FCC Increases Universal Service Fund Contribution Fee for Q3

WASHINGTON, June 13, 2024 – The Federal Communications Commission increased on Wednesday the contribution factor for its Universal Service Fund to 34.4 percent for the third quarter of 2024.

That means the agency will collect 34.4 percent of all interstate end user revenues from voice providers to support the fund. The USF spends about $8 billion each year to support rural broadband infrastructure and internet discounts for low-income households, schools and libraries, and healthcare centers.

Wednesday’s announcement brings the factor up from 32.8 percent in the current quarter.

The agency sets a new contribution factor each quarter, adjusting it for projected contributor revenues and USF costs. The number fluctuates from quarter to quarter, but has generally been getting higher over time as voice revenues shrink. It passed 30 percent for the first time in 2021. 

While the increase was not unexpected, AT&T made it clear the company was not happy.

“It’s no surprise that the Universal Service Fund contribution factor is being increased yet again. Constantly ratcheting up the financial burden on the narrow and ever-dwindling base of traditional phone users to pay for the USF is unsustainable,” Rhonda Johnson, the company’s executive vice president of federal regulatory relations, said in a statement.

Capitol Hill lawmakers and the FCC agree the fund needs modernizing. A bipartisan group from both chambers of Congress has been working for the past year on legislation to reform the fund.

A sticking point has been who will be tapped for extra contributions. The FCC declined to levy USF fees on broadband Internet providers when it reclassified them as Title II carriers in April, citing fears of potential rate shock for consumers.

Broadband providers have asked that tech companies providing services over the internet, like Google and Meta, be included in an updated contribution base. FCC Chairwoman Jessica Rosenworcel pointed the working group toward online advertisers or those tech companies when asked for her input.

The fund survived a major legal challenge this week, with the Supreme Court declining to review two federal decisions reaffirming its legality. A conservative advocacy group alleged the fund’s fee mechanism and the FCC’s management of the fund were unconstitutional.