www.linkedin.com/pulse/fund-brought-communications-rural-america-running-out-rick-darsey-g4inc/?trackingId=7ukAjlWvHf1yxt8jxxBKgg%3D%3D, June 2026