Q1: What is universal service?
A1: Universal service is the policy of ensuring access to a baseline level of telecommunications services for everyone in the United States. The policy originated with the Communications Act of 1934. The Telecommunications Act of 1996 expanded the scope of universal service from individual consumers to include rural health care facilities, schools, and libraries.

The goals of universal service, as mandated by the 1996 Telecom Act, are:

• To promote the availability of quality services at just, reasonable prices.
• To increase access to advanced telecommunications services throughout the country.
• To advance the availability of such services to all consumers, including those in low-income, rural, insular, and high-cost areas at comparable rates to urban areas.

The 1996 Telecom Act further defines “universal service” in Section 254 (c)(1) as “an evolving level of telecommunications that the [Federal Communications] Commission shall establish periodically… taking into account advances in telecommunications and information technology and services.” The public goods that universal service supports, as stated in Section 254 (b)(7), include, “protection of the public interest, convenience, and necessity.”

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Q2: What is the universal service fund?
A2: The universal service fund (USF) is money collected from telecommunications companies and dedicated to fulfilling the goals of universal service. Telecommunications companies are required to make universal service contributions based on revenues gained from providing international and interstate calling services. Under the authority of the 1996 Telecom Act, the Federal Communications Commission (FCC) put the Universal Service Administrative Company (USAC) in charge of administering the collection and disbursement of universal service funds. In 2011, universal service disbursements totaled $8.1 billion.

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Q3: What are the universal service programs?
A3: The universal service 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 2012 levels of universal service funding:

• The High Cost Program supports telecommunications companies with customers in hard-to-serve, rural areas. The program is designed to enable them to offer services and rates that are comparable to those available in urban areas. In 2012, the program provided over $4.15 billion in support.
• The Lifeline Program enables carriers to offer discounted voice telephone to eligible low-income consumers. In 2012, the program provided $2.19 billion in support.
• The Rural Health Care Program helps telecommunications companies offer discounted rates to rural health care providers. These discounts enable rural health care providers to obtain communications and Internet services at rates comparable to urban providers. In 2012, the program provided over $106 million in support.
• The Schools and Libraries Program, commonly known as E-rate, provides discounts to schools and libraries for telecommunications, telecommunications services, Internet access, internal connections, and basic maintenance of internal connections. In 2012, the program provided over $2.22 billion in support.

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Q4: Who pays for universal service?
A4: 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.

Below is an example of the quarterly collection and disbursement process, which is repeated each quarter:

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Q5: How does universal service funding work?
A5: Universal service collections: All telecommunications carriers that provide international and interstate service make universal service contributions. The amounts of these contributions are determined by projections of the aggregate demand for universal service support, which USAC submits each quarter to the FCC. The FCC reviews these projections and determines the percentage of international and interstate revenues that carriers must contribute.

Universal service disbursements: Universal service contributions fund the High Cost, Lifeline, Rural Health Care, and Schools and Libraries 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.

How program participants claim support in each of the programs:

• 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.
• Schools and Libraries: 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.

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Q6: What is USAC?
A6: USAC is an independent, not-for-profit corporation created in 1997 to collect contributions from telecommunications carriers and administer universal service support mechanisms (programs), designed to provide communities across the country with access to affordable telecommunications services.

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Q7: What does USAC do?
A7: USAC's mission is to collect and distribute universal service funds. USAC administers the four universal service programs in accordance with the FCC's rules, orders, and directives. USAC does not set or advocate policy. USAC works to protect the integrity of the fund, 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 and the fund, 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 December 2012, USAC has disbursed over $90 billion 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 2012 on the USAC Fast Facts and Annual Reports pages.

NOTE: USAC is the neutral administrator of the universal service 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.

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Q8: Approximately how much universal service funding is disbursed for each program?
A8: Below are the four universal service programs' unaudited approved disbursement totals for 2011.

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Q9: Where is the USAC Annual Report?
A9: You can view USAC Annual Reports in the "About USAC" section of our website, under "Publications."

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Q10: Where are USAC Press Releases?
A10: You can view USAC Press Releases in the "About USAC" section of our website, under "Media Kit."

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Q11: Where can I find more information about the four universal service programs?
A11: You can view annual reports, brochures, glossaries of terms, newsletters, tip sheets and other materials about the four universal service programs in the "About USAC" section of our website under Publications.

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Q12: What resources are available to search for universal service commitments, disbursements, and other statistics?
A12: USAC has developed various online search tools to help you find the information you need when you need it.

• High Cost Program Tools
• Lifeline Program Tools
• Rural Health Care Program Tools
• Schools and Libraries Program Tools

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