Universal Service Fund Contribution Factor Projected at 37.6% in 2026
Believe it or not, that 37.6 percent is down from the current 38.1 percent.
WASHINGTON, Dec. 16, 2025 – The Universal Service Fund’s contribution factor will likely be 37.6 percent in the first quarter of 2026, down slightly from its record high.
The contribution factor is the amount of interstate and international voice revenue telecoms will pay into the roughly $8 billion-per-year fund. The program has been funded this way with few major changes since the 1990s, but now focuses much more on supporting broadband than voice services.
The new contribution factor was announced Monday by the Federal Communications Commission. It was proposed by the Universal Service Administrative Company, a nonprofit that does the fund’s accounting work for the agency.
Jake Neenan
If the FCC doesn’t say otherwise by Dec. 29, the 37.6 percent factor will be adopted and go into effect for the first quarter. It’s currently 38.1 percent, the highest ever and up from 36 percent in the third quarter of 2025.
Four Universal Service Fund program
The USF supports four programs that subsidize building and maintaining rural broadband networks, plus internet discounts for low-income households, schools and libraries, and healthcare centers.
The total contribution requirement for the first quarter is projected to be about $2 billion, according to USAC, compared to an adjusted contribution base of about $5.5 billion.
The projected funding requirement is higher than USAC had predicted earlier this year in a November filing with the FCC, in which USAC projected less infrastructure and low-income support funding would be needed. The nonprofit filed revised projections earlier this month.
Demand for USF programs is not expected to go away any time soon, but the pool of revenue the fund can draw from is rapidly diminishing – down more than 47 percent compared to the fourth quarter of 2015. Generally considered an unsustainable situation, lawmakers have been working for years to modernize the fund.
That work was complicated by a lengthy but unsuccessful legal challenge to the fund this year, but has started back up again in Congress.
Aides from the offices of Sens. Dan Sullivan, R-Alaska, and Ben Ray Luján, D-N.M., said at an October conference that they expect to unveil a new framework by early 2026.
Multiple commenters have suggested the working group look to broadband service revenue for USF fees. Major broadband trade group USTelecom has said the lawmakers should add big tech companies to the mix, something FCC Chairman Brendan Carr has supported and tech companies have unsurprisingly opposed.
When the FCC classified ISPs as telecom providers in 2024 – a move that has since been struck down by courts – then-Chairwoman Jessica Rosenworcel chose not to levy USF fees. She told lawmakers she feared the move would increase rates for consumers, given the fees are currently passed on to consumers and likely would be if ISP revenue were assessed. She floated the idea of online advertisers.
The Supreme Court upheld the fund’s legality in June, but the conservative nonprofit that challenged it isn’t giving up easily. Consumers’ Research has filed another lawsuit taking up arguments from the three justices that dissented and said they would have found the program unconstitutional.
A full brief from the group is due to the U.S. Court of Appeals for the Fifth Circuit – which previously agreed the fund was unconstitutional before the Supreme Court reversed its ruling – on Jan. 12, 2026.
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