Universal Service Fund

Universal Service Fund

Universal Service Fund

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Description:
The Universal Service Fund (USF) was created by the United States Federal Communications Commission (FCC) in 1997 to meet Congressional universal service goals as mandated by the Telecommunications Act of 1996. The 1996 Act states that all providers of telecommunications services should contribute to federal universal service in some equitable and nondiscriminatory manner; there should be specific, predictable, and sufficient Federal and State mechanisms to preserve and advance universal service; all schools, classrooms, health care providers, and libraries should, generally, have access to advanced telecommunications services; and finally, that the Federal-State Joint Board and the FCC should determine those other principles that, consistent with the 1996 Act, are necessary to protect the public interest. As of the first quarter of 2011, the USF fee, which changes quarterly, equals 15.5 percent of a telecom company's interstate and end-user revenues.

Background

Origins

By 1913, AT&T had favored status from U.S. government, allowing it to operate in a noncompetitive economic environment in exchange for subjection to price and quality service regulation. The government asserted that a monopolistic telephone industry would best serve the goal of creating a “universal” network with compatible technology country wide for telephone consumers. Regulators emphasized limits on profits, enforcing “reasonable” prices for service, setting...
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