Universal Service Fund Fee Explained
The Universal Service Fund (USF) was created by the Federal Communications Commission (FCC) under the direction of congress, to promote telecommunication services across the nation. All telecommunications companies that provide state to state (interstate) long distance are required by law to contribute to the USF.
When the Universal Service Fund was first put into action, only traditional long distance companies were required to contribute to the fund. However, in 1996, Congress passed a law that required all local telephone companies, wireless telephone companies, paging companies, and payphone providers who provide state to state long distance to contribute to the fund, in addition to traditional long distance carriers.
The Universal Service Fund is distributed among four separate components to help fund each program:
Low Income
The low income program provides discounted installation and monthly telephone service to qualified consumers. Qualifications for participating in the low income program vary by state.
Schools and Libraries
Schools and libraries that are eligible receive discounts (ranging from 20%-90% depending upon the student/community income level) on telephone service, Internet access, and internal connections (such as network wiring) located within school and library buildings.
High Cost
The high cost program provides financial support to companies that provide telecommunications services in areas of the United States where the cost of providing such services are high.
Rural Health Care
This program provides for Public and non-profit health care providers in rural areas to receive discounts on monthly telecommunications charges, installation charges, and long distance Internet connection charges.The funds from this program are being used by rural health care providers for patient services, such as transmitting x-rays from remote areas to be read by health care experts in urban areas.
The amount that each telecommunications company pays into the Universal Service Fund is determined by the revenue earned on all state to state (interstate) and international calls. The must pay a percentage of this revenue, which is referred to as their Contribution Factor. The Contribution factor changes quarterly. To see the current Contribution Factor, you can visit the Federal Communication Commission's website.
While the FCC does not require that companies recover the cost of USF contributions from their customers, a large portion of telecommunication providers choose to do so. You can check your phone bill to see if your company does by looking for a "Universal Service Fund" fee or "Universal Connectivity Charge" fee. The actual percentage or fee that a company recovers from its customers may be different from the Contribution Factor, and it may differ from company to company.
To make sure you get the best deal, be conscious of the Universal Service Fund when shopping for a telecommunications provider. Be sure to ask each company what their Universal Service Fund fee or Universal Connectivity Charge fee is and compare the charges to find a service provider that will fit your needs.
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