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) 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. Originally designed to subsidize telephone service, since 2011 the fund has expanded its goals to supporting broadband universal service.[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. In 2022 disbursements totaled $7.4 billion, split across the USF's four main programs: $2.1 billion for the E-rate program, $4.2 billion for the high-cost program, $0.6 billion for the Lifeline program, and $0.5 billion for the rural health care program.[USAC 1]: 4 

Unlike many government programs which are funded by general Congressional appropriations, the Universal Service Fund is instead funded by a specific fee on United States telephone providers. 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.[2] As of 2024, the rate for the USF budget was 34.4% of a telecom company's interstate and international end-user revenues.[FCC 1]

The structure and funding of the USF has been subject to significant criticism and proposed reforms. One issue is a declining revenue base: consumers' spending on the interstate telephone service that funds the USF has been falling for many years.[3] Some have challenged the constitutionality of having USF fees set without congressional approval and the delegation of authority to the private USAC.[4]

  1. ^ Manda, Haarika (August 4, 2024). The Efficacy of the Connect America Fund in Addressing US Internet Access Inequities. Proceedings of the ACM SIGCOMM 2024 Conference. p. 484-505. arXiv:2405.18657. doi:10.1145/3651890.3672272.
  2. ^ "Understanding Your Telephone Bill". New Hampshire Office of Consumer Advocate. Archived from the original on November 10, 2014.{{cite web}}: CS1 maint: unfit URL (link)
  3. ^ "The Future of the Universal Service Fund and Related Broadband Program". Congressional Research Service. March 1, 2024. p. 9. Retrieved September 7, 2024.
  4. ^ Brodkin, Jon (July 25, 2024). "5th Circuit court upends FCC Universal Service Fund, ruling it an illegal tax". Ars Technica. Retrieved September 7, 2024.


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