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Tech

The Universal Service Fund Survived the Supreme Court. Now Comes the Bill.

The Supreme Court already saved the Universal Service Fund — the money fight now is over who gets taxed to pay for it, and AT&T and Verizon's shrinking legacy revenue is the base absorbing an already record-high, still-climbing contribution factor.

Image: Money Racket
By at Money Racket · Apr 29, 2026

The lede. On June 27, 2025, the Supreme Court settled the constitutional threat to the Universal Service Fund, ruling 6-3 in FCC v. Consumers' Research that Congress didn't unlawfully hand its taxing power to the FCC (and the FCC didn't unlawfully hand it to USAC). The $9-billion-a-year subsidy machine survives. But surviving isn't the same as being fixed — and the mechanism now churning in plain sight is the real money story: the USF "contribution factor," the surcharge carriers pay on interstate long-distance and wireless revenue to fund Lifeline, E-Rate, Rural Health Care, and High-Cost support, has been on a straight-line march upward — 37.6% in Q1 2026, 37.0% in Q2, a proposed 38.8% in Q3, with USAC and industry groups now projecting a run at 42%+ as the assessable revenue base keeps shrinking. Every point of that climb is a direct tax on the same shrinking pool of legacy voice revenue at AT&T, Verizon, and T-Mobile — while a live Senate push (the Lowering Broadband Costs for Consumers Act) would finally force broadband and "edge provider" revenue into the base. Whoever wins that fight decides who eats the bill next.

SCOTUS didn't decide who pays for the Universal Service Fund — it just decided someone has to. Right now that someone is AT&T and Verizon's shrinking legacy revenue base, taxed at a rate racing past 40%.

Who cashes in. AMT (American Tower) sits outside the contribution fight entirely and profits from the programs USF money funds — High-Cost support and BEAD-adjacent rural buildout both mean more fiber-fed rural towers and more carrier capex flowing through AMT's lease book, with none of the contribution-factor exposure that hits the carriers directly. TMUS is the structural winner among carriers: T-Mobile's all-wireless, high-growth revenue mix and lighter reliance on the shrinking legacy interstate toll-revenue base it must assess means each contribution-factor hike bites a smaller, more diluted share of total revenue than it does for AT&T's copper-legacy book. CHTR and CMCSA, as predominantly non-telecom cable/broadband providers with comparatively small regulated interstate telecom revenue, currently sit largely outside the assessable base — meaning if the broadband-provider-pays reform actually lands, they gain a large, currently-untaxed new revenue category to defend, but until then they're simply not writing the checks AT&T and Verizon write.

Who is exposed. T carries the heaviest structural exposure: AT&T's consumer wireline and legacy voice base is the textbook "shrinking assessable base" the contribution factor is chasing, meaning the same subsidy dollar gets extracted from a smaller and smaller revenue pool every quarter — a mechanical margin drag with no vote required. VZ faces the identical mechanism on its wireline/enterprise voice book, plus it is USF's single largest rural High-Cost and Lifeline distribution counterparty, so any FCC reform that recaps or redirects High-Cost dollars hits Verizon's rural subsidy revenue line directly, not just its cost side.

The play. This isn't a "will USF survive" story anymore — SCOTUS closed that door. It's a contribution-base story: watch USAC's quarterly factor filings (fcc.gov) and the Senate broadband-contribution bill's markup calendar. A base-widening bill that adds CHTR/CMCSA broadband revenue to the assessment pool is the single catalyst that would flip today's carrier tax burden onto cable — reprice accordingly.

Source: original report ↗

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