The chart below shows the steady increase over time in the FCC’s USF Contribution Factor, which is the percentage of interstate and international end-user telecommunications revenues that telecommunications service providers must contribute to support the ever growing federal universal service fund. Today, the FCC announced the contribution factor has increased for the fourth quarter of 2014 by .4 percent to 16.1 percent. This means that American consumers will pay a 16.1% fee on a portion of their telephone bills for USF.
While there are a number of factors resulting in this trend line, including moving to a more explicit system and shrinking revenues, this path is clearly disturbing and unsustainable. The chart helps highlight that contribution reform is necessary. Also, I reiterate my call for an overall budget cap on universal service, which can help limit the demand placed on the collection side.