Universal service is the principle that all Americans should have access to communications services. Universal service is also the name of a fund and the category of FCC programs and policies to implement this principle. Universal service is a cornerstone of the law that established the FCC, the Communications Act of 1934. Since that time, universal service policies have helped make telephone service ubiquitous, even in remote rural areas. Today, the FCC recognizes high-speed Internet as the 21st Century’s essential communications technology, and is working to make broadband as ubiquitous as voice, while continuing to support voice service.
The Telecommunications Act of 1996 expanded the traditional goal of universal service to include increased access to both telecommunications and advanced services – such as high-speed Internet – for all consumers at just, reasonable and affordable rates. The Act established principles for universal service that specifically focused on increasing access to evolving services for consumers living in rural and insular areas, and for consumers with low-incomes. Additional principles called for increased access to high-speed Internet in the nation’s schools, libraries and rural health care facilities. The FCC established four programs within the Universal Service Fund to implement the statute. The four programs are:
- Connect America Fund (formally known as High-Cost Support) for rural areas
- Lifeline (for low-income consumers), including initiatives to expand phone service for residents of Tribal lands
- Schools and Libraries (E-rate)
- Rural Health Care
The Universal Service Fund is paid for by contributions from providers of telecommunications based of an assessment on their interstate and internation end-user revenues. Examples of entities that contribute to the Fund are telecommunications carriers, including wireline and wireless companies, and interconnected Voice over Internet Protocol (VoIP) providers, including cable companies that provide voice service. The Universal Service Administrative Company, or USAC, administers the four programs and collects monies for the Universal Service Fund under the direction of the FCC. The FCC’s annual monitoring report tracks contributions and disbursements.
The FCC is reforming, streamlining, and modernizing all of its universal service programs to drive further investment in and access to 21st century broadband and voice services. These efforts are focused on targeting support for broadband expansion and adoption as well as improving efficiency and eliminating waste in the programs.
HISTORY OF UNIVERSAL SERVICE AND THE UNIVERSAL SERVICE FUND
The Federal Communications Commission was created by the Communications Act of 1934. Universal service was one of the core mandates of that legislation, the purpose of which included making “available…to all the people of the United States…a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges."
In 1934, telephone service was considered to be a “natural monopoly,” a service best delivered by one company rather than two or more competitors. The U.S. government allowed AT&T, then the monopoly provider, to operate in a non-competitive environment in most areas of the country in exchange for the federal and state government regulation of price and service quality. In areas that AT&T did not provide service, small companies, including cooperatives owned by residents of the local community, provided phone service. The concept of universal service evolved over the decades to mean the development of an infrastructure that provides telephone service to all consumers at a reasonable price. Funding for universal service came from a series of access charges that long distance carriers paid as intercarrier compensation (ICC) to local exchange companies for originating and terminating the long distance calls. Even after the breakup of AT&T in 1982, only interstate long distance companies were required to contribute funds towards universal service.
The Telecommunications Act of 1996 was the first major re-write of the Communications Act of 1934. It opened up local markets to competition, which changed the dynamics of the existing system of funding universal service. The 1996 Act explicitly adopted principles to guide universal service policy. These principles include:
- 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 to those charged in urban areas
- Increase access to telecommunications and advanced services in schools, libraries and rural health care facilities
- Provide equitable and non-discriminatory contributions from all providers of telecommunications services for the fund supporting universal service programs
In addition, the Telecommunications Act of 1996 directed the FCC to formalize what services a company must provide in order to receive support from the Universal Service Fund. For example, an eligible telecommunications company must be able to demonstrate its ability to remain functional in emergency situations. The Act also expanded the universe of companies required to pay into the fund from only interstate long-distance carriers to include all telecommunications carriers (regardless of whether they are wireline, wireless or satellite companies). The Telecommunications Act of 1996 led to the creation of the Universal Service Administrative Company, or USAC, an independent, not-for-profit corporation designated as the administrator of the federal Universal Service Fund by the FCC. The Act also called for the creation of a Federal-State Joint Board on Universal Service to make recommendations to implement the universal service provisions of the Act. This Joint Board is comprised of FCC Commissioners, State Utility Commissioners, and a consumer advocate representative.
The Universal Service Fund provides support through four programs:
- High-Cost Support (now known as the Connect America Fund) provides support to certain qualifying telephone companies that serve high-cost areas, thereby ensuring that the residents of these regions have access to reasonably comparable service at rates reasonably comparable to urban areas
- Low-Income Support, also called the Lifeline program, assists low-income customers by helping to pay for monthly telephone charges so that telephone service is more affordable
- Schools and Libraries Support, also known as the "E-Rate," provides telecommunication services (e.g., local and long-distance calling, both fixed and mobile, high-speed data transmission lines), Internet access, and internal connections (the equipment that delivers these services to particular locations) to eligible schools and libraries
- Rural Health Care Support allows rural health care providers to pay rates for telecommunications services similar to those of their urban counterparts, making telehealth services affordable, and also subsidizes Internet access
In early 2009, Congress directed the FCC to develop a National Broadband Plan to ensure every American has “access to broadband capability. The plan was released in March of 2010. The plan highlighted ways that the government could influence the broadband ecosystem including to “reform current universal service mechanisms to support the deployment of broadband and voice in high-cost areas; and ensure that low-income Americans can afford broadband; and in addition, support efforts to boost adoption and utilization.”
Consistent with the National Broadband Plan, in February 2011, the FCC issued a Notice of Proposed Rulemaking to comprehensively reform and modernize the universal service High-Cost program and intercarrier compensation systems to ensure that robust affordable voice and broadband service, both fixed and mobile, are available to Americans throughout the nation. The rulemaking process was guided by four principles rooted in the Communications Act of 1934and the Telecommunications Act of 1996:
- Modernize USF and ICC for Broadband. Modernize and refocus USF and ICC to make affordable broadband available to all Americans and accelerate the transition from circuit-switched to IP networks, with voice ultimately one of many applications running over fixed and mobile broadband networks
- Fiscal Responsibility. Control the size of USF as it transitions to support broadband, including by reducing waste and inefficiency
- Accountability. Require accountability from companies receiving support to ensure that public investments are used wisely to deliver intended results. Government must also be accountable for the administration of USF, including through clear goals and performance metrics for the program
- Incentive-Based Policies. Transition to incentive-based policies that encourage technologies and services that maximize the value of scarce program resources and the benefits to all consumers
In October 2011, the Commission adopted its first rulemaking decision to implement these principles informally called the “USF/ICC Transformation Order.” The Commission established the following goals:
- Preserve and advance voice service
- Ensure universal availability of voice and broadband to homes, businesses and community anchor institutions
- Ensure the availability of mobile voice, and broadband where Americans live, work or travel
- Ensure reasonably comparable rates for broadband and voice service
- Minimize universal contribution burden on consumers and businesses
One of the key elements of the Order was to expand the public interest obligations for eligible telecommunication carriers to deploy infrastructure that can provide broadband service in addition to voice service. In addition, the Order created the “Connect America Fund” to replace all existing high-cost support mechanisms. One of the goals of the Connect America Fund is to extend broadband to those Americans that lack service today, while preserving voice service. Another one of the goals of the Connect America Fund is to help make advanced mobile services – including mobile voice and broadband – available in areas that would not otherwise have those services. Implementation of this goal will be through incentive-based, market driven policies such as phase one of the Mobility Fund which uses a competitive bidding process to help expand 3G and 4 G mobile wireless networks in areas where it would be cost effective to develop with a one-time investment from the Connect America Fund.
2016 Universal Service Headlines
Mutual Telco and Winnebago Coop Study Area Waiver Public Notice: : Wireline Competition Bureau seeks comment on the joint petition of Mutual Telephone Company of Sioux Center, Iowa d/b/a Premier Communications and Winnebago Cooperative Telecom Association for waiver of the definition of “study area.”
NECA's 2016 Further Modification of Average Schedule HCLS Formula Public Notice: : Wireline Competition Bureau seeks comments on NECA’s 2016 Further Modification of the Average Schedule Company Universal Service High Cost Loop Support Formula.
Lifeline ETC Applications Public Notice: : Seeks an affirmation from any carrier with a currently pending Lifeline compliance plan request or petition for designation as a Lifeline-only ETC that the carrier remains interested in having the Bureau review its application.
E-rate Inflation Adjustment Public Notice: Wireline Competition Bureau Announced E-rate Inflation-Based Cap for Funding Year 2016.
RBE Authorization Public Notice: Authorizes New Lisbon Broadband and Communications to receive $ 37,695.60 in rural broadband experiment support to bring new broadband service to seven census blocks in Indiana.
NCUC Redefinition Public Notice: Seeks comment on a petition by the North Carolina Utilities Commission seeking FCC agreement with redefinition of a rural telephone company’s service area.
BPS and AT&T Study Area Waiver Public Notice: Wireline Competition Bureau seeks comment on the joint petition of BPS Telephone Company (BPS) and AT&T Services, Inc., on behalf of its affiliate Southwestern Bell Telephone Company d/b/a AT&T Missouri for waiver of the definition of “study area”.
April 2016 USF Appeals Disposition Public Notice: Streamlined Resolution of Requests Related to Actions by the Universal Service Administrative Company.
Lifeline Reform Order: Adopts significant reforms to encourage more Lifeline providers to deliver supported broadband services and transition the program from primarily supporting voice services to targeting support at modern broadband services.
Wheeler Statement: Word PDF
Clyburn Statement: Word PDF
Rosenworcel Statement: Word PDF
Pai Statement: Word PDF
O'Rielly Statement: Word PDF
South Dakota PUC Report & Order: Granted request of South Dakota PUC to withdraw service area redefinition petition.
Invoice Deadline Extension Order: Denies requests for waiver of the E-rate program rules governing invoicing deadlines.
MTAW Order on Reconsideration: Denies MTAW’s petition for reconsideration, concluding that it failed to present any argument warranting reconsideration of the Bureau’s decision to deny MTAW’s petition for waiver of the relevant high-cost filing deadline.
Mid-Tex Order on Reconsideration: Denies Mid-Tex’s petition for reconsideration, concluding that it failed to present any argument warranting reconsideration of the Bureau’s decision to deny Mid-Tex’s petition for waiver of the relevant high-cost filing deadline.
OTZ Telecom, ASTAC & Pine Cellular Waiver Order: Denies petitions for waiver of various high-cost universal service support filing deadlines, finding that all three carriers have failed to demonstrate good cause warranting grant of the requested waivers.
Advantage Order on Reconsideration: Denies Advantage’s petition for reconsideration, concluding it failed to present any argument warranting reconsideration of the Bureau’s decision to deny Advantage’s petition for waiver of the relevant high-cost line count filing deadlines.
Form 477 RoR Carrier Study Areas Public Notice: Announces the release of a data set showing updates to the Form 477 filing made by non-incumbent providers between February 19 and March 30, 2016 for broadband deployment data as of June 2015.
Frontier CA-TX Phase II Authorization Public Notice: Authorizes Frontier Communications Corporation to receive Connect America Phase II model-based support for the states of California and Texas in the areas served by former Verizon Communications Inc. subsidiaries.
Osirus-Huron Mountain Dismissal Order: Dismisses as moot petitions filed by Osirus Communications and Huron Mountain Communications for waiver of the Commission's rules to participate in NECA pools and tariffs and to obtain accelerated USF support.
ACAM v2.2 Release Public Notice: Announces the release of a new version of the Alternative Connect America Cost Model, v2.2, as well as illustrative results, and commences the challenge process for competitive coverage.
2016 Urban Rate Survey Public Notice: Announces the 2016 rate floor for incumbent eligible telecommunications carriers and reasonable comparability benchmarks for fixed voice and broadband services.
Lifeline Recertification Public Notice: Provides guidance regarding the process for ETCs to elect USAC to perform Lifeline recertification for their subscribers in 2016.
Rate-of-Return Webinar Public Notice: Announces a webinar for Monday, April 4, 2016, to provide a summary of the recent reforms to the high-cost support mechanisms for rate-of-return carriers.
Rate-of-Return Carriers Reform Order: Adopts significant reforms to place the universal service program on solid footing for the next decade to "preserve and advance" voice and broadband service in areas served by rate-of-return carriers.
March 2016 USF Appeals Disposition Public Notice: Streamlined Resolution of Requests Related to Actions by the Universal Service Administrative Company.
FCC Form 481 Protective Order: Revises the Protective Order governing the filing of and access to FCC Form 481 financial information filed by privately held rate-of-return carriers to streamline the procedures for submitting filings with the Commission and significantly reducing burden on filers.
PRT Phase I Round 2 Modification Public Notice: Announces the deadline by which providers must notify PRT if they serve census blocks that PRT has proposed to serve with CAF Phase I Round 2 incremental support.
February USF Appeals Disposition Public Notice: Streamlined Resolution of Requests Related to Actions by the Universal Service Administrative Company.
ITC-Qwest Study Area Public Notice: Wireline Competition Bureau seeks comment on the joint petition of Interstate Telecommunications Cooperative, Inc. (ITC) and Qwest Corporation d/b/a CenturyLink for waiver of the definition of “study area”.
RBE Ready to Authorize Public Notice: Announces that it the Bureau is ready to authorize rural broadband experiment support for New Lisbon Broadband and Communications, LLC.
NEP Relinquishment Order: Approves a request filed by NEP Cellcorp, Inc. to relinquish its eligible telecommunications carrier designation in the Commonwealth of Pennsylvania.
A-CAM Illustrative Results Public Notice: Announces the release of additional illustrative results for the Alternative Connect America Cost Model v2.1, utilizing input values reflecting a 9.75 percent cost of money.
2016 FCC Forms 499-A and 499-Q Public Notice: Wireline Competition Bureau Releases the 2016 Telecommunications Reporting Worksheets and Accompanying Instructions.
Form 499-A | Form 499-A Instructions
Form 499-Q | Form 499-Q Instructions
Oklahoma Map Implementation Order: Extends the transition period before the effective date of the Commission's interpretation of the term "former reservations in Oklahoma," as used within section 54.400(e) of the Commission's rules, for 120 days, until June 8, 2016.
EBP Denial Order: Denies a petition filed by Electric Power Board of Chattanooga (EPB) for waiver and extension of the ETC designation deadline and removes EPB from further consideration for rural broadband experiments support.
January USF Appeals Disposition Public Notice: Streamlined Resolution of Requests Related to Actions by the Universal Service Administrative Company.
Lifeline OMB Rules Public Notice: Announces effective dates of Lifeline rules following approval by the Office of Management and Budget.
RBE Authorization Public Notice: Authorizes Skybeam, LLC, to receive over $500,000 in rural broadband experiment support to bring new broadband service to 265 census blocks in Iowa.
USAC Board Selection Public Notice: Announces that Chairman Wheeler appoints six members to the Board of Directors of the Universal Service Administrative Company.