Universal Service

Universal Service Funding

Contributions to the universal service fund are calculated using certain interstate and international revenues reported on the FCC Form 499-A (Annual Telecommunications Reporting Worksheet) and FCC Form 499-Q (Quarterly Telecommunications Reporting Worksheet). All intrastate, interstate, and international providers of telecommunications within the United States, with very limited exceptions, must file the FCC Form 499-A. Telecommunications carriers that do not qualify for the de minimis exemption must file the FCC Form 499-Q. USAC uses universal service contributions to make disbursements to the High Cost, Lifeline, Rural Health Care, and Schools and Libraries Programs.

Consumers may notice a "universal service" line item on their telephone bills. This line item appears when a telecommunications carrier chooses to recover its universal service contributions directly from its customers through a charge on the customers' telecommunications bills. The Federal Communications Commission (FCC) does not require telecommunications carriers to pass through their universal service contribution obligations to their customers, but if a carrier does choose to assess its customers a universal service charge, the FCC has established certain rules regarding how the charge must be calculated (see 47 C.F.R. § 54.712 and FCC orders).

USAC submits program demand and contribution base information each quarter to the FCC so that the FCC may calculate the contribution factor used to determine telecommunications carriers' required universal service contributions. The demand filing includes High Cost, Lifeline, Rural Health Care, and Schools and Libraries Programs projections of support requirements for the next quarter as well as the fund size and administrative cost projections. The demand filings are due 60 days before the beginning of the next quarter (e.g., on or about November 2 for first quarter, January 31 for second quarter, May 2 for third quarter, and August 2 for fourth quarter).

USAC also collects interstate and international revenue information from telecommunications carriers on the FCC Form 499-Q four times each year and submits aggregate information in the form of the contribution base filing on a quarterly basis to the FCC (March 2, June 1, September 1, and December 2). Based on the demand and contribution base filings, the FCC reviews the data and establishes the contribution factor for the upcoming quarter. Typically, the FCC releases the contribution factor for the quarter between the 2nd and 15th day of the month preceding the quarter (e.g., between Dec. 2 and Dec. 15 for the following first quarter).

Using the contribution factor established by the FCC and the information collected on the FCC Forms 499, USAC calculates the amounts that telecommunications carriers will contribute to the fund.