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Universal Service Fund

The Universal Service Fund is also known as USF, and it was invented by the United States Federal Communication Commission. In 1997, this program came into being in order to offer universal telecommunication service to educational facilities, classrooms, health care provider companies and libraries. Due to the program’s mandate, advanced telecommunication services are now found at the majority of these public buildings, via the specific stipulations of the 1996 Act.

Universal Service charges are not the same as those which are often referred to in telephone company bills as "Federal Subscriber Line" fees, which are neither taxes nor charges via the federal government or via other types of government. The FCC stipulates that "Local telephone companies recoup some of the costs of telephone lines linked to a home or business via this monthly fee on your local telephone bill. Sometimes known as the federal subscriber line charge, this charge is regulated and capped by the FCC. It is not a tax or levy charged by the government. "The cash received from the subscriber line charge will be turned over to local telephone companies."

Conversely, the generally lower USF fees gathered by phone companies represent the same monies passed on to the Federal Communications Commission (FCC), which remarks that "this line item (USF) appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs.”

In autumn of 2011, the FCC passed into law a six-year transfer process which would transfer monies from the Universal Service Fund’s High Cost Program to an American Fund, which featured over four billion dollars in new funding. By 2018, the USF high-cost fund will be phased out entirely.

Since phones offer a crucial link to emergency services, government services and community services, promoting phone service for all people from all income levels and walks of life is the mandate of the USF program. Phone service is made more reasonably-priced via the program, allowing those with low incomes or those living in out-of-the-way places to get the telecommunication services that they really need.

Therefore, Congress has made it mandatory for all phone companies to participate in this initiative, by contributing to the USF. Phone companies participate in the program in different ways. For example, some offer their clients access to line item savings on their phone bills, while also contributing to the fund. Others may not choose to pass on savings to their valued clientele. Therefore, consumers should see how USF levies affect their billing, for better or worse, before signing on for services.

This surcharge is put into place in order to provide telecommunications services at affordable prices, for schools, libraries, rural health care providers and low-income clients. The levy is a percentage of the interstate portion of the long distance charges on a phone bill. The surcharge is assessed to all telecommunications companies that have interstate operations, including long distance carriers, wireless companies, pager firms and payphone service providers. The Federal Communications Commission (FCC) oversees this levy.

This surcharge is known by many names. The list of names posted below are several ways in which the USF levies may be represented on phone bills from other firms, including local and long distance telephone companies:

  • Federal Universal Service Fee
  • Federal Universal Service Fund
  • Federal USF - ADSL
  • FED USF - Special Access
  • Universal Connectivity Charge
  • Universal Service Carrier Charge