Universal service is the principle that all Americans should have access to a baseline level of telecommunications services. This principle is the cornerstone of the Communications Act of 1934, which established universal service in legislation and also created the Federal Communications Commission (FCC). Since that time, universal service policies have helped make telephone service ubiquitous, even in rural areas. The Telecommunications Act of 1996 (1996 Telecom Act) expanded the scope of universal service to include increased, affordable access to both telecommunications and advanced services, such as high-speed Internet, for all consumers. More specifically, the law adopted explicit goals to guide the implementation of universal service policies. These goals include:
- Promoting the availability of quality services at just, reasonable, and affordable rates.
- Increasing access to advanced telecommunications services throughout the nation.
- Advancing the availability of such services to all consumers, including those in low income, rural, insular, and high cost areas at rates that are reasonably comparable to those charged in urban areas.
- Increasing access to telecommunications and advanced services in schools, libraries, and rural health care facilities.
- Providing equitable and non-discriminatory contributions from all providers of telecommunications services to the fund supporting universal service programs.
The Universal Service Fund is money collected from telecommunications companies that is dedicated to fulfilling the goals of universal service. Telecommunications companies are required to make universal service contributions based on earned revenue. Under the authority of the 1996 Telecom Act, the FCC put USAC in charge of administering the collection and disbursement of universal service funds. In 2021, universal service disbursements totaled over $8.5 billion.
The USF programs are mechanisms for providing funding to organizations or companies eligible for support. These beneficiaries help fulfill the goals of universal service of providing affordable access to telecommunications services for all Americans.
Below are brief descriptions of each program, along with 2021 levels of universal service funding:
- The E-Rate program provides support to eligible schools and libraries that qualify for reduced rates for telecommunications, telecommunications services, Internet access, internal connections, and basic maintenance of internal connections. In 2021, the program provided over $2.1 billion in support.
- The High Cost program provides support to eligible telecommunications companies that in turn offer service to consumers in hard-to-serve, rural areas at rates that are comparable to those available in urban areas. In 2021, the program provided over $5.1 billion in support.
- The Lifeline program provides support to telecommunications companies that in turn offer discounts on telecommunications services to eligible consumers. In 2021, the program provided $723 million in support.
- The Rural Health Care (RHC) program provides support to eligible rural health care providers (HCPs) that qualify for reduced rates for telecommunications services and broadband access. This allows HCPs to pay rates for telecommunications services similar to those of their urban counterparts, making telehealth services affordable in rural areas. In 2021, the program provided over $556 million in support.
As required by the 1996 Telecom Act, telecommunications carriers providing international and interstate service and earning above certain revenue thresholds make universal service contributions. Consumers may notice a universal service line item on their telephone bills. This line represents a charge by a telephone company to recover its FCC-mandated universal service contributions.
Step 1: Carriers contribute funding.
All telecommunications carriers that provide international and interstate service make universal service contributions equal to a certain percentage of their revenue.
To determine this percentage, USAC makes quarterly projections of the upcoming demand for universal service support, then submits the projections to the FCC. The FCC reviews these projections and determines the “contribution factor,” i.e., the percentage of international and interstate revenues that carriers must contribute.
Step 2: USF programs disburse funding.
Universal service contributions fund the E-Rate, High Cost, Lifeline, and Rural Health Care programs. Entities eligible for support from these programs submit information to USAC for processing and evaluation, leading to disbursement of universal service support to those approved for funding.
Program participants claim support in different ways for each program:
- E-Rate: Eligible applicants in this program open a competitive bidding process to receive bids on the products and services they seek. Service providers submit bids, which are reviewed by applicants under applicable program rules. Applicants select the service provider for the service or product and submit the appropriate forms to USAC to process support payment invoices.
- High Cost: Rural and non-rural incumbent local exchange carriers (ILECs) and competitive carriers that are eligible telecommunications carriers (ETCs) submit line count data, certain cost data, and certifications to USAC to receive support.
- Lifeline: ETCs that provide consumers with Lifeline program discounts file the FCC Form 497 (Lifeline Worksheet) with USAC to receive Lifeline program support that reimburses them for providing service at discounted rates.
- Rural Health Care: All health care providers (HCPs), or consortia of HCPs seeking to participate in the Rural Health Care program, conduct a competitive bidding process for services to be used in providing health care. Once the service providers and services are selected, the health care provider completes and submits a funding request to USAC and later a notice that actual service has begun. The HCP then receives the benefit of the reduced rates from the Rural Health Care program, which pays the selected service provider for the discounts it provides to the HCP.
USAC is an independent, not-for-profit corporation designated by the FCC as the administrator of the Universal Service Fund.
USAC’s mission is to collect and distribute universal service funds. The FCC designated USAC to administer the four USF programs in accordance with the FCC’s rules, orders, and directives. In addition, the FCC designated USAC to administer several Congressional Response programs and funds that Congress created during the COVID-19 pandemic.
USAC does not set or advocate policy. USAC works to protect the integrity of universal service, promote compliance among program participants, and provide information about universal service to Congress, the FCC, program audiences, and the general public. In all of these tasks, USAC strives to provide efficient, responsible stewardship of the programs; a key national asset in making important telecommunications services and broadband access available to consumers, health care providers, schools, and libraries throughout the United States.
Since its creation in 1998 through the present day, USAC has disbursed billions to support the goals of universal service and to help keep Americans connected. USAC performs a wide range of complex, large-scale operations. See highlights for 2021 on the Annual Reports pages.
Note: USAC is a neutral administrator of the USF and Congressional Response programs. USAC may not make policy, interpret unclear provisions of the statute or rules, interpret the intent of Congress, or advocate policy positions before the FCC or its staff, but may advocate positions on administrative issues related to universal service programs.
Below are the four USF programs’ unaudited, approved, and rounded disbursement totals for 2021.
|2021 Disbursements||$8.5 billion|
|High Cost||$5.1 billion|
|Rural Health Care||$556 million|
You can view USAC annual reports in the “About” section of our website under “Reports and Orders.”
In response to the COVID-19 pandemic, Congress created multiple programs to help people stay connected during and beyond this disruptive period. The FCC designated USAC to administer these programs and funds. As of 2022, the following programs are still active:
- Affordable Connectivity Program (ACP)
- Emergency Connectivity Fund (ECF)
- COVID-19 Telehealth Fund
Note: These programs do not use funds from the Universal Service Fund.