USAC:

1999 Annual Report to Congress and the FCC

USAC: An Overview

In the Communications Act of 1934, Congress proclaimed that "all people of the United States" shall have access to a "rapid, efficient, nationwide...communications service with adequate facilities at reasonable charges." In the Telecommunications Act of 1996, Congress further codified and expanded this concept of "universal service." January 1999 brought the consolidation of the universal service support mechanisms under the umbrella of the Universal Service Administrative Company (USAC). USAC, and the programs it administers at the direction of Congress and the Federal Communications Commission (FCC), has allowed millions of Americans to realize just how "universal" universal service can be.

USAC’s USF Programs

* High Cost
Provides support to telephone companies that serve high cost areas
* Low Income
Assists low-income consumers by helping to pay for service connection charges as well as monthly charges
* Rural Health Care
Allows rural health care providers to pay the same for telecommunications services as their urban counterparts
* Schools & Libraries (E-rate)
Provides discounted Internet access and telecommunications service to schools and libraries

USAC administers the Universal Service Fund (USF), which provides communities across the country with access to affordable telecommunications services. USAC is a private, not-for-profit organization directed by the FCC to administer the USF. USAC’s mission is to deliver the benefits of universal service to all consumers. All of the country’s communities—remote or rural areas, low-income neighborhoods, rural health care providers, and public and private schools and public libraries—are eligible to seek support from the USF for communications services.

Since its incorporation in September 1997, USAC has gone from the drawing board to a full-scale operation. In addition, USAC successfully incorporated the Schools and Libraries Corporation and the Rural Health Care Corporation into USAC in a merger completed December 31, 1998.

USAC collects funds from contributing telecommunications service providers in accordance with FCC regulations. Under rules adopted by the FCC pursuant to the Telecommunications Act of 1996, over 5,000 telecommunications service providers report information to USAC, and more than 2,000 companies contribute to the USF based on their share of interstate and international end-user revenue.

In 1998, USAC distributed $2,291,933,000 in support to eligible entities participating in the four programs administered by USAC. More than $3.6 billion was distributed in 1999.

In the pages that follow, USAC provides highlights of changes and improvements, and the successes of the universal service support mechanisms. USAC submits this annual report to Congress and the FCC pursuant to 47 CFR § 54.702 (h). By law, USAC’s annual report must detail USAC’s "operations, activities, and accomplishments for the prior year, including information about participation in each of the universal service support mechanisms and administrative action intended to prevent waste, fraud, and abuse," as well as an assessment of contractor performance. This annual report covers the period from USAC’s inception through December 31, 1999. As required by regulation, USAC has consulted with FCC staff concerning the scope and content of this annual report.

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