About USAC

What is Universal Service?

In the Telecommunications Act of 1996 (1996 Act) Congress directed the Federal Communications Commission (FCC) and states to take the steps necessary to establish support mechanisms to ensure the delivery of affordable telecommunications service to all Americans including low-income consumers, eligible schools and libraries, and rural health care providers.

Congress also specified that universal service support "should be explicit," and that, with respect to federal universal service support, "every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the FCC to preserve and advance universal service."

Congress emphasized that the preservation and advancement of universal service was to be the result of federal and state action, stating "[t]here should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service." Congress also entrusted the states with a role in universal service, including expressly granting states the authority "to adopt regulations not inconsistent with the Commission's rules to preserve and advance universal service," and requiring every telecommunications carrier that provides intrastate telecommunications services to "contribute, on an equitable and nondiscriminatory basis, in a manner determined by the state, to the preservation and advancement of universal service in that state" when such state establishes universal service support mechanisms.

States traditionally have promoted universal service by, among other things, assuring affordable residential access by explicitly and implicitly supporting and pricing basic telephone service at levels associated with very high telephone subscribership rates.

Prior to the 1996 Act, the FCC relied on Section 1 of the Communications Act of 1934 as the touchstone for virtually all major universal service policy discussions. The principles in Section 254(b) of the 1996 Act solidified the FCC's responsibilities under Section 1, "to make available, so far as possible, to all the people of the United States without discrimination on the basis of race, color, religion, national origin, or sex a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges."

The 1996 Act

Section 254 of the 1996 Act codified the FCC's historic commitment to advancing universal service by ensuring the affordability and availability of telecommunications services for all Americans. Section 254(c) directed the Federal-State Joint Board on Universal Service to recommend, and the FCC to establish, a definition of the telecommunications services that will be supported by the federal universal service support programs.

In defining the list of telecommunications services, the Joint Board and FCC were instructed to consider whether the service is (1) essential to education, public health, or public safety; (2) subscribed to by a substantial majority of residential consumers; (3) being deployed by telecommunications carriers in public telecommunications networks; and (4) consistent with the public interest, convenience, and necessity.

    The FCC and Joint Board have concluded that each of these criteria must be considered, "but not each necessarily met, before a service may be included within the general definition of universal service, should it be in the public interest."

      Section 254(b) also sets forth principles upon which the Joint Board and FCC shall base policies for the preservation and advancement of universal service. These principles are listed below. In addition, the FCC adopted another principle not identified in section 254(b), competitive neutrality. The Joint Board and FCC have stated that universal service policies should strike a fair and reasonable balance among the principles identified in section 254(b) and the additional principle of competitive neutrality.

      The universal service principles adopted by the Joint Board and FCC as the basis for universal service policies include:

      • Quality and rates - Quality services should be available at just, reasonable, and affordable rates.
      • Access to advanced services - Access to advanced telecommunications and information services should be provided in all regions of the Nation.
      • Access in rural and high cost areas - Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.
      • Equitable and nondiscriminatory contributions - All providers of telecommunications services should make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service.
      • Specific and predictable support mechanisms - There should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service.
      • Access to advanced telecommunications services for schools, health care, and libraries - Elementary and secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services.
      • Competitive neutrality - Universal service support mechanisms and rules should be competitively neutral. In this context, competitive neutrality means that universal service support mechanisms and rules neither unfairly advantage nor disadvantage one provider over another, and neither unfairly favor nor disfavor one technology over another.

      The FCC's policies and decisions on universal service, and USAC's administration of the Universal Service Fund, rely on these guiding principles to make implicit mechanisms explicit in a competitively neutral way while preserving the goals of universal service.


      Last modified on 2/18/2008