The agency has been considering whether broadband should be part of the USF in a separate proceeding from net neutrality.
The new rules will drive up compliance costs for broadband carriers, with small rural providers hardest hit, Pai and some Republican senators added. "Some of these smaller ISPs, in particular, are going to have to either suck up the costs or go out of business altogether," Pai said.
The rule allows the FCC to police future ISP conduct, raising questions about what business models and services will be allowed, Pai added. "Instead of the Internet working to the benefit of consumers and being developed by technologists, engineers and innovators, it's going to be lawyers, bureaucrats and politicians," he said.
Wednesday's hearing was the second of three in Congress this week to examine the FCC. Thune urged senators to support his proposal that would enact basic net neutrality rules but remove the FCC's reclassification of broadband, but other senators questioned if such a bill can pass.
While committee Republicans criticized the net neutrality rules, most Democratic members voiced strong support for the FCC decision. The FCC's action has assured Web companies that they will have access to customers, said Senator Ed Markey, a Massachusetts Democrat.
"You have created a more predictable investment environment" for Internet companies, Markey said.
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