By Lawson Faulkner
Under the Telecommunications Act of 1996, the USF was established to expand telecommunications access to rural and low-income communities. Funded by contributions from wireline and wireless service customers, the USF bankrolls a plethora of subsidiary programs, including Lifeline, E-Rate, High Cost, and Rural Health Care. According to the Universal Service Administrative Company, the FCC has recently sought USF reform to “eliminate waste in the programs”, while simultaneously safeguarding broadband expansion.
Under the Telecommunications Act of 1996, the USF was established to expand telecommunications access to rural and low-income communities. Funded by contributions from wireline and wireless service customers, the USF bankrolls a plethora of subsidiary programs, including Lifeline, E-Rate, High Cost, and Rural Health Care. According to the Universal Service Administrative Company, the FCC has recently sought USF reform to “eliminate waste in the programs”, while simultaneously safeguarding broadband expansion.
For the first quarter of 2025, FCC officials have mandated a 36.3 percent contribution for telecommunications companies generating end-user revenue. This would be a 1.4 percent increase (on 35.8 percent) from the fourth quarter of 2024, and a 5.5 percent increase (on 34.4 percent) from the third quarter of 2024. Over the past four years, the USF contribution rate has ballooned a whopping 71 percent from the first quarter of 2020 when it stood at 21.2 percent. Although these fees are officially charged to phone companies, USF rate hikes are often passed on to everyday consumers, constituting an excessive tax on phone service.
Throughout the telecommunications industry, sentiment has been steadily building against USF contribution mandates, with quarterly rate hikes becoming a staple of the program. Although there has long been bipartisan support for USF funding reform, lawmakers have struggled to reach a consensus on what that should look like. Nevertheless, without substantive USF reform, American consumers will continue to suffer under incessant rate hikes.
Without decisive action, these escalating costs will undermine the expressed purpose of the USF altogether, harming both affordability and accessibility to telecommunications services. Lawmakers should move to reign in the exorbitant demands of the USF.
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