Universal Service Fund

The Universal Service Fund (USF) is a system of telecommunications subsidies and fees managed by the United States Federal Communications Commission (FCC) intended to promote universal access to telecommunications services in the United States. The FCC established the fund in 1997 in compliance with the Telecommunications Act of 1996. The FCC is a government agency that implements and enforces telecommunications regulations across the U.S. and its territories.^[1] The Universal Service Fund's budget ranges from $5–8 billion per year depending on the needs of the telecommunications providers. These needs include the cost to maintain the hardware needed for their services and the services themselves. The total 2019 proposed budget for the USF was $8.4 billion. The budget is revised quarterly allowing the service providers to accurately estimate their costs. As of 2019, roughly 60% of the USF budget was put towards “high-cost” areas, 19% went to libraries and schools, 13% was for low income areas, and 8% was for rural health care.^[2] In 2019 the rate for the USF budget was 24.4% of a telecom company's interstate and international end-user revenues.^[3]

While separate itemization is not required by the FCC, it is common for USF fees to be listed separately from other charges on a consumer's bill.^[4] Universal Service charges should not be confused with what are sometimes referred to in telephone company bills as "Federal Subscriber Line" charges, which are access fees charged by telecommunications companies, not the local or federal government.

Some have raised concerns about the future funding of the USF; despite falling taxable revenues, the size of the fund has increased from $1.2 billion in collections at 5.7% in 4Q 2000, to $2.2 billion in 4Q 2014 at 16.1%. Some believe that reclassifying broadband Internet access services under Title II of the 1996 Telecommunications Act would be followed by requiring ISPs to pay into the USF as a new source of revenue for the fund.^[5] The FCC has made clear that the change does give it the power to do so, but will not require contributions on broadband Internet access revenues at this time,^[6] as the FCC will forbear from the contribution requirements in Section 254(d) of the Communications Act.^[7]