Supreme Court Takes Up 8 Billion Phone And Internet Subsidy For Rural And Low-income Areas

The Supreme Court hears arguments Wednesday in a major legal fight over the 8 billion a year the federal government spends to subsidize phone and internet services in schools, libraries and rural areas, in a new test of federal regulatory power.

The justices are reviewing an appellate ruling that struck down as unconstitutional the Universal Service Fund, the tax that has been added to phone bills for nearly 30 years.

Tens of millions of Americans have benefited from the programs that receive money from the fund and eliminating it "would cause severe disruptions," lawyers for associations of telecommunications companies wrote.

The Federal Communications Commission collects the money from telecommunications providers, who then pass the cost on to their customers.

A conservative advocacy group, Consumer Research, challenged the practice. The justices had previously denied two appeals from Consumer Research after federal appeals courts upheld the program. But the full 5th U.S. Circuit Court of Appeals, among the nation's most conservative, ruled 9-7 that the method of funding is unconstitutional.