US Supreme Court to scrutinize Federal Communications Commission fund's legality

The U.S. Supreme Court is set on Wednesday to hear the Federal Communications Commission's defense of the mechanism it uses to fund a multi-billion dollar effort to expand phone and broadband internet access to low-income and rural Americans and other beneficiaries.

The FCC and a coalition of telecommunications firms and interest groups have appealed a lower court's ruling that found that the agency's funding operation effectively levied a "misbegotten tax" on American consumers in violation of the U.S. Constitution's vesting of legislative authority in Congress. It is the latest case to come to the Supreme Court challenging the power of federal agencies.

A law called the Telecommunications Act passed by Congress in 1996 authorized the FCC to operate a "Universal Service Fund," to be drawn from regular contributions by telecommunications companies. The fund draws around $9 billion annually, with the vast majority of telecommunications companies passing on the cost to customers.