S. 98 would require the Federal Communications Commission (FCC) to issue rules to amend the application review process for the high cost universal service program, which seeks to expand voice and broadband service in unserved or underserved areas. Specifically, the bill would require the FCC to evaluate applicants and funding recipients based on a set of criteria specified in the bill. Recent awards for the high cost program have been made through auctions run by the FCC. The bill would establish minimum civil monetary penalties for bidders who win an auction and subsequently default on their service obligations prior to receiving funding.
Because the FCC currently evaluates applicants for this program, CBO expects that the rules issued under S. 98 would mostly codify the commission’s current policies. On that basis, CBO estimates that it would cost the FCC less than $500,000 to issue rules amending the current review process. The FCC is authorized to collect fees each year sufficient to offset the appropriated costs of its regulatory activities; thus, CBO estimates that the net cost for the FCC to implement the bill would be negligible, assuming appropriation actions consistent with that authority.
Under current law, the FCC has broad authority to levy civil monetary penalties, which are recorded in the budget as revenues. Using that authority, the commission currently issues rules for each auction that include penalties for winning bidders that default on their service obligations prior to receiving funding. S. 98 would set minimum penalties for defaulting entities at an amount higher than the amounts the FCC has set for recent auctions.
Using information from the FCC about the size of penalties collected for previous defaults and the uncertainty about the timing of future auctions, CBO estimates that enacting S. 98 would increase revenues by an insignificant amount over the 2025-2035 period. In CBO’s estimation, any significant increases in penalty collections under S. 98 would be unlikely to occur before 2036.
If the FCC increases annual fee collections to offset the costs of implementing provisions in the bill, S. 98 would increase the cost of an existing private-sector mandate on entities required to pay those fees. CBO estimates that the incremental cost of the mandate would be small and would fall well below the annual threshold established in the Unfunded Mandates Reform Act (UMRA) for private-sector mandates ($206 million in 2025, adjusted annually for inflation).
S. 98 contains no intergovernmental mandates as defined in UMRA.
The CBO staff contacts for this estimate are David Hughes (for federal costs), Nate Frentz (for revenues) and Rachel Austin (for mandates). The estimate was reviewed by H. Samuel Papenfuss, Deputy Director of Budget Analysis.
Phillip L. Swagel
Director, Congressional Budget Office