https://en.wikipedia.org/wiki/Universal_Service_Fund

The fund is supported by charging telecommunications companies a fee which is set quarterly. As of the third quarter of 2016, the rate is 17.9%[2] of a telecom company’s interstate and international end-user revenues.

“Federal Subscriber Line” charges, which are access fees charged by telecommunications companies, not the local or federal government.

The major goals of Universal Service as mandated by the 1996 Act are as follows:

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 to the fund supporting universal service programs
— Federal Communications Commission, Universal Service

Adding additional services to the fund has corporate support from major telecommunication companies, including Verizon and AT&T. In March 2009, senior executives from Verizon Communications met with the House Subcommittee on Communications, Technology, and the Internet, providing recommendations for how best to proceed, bringing broadband and mobile communication access to rural and unserved areas. Citing reform to the Universal Service Fund as a means “to better serve rural America,” Verizon recommended that a limit be set on the size of USF’s high-cost fund; competitive bidding wars be employed to determine which company expand service to unserved areas; structure a “wire-center approach” model to replace statewide cost averaging; restructure how contributions to the USF are determined; and impose a deadline on the FCC for completion of their reform of inter-carrier compensation.[18]

In October 2011 the FCC formally proposed a “Connect America Fund” to address these and other concerns.[19] Reform finally arrived on October 27, 2011, when the FCC approved a six-year transfer process that would transition money from the Universal Service Fund to a new $4.5 billion a year Connect America Fund that will support the expansion of broadband services to areas that don’t have broadband access yet.[20][21]

Connect America Fund[edit]
The largest and most complex of the four programs, the high cost program subsidizes telecommunications services in rural and remote areas. The program paid out $4.17 billion in subsidies to telecommunications companies in 2013,[26] with a goal of making telecommunications affordable to rural and remote areas. The program has been criticized as wasteful, granting large sums of money to telecommunications companies while having little effect on access.[27]

As part of the National Broadband Plan proposed in March 2010, the FCC proposed reorganizing the High Cost program into a new “Connect America Fund”, which will include both voice and 4 Mbit/s internet connectivity.[28] On October 27, 2011, the FCC approved a six-year transfer process that would transition the money from the Universal Service Fund High-Cost Program into the new $4.5 billion a year Connect America Fund, effectively putting an end to the USF High-Cost Fund by 2018.[20][21][29]

In 2012, during “Phase I” of the Connect America Fund, $115 million in subsidies were given out to build out broadband in 37 states, with $71.9 million going to Frontier Communications and $35 million to Century Link, with AT&T and Verizon declining to participate.[30] In 2013, also during “Phase I”, CenturyLink accepted another $54 million,[31] and AT&T accepted $100 million.[32]

In March 2014, the FCC approved “Phase II” of the transition to the Connect America Fund, adding 1.8 billion a year in funding,[33] and clarifying the specifics of the funding process. Under the framework the FCC approved, incumbent carriers have priority access to subsidies, but if the funds are declined, the funds are allocated by a competitive bidding process. The FCC also proposed upping the minimum speed requirement from 4Mbit/s to 10Mbit/s.[34] In May 2014, the 10th circuit court of appeals upheld the shift in funds in the face of a legal challenge by telephone companies.[35][36]

The Connect America Fund also includes the Mobility Fund, which is given to wireless carriers who expand service to underserved areas. “Phase I” of the Mobility Fund offered $300 million for a September 2012 round of auctions, and “Phase II” of the Mobility Fund plans to give out $500 million in annual support.[37]

Low income (Lifeline)[edit]
Since 1985, the Lifeline program has helped low-income people pay for phone service; first landlines, then cellphones, and as of 2016 it also offers the option of Internet connectivity.[38] It provides a subsidy of up to $10.00 a month for Americans below 135% of the poverty line for this service.[39]

As of 2012, 17 million households received a $9.25 subsidized discount through the program. This was down to 12 million households by 2015.[40][38] In 2013, the lifeline program paid out $1.8 billion in subsidies to telephone companies; reduced to 1.5 billion by 2015.[26][38] As the original program was set up to cover land lines, there was criticism of the increasing use of the fund to cover wireless service,[39] as well as significant waste in the program.[41][42] Residents of Native American Indian and Alaska Native tribal communities may qualify for enhanced Lifeline assistance (up to an additional $25.00) and expanded Link-Up support (up to an additional $70.00). States with their own programs may have their own eligibility guidelines.

In February 2017, FCC Commissioner Ajit Pai suspended the expansion of Lifeline. While current broadband providers are technically authorized to provide subsidized broadband, the FCC itself could not point to a single company that actively provides broadband.[48]

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