Is Universal Service Fund in Peril? A Close Look at the Budget – and Where the Money Comes From

The percentage of end-user phone bills that go toward the Universal Service Fund (USF) has been climbing and there are serious questions about the sustainability of that funding mechanism, despite a relatively stable USF budget. The money for USF comes from companies that offer interstate and international long-distance telecom services (i.e., voice services). At one time most of the money went toward voice services but over the years, more and more of it has gone towards broadband. Service providers generally pass these costs on to consumers in their monthly phone bill. Broadband revenues aren’t considered telecom revenues, however, which means that even though USF dollars go toward building and maintaining broadband networks and toward broadband service for low-income users and toward broadband to support schools, libraries and telehealth, all those programs are still funded as a percentage of traditional telecom revenues.