SCOTUS Hears Arguments on Consumers’ Research E-Rate Case

In our last blog post, we reviewed the recent court cases related to E-Rate funding and addressed some of the questions raised regarding the Trump administration’s policies. Today we’ll focus on the March hearing before the Supreme Court on the Consumers’ Research case.

A group called Consumers’ Research has filed lawsuits in multiple appellate courts challenging the legality of the Federal Communications Commission’s (FCC) Universal Service Fund (USF). The USF is what funds the E-Rate program, among other programs that help increase universal broadband access. The USF is managed by the Universal Service Administrative Company (USAC), a nonprofit organization that administers the funds, which are collected from telecom providers. Consumers’ Research argues that the mechanism by which the FCC raises and distributes these funds is unconstitutional. In separate cases, the 5th, 6th, and 11th Circuit Courts upheld the constitutionality of the USF, but after the 5th Circuit Court reversed their decision, the U.S. Supreme Court agreed to hear the case and issue a ruling this year.

The Supreme Court met on March 26 to hear the oral arguments for this case. Here we’ll give you a brief overview of the main highlights from the hearing.

Supreme Court Hears Oral Arguments

Arguments during the Supreme Court hearing addressed questions surrounding the USF’s history, structure and funding mechanism; how its programs support Americans; and the relevant constitutional constraints argued by Consumers’ Research.

The consensus after the hearing was that the Justices seemed perhaps slightly skeptical of Consumers’ Research’s argument, and were focused on the possible impact on everyday Americans if the USF was eliminated - Americans who rely on its programs for internet access and telecom services. Parties to the case, like the Schools, Health & Libraries Broadband Coalition (SHLB), and other organizations like the Benton Institute for Broadband & Society and the National Digital Inclusion Alliance (NDIA), reported feeling cautiously optimistic after the hearing. A decision is expected to be announced in summer 2025.

Potential Outcomes for E-Rate

The Supreme Court of the United States decision could take several paths related to the E-Rate program. The Court could:

• Uphold the current USF structure entirely as constitutional.

• Strike down parts of the USF structure while preserving its core functions, potentially requiring some modifications to the program’s structure.

• While seemingly unlikely, strike down the entire USF framework, which would require congressional action and establishing a new funding structure.

We will continue to monitor the situation and provide updates as we learn more on the future of this vital funding. A decision is expected in in summer 2025 at the end of the Court’s term. In the meantime, please reach out with any questions.