Fifth Circuit Finds USF Unconstitutional

In a 9-7 en banc ruling, the Fifth Circuit Court of Appeals struck down the FCC’s Universal Service Fund (“USF”), finding its funding mechanism unconstitutional. The court ruled that Congress impermissibly delegated its taxing authority to the FCC, which further delegated that authority to a private entity, the Universal Service Administration Company (“USAC”). The USF subsidizes telecommunications service for rural and low-income users through fees assessed on telecommunications, which can be passed on to consumers. The decision creates a circuit split with the Sixth, Eleventh, and D.C. Circuits, and therefore could lead to Supreme Court review. 

FCC Proposes AI Transparency Requirements

The FCC is proposing to implement new Artificial Intelligence (“AI”) transparency requirements for political advertisements, which would mandate disclosure to the Commission of TV and radio advertisements that use AI, as well as on-air disclosure of AI use. The rules would apply to those already with a legal obligation to file information about their TV and radio advertisements with the FCC. The Commission has authority over political messages people see on television, hear over the radio, or receive over the phone, and this proposal seeks to address recent abuses of AI technology in political advertising. The proposal does not seek to prohibit AI-generated content. 

FCC Issues AT&T Service Outage Report

The FCC issued a report detailing the cause and impact of a nationwide AT&T wireless service outage on February 22, 2024, which prevented customers from using voice and data services for at least 12 hours and blocked more than 25,000 attempts to reach 911. The service outage also cut off service to the First Responder Network Authority (“FirstNet”), a dedicated network for public safety users. The Public Safety and Homeland Security Bureau has referred the matter to the Enforcement Bureau for potential violations of FCC rules. The Commission is also investigating a recent AT&T breach of consumer data. 

$16 Million Penalty for CPNI Rule Violations

The FCC announced a settlement with TracFone Wireless (“TracFone”) to resolve investigations into whether TracFone failed to protect its customers’ information from unauthorized access in connection with three data breaches. Carriers like TracFone have a duty to secure customers’ proprietary network information (“CPNI”) under Section 222 of the Communications Act, which also mandates that carriers not impermissibly use, disclose, or permit access to individually identifiable CPNI without customer approval. TracFone is required to pay a $16 million civil penalty, implement an information security program, update its Subscriber Identity Module (“SIM”) change and port-out protections, undergo annual assessments of its information security program, and provide privacy and security awareness training to employees and certain third parties. 

Thomas B. Magee, Tracy P. Marshall, Sean A. Stokes, and Wesley K. Wright contributed to this article