Universal Service Fund (USF)

What It Means

The Universal Service Fund (USF) is a federal program established under Section 254 of the Telecommunications Act of 1996 and administered by the FCC via the Universal Service Administrative Company (USAC), a nonprofit. USF collects roughly $8 billion annually from telecommunications providers via a surcharge on interstate and international end-user revenue, which appears as a line item on consumer phone and long-distance bills. The USF supports four distinct programs: the High-Cost program (roughly $4.5 billion annually) subsidizes rural telephone and broadband carriers to serve high-cost areas, the Lifeline program ($2 billion annually) provides monthly discounts of $9.25 for voice and broadband service to low-income households, E-Rate ($2.5 billion annually) subsidizes internet and telecom services for schools and libraries, and Rural Health Care ($571 million annually) supports telehealth infrastructure. The USF contribution factor, the percentage surcharge applied to assessed revenues, has risen from roughly 6% in 2000 to over 33% in 2024 as the assessed revenue base (traditional voice service) has shrunk faster than program costs have fallen. This trajectory has prompted ongoing debate about expanding the USF contribution base to include broadband providers (currently exempt) or large technology companies. The FCC's authority to collect USF contributions was upheld by the Supreme Court in June 2025 in FCC v. Consumers' Research. Some policymakers have proposed that USF High-Cost support replace the expired ACP for broadband affordability.

Frequently Asked Questions