Do I Have to Pay the Federal Universal Service Fund?

The Federal Universal Service Fund (FUSF) is a government program designed to ensure people across the United States have access to telecommunications services. Although the modern fund was established by the Federal Communications Commission (FCC) in 1997, the principle of universal service has been a part of federal policy since 1934. The fund supports this goal by subsidizing services for schools, libraries, and rural health care facilities. It also assists low-income households and helps keep rates reasonable for those living in high-cost and rural areas.

The Source of the Charge

The responsibility for paying into the Universal Service Fund rests with telecommunications providers, not directly with consumers. The FCC requires companies that provide interstate and international telecommunications services to contribute to the fund. This includes local and long-distance phone companies, wireless providers, and certain Voice over Internet Protocol (VoIP) service providers.

The Universal Service Administrative Company (USAC), a not-for-profit corporation, administers the fund under the direction of the FCC. USAC is responsible for collecting the contributions from providers and disbursing the money to the four programs supported by the fund. The amount each provider must contribute is not a flat fee but is calculated as a percentage of its assessable revenues from telecommunications services.

This percentage is known as the contribution factor, and the FCC adjusts it on a quarterly basis. The factor can fluctuate based on the projected needs of the fund’s programs. This calculation ensures that the funding mechanism is responsive to the evolving demands for universal service support across the country.

Why the Charge Appears on Your Bill

Seeing a “Universal Service” fee on your bill can be confusing, as it is not a direct tax from the government. The FCC requires telecommunications companies to contribute to the fund, but it does not mandate that they pass this cost on to their customers. Instead, the FCC permits providers to recover their contribution costs.

The line item on your bill is a charge levied by your service provider to recoup the money it is required to pay into the FUSF. Companies cannot collect more from their customers than they contribute to the fund. The charge is calculated as a percentage of the interstate and international service charges on your bill, which is why the amount can vary from month to month.

Providers have discretion in how they label this charge on their bills. You might see it listed as “Universal Service Fee,” “Federal Universal Service Charge,” or a similar name. The key distinction is that the provider is the entity legally obligated to pay the government; the charge on your bill is a business decision to recover that cost.

Services Subject to the Fee

The Universal Service charge appears on your bill because it is tied to specific types of services you purchase. The fee is applied to revenues from telecommunications services, which the FCC defines to include traditional voice services like local and long-distance calling. It also applies to wireless phone services and Voice over Internet Protocol (VoIP) services.

If you have a bundled service package that includes a phone line along with internet and television, you will see the charge applied to the voice portion of your bill. The charge is calculated based on the provider’s revenues from these specific offerings.

A notable exception to this rule is standalone broadband internet access service. The FCC has exempted internet-only service from FUSF contributions. This means if you only subscribe to internet service from a provider and do not have a voice line, you will not see a Universal Service charge on your bill. This distinction explains why the fee is present on phone bills but often absent from bills for internet-only customers.