Telephone Taxes | Federal Universal Service Fund

Federal Universal Service Fund

All telecommunications companies are required to contribute to the Federal Universal Service Fund (FUSF). This Fund, established in January 1998, supports the telecommunications needs of low-income households, consumers living in high-cost areas, schools (K-12), libraries and rural hospitals. The fund was established in the Telecommunications Act of 1996 and was created by assessing both intrastate and interstate revenues of providers of interstate telecommunications services.

The Federal Communications Commission (FCC) determines on a quarterly basis a contribution factor that is based on the ratio of total projected quarterly costs of the "universal service support mechanisms" to total end-user interstate and international telecom revenues. The calculation of the FUSF Flat Rate End User Charge takes all interstate and international revenue less special access end user revenues. The result is then multiplied by the contribution factor released by the FCC (currently 7.2805% for 2Q02) and then multiplied by four. The result is then divided by the annualized amount of Presubscribed Inter-exchange Carrier Charge (PICC) lines (minus resold and lifeline counts) for the period of three months prior to the obligation period. Needless to say it's not a simple calculation. Conversely the special access end user USF obligation is recovered through a percentage surcharge factor applied to the end user billed special access charges.

Primary residential and single line business, including multi-line business customers are assessed one USF charge per line. PRI ISDN customers are assessed five (5) times the business USF charge. Centrex customers are assessed one-ninth (1/9) of the business USF charge on all lines. A special access USF factor is assessed monthly to end user billed special access recurring charges.