The Universal Service Fund and Related FCC Broadband Programs: Overview and Considerations for Congress

Universal service is the principle that all Americans should have access to communications services. It is the cornerstone of the Communications Act of 1934 (P.L. 73-416)—the law that established the Federal Communications Commission (FCC). The FCC is an independent federal agency charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. Since the enactment of the Communications Act, universal service policies and programs have helped make telephone service available nationwide, including in rural areas. The Telecommunications Act of 1996 (P.L. 104-104) expanded the focus of universal service, amending the Communications Act to include access to advanced telecommunications and information services, including high-speed (e.g., broadband) internet service to homes, schools, and businesses—especially in rural and high-cost areas, and to low-income individuals. The Telecommunications Act of 1996 adopted a set of principles to guide universal service policy and achieve universal service goals: promote the availability of quality services at just, reasonable, and affordable rates for all consumers; increase nationwide access to advanced telecommunications services; advance the availability of such services to all consumers, including those in low-income, rural, insular, and high-cost areas, at rates that are reasonably comparable with those charged in urban areas; increase access to telecommunications and advanced services in schools, libraries, and rural health care facilities; and provide equitable and nondiscriminatory contributions from all providers of telecommunications services to the Universal Service Fund (USF), which supports universal service programs. To advance the goals of universal service, the FCC uses various permanent, pilot, and temporary subsidy programs funded through the USF. Fees on telecommunications carriers, rather than appropriations, fund the USF. Section 254 of the Communications Act, as amended (47 U.S.C. §254)—which was added by the Telecommunications Act of 1996—governs the FCC’s USF authority. Section 254(d) requires interstate telecommunication carriers to contribute to the advancement of universal service based on mechanisms established by the FCC. The FCC has implemented this direction by adopting regulations requiring interstate carriers to pay a percentage of their revenue at a rate, set on a quarterly basis, called the “contribution factor.” While the FCC sets the regulatory and fee structure, the USF is administered by the Universal Service Administrative Company, a nonprofit entity, under the direction of the FCC. The FCC has established four USF programs: the High Cost Program, the Lifeline Program, the Schools and Libraries Program (commonly referred to as the “E-Rate”), and the Rural Health Care Program. The agency says it continually seeks to improve and update USF programs to reflect the changing needs of beneficiaries and advances in technology. Additionally, some Members have called on Congress to reexamine the USF and the fees it charges carriers (which may be passed on to consumers), evaluate the appropriateness of FCC authorities, and increase congressional oversight of USF spending. Proposals include expanding the types of entities that contribute to the fund or covering additional services (e.g., rural 5G), expanding the contribution base (e.g., S. 3321), directing electromagnetic spectrum auction revenues to support the USF, or funding the USF through the appropriations process. In addition to several pieces of legislation related to the USF or its programs that have been introduced in the 119th Congress, Senators Fischer and Luján announced the reconstitution of a bipartisan, bicameral USF Working Group in June 2025. That same month, the U.S. Supreme Court upheld the constitutionality of the USF. The working group is reviewing comments it received in the fall of 2025 in response to a request for comments on ideas to modernize the USF.