Reforming the Universal Service Fund

Starting in the mid-1980s, the FCC established various programs, collectively called the Universal Service Fund (USF), to increase access to communication services in the home at “just, reasonable and affordable rates for all consumers.” Universal service consists of three main components:

• Lifeline and Link-Up help low-income consumers (including those with disabilities and senior citizens) afford telephone service at home.
• Rural support funds carriers in areas with lower population densities make the natural cost of service too high.
• USF funds also support telecommunications service (including Internet) to schools and libraries, known widely as the e-rate (which was established in 1996).

Telecommunications providers (such as telephone, cable and cell phone companies) must contribute to the USF. Ultimately, most providers add a small Universal Connectivity Fee to each customer’s bill.

USF has played a role in bringing U.S. telephone adoption rates to 95.6 percent of Americans. The fund is currently at 8.7 billion dollars as of 2010.