USF Contribution Factor Expected to Hit Record 39.3 Percent
Would represent a 3.3 percentage point increase from Q3 2025.
WASHINGTON, August 11, 2025 – Telephone customers may see higher charges on their monthly bills this fall, as fees paid to the Universal Service Fund were projected to rise to a record-high 39.3 percent.
The increase, up from 36% in Q3, according to the Universal Service Administrative Company’s Q4 2025 fund size projections, would mark the largest rate in the program’s history and the seventh largest quarter-over-quarter jump in nearly 30 years.
USAC, led by CEO Radha Sekar, administers the $8 billion Universal Service Fund, which is financed by fees on telecommunications carriers that are typically passed directly to customers.
Stood up by the Telecommunications Act of 1996, USF is designed to provide universal access to telecommunications services in the United States.
It is composed of four programs: Lifeline, for low-income consumers, the High-Cost Program, for rural consumers, E-Rate for schools and libraries, and the Rural Health Care Program for rural hospitals.
USF is funded by telecommunications carriers, and is assessed as a percentage of those carriers' end-user interstate and international voice revenues.
Though USF expenditures have remained relatively steady, interstate voice revenue has steadily shrunk, which has resulted in steadily higher contribution limits. The contribution limit was less than 6 percent in 2000, and remained under 20 percent until the end of 2018.
The limit’s rate of increase has only grown in recent years. All seven of the largest quarter over quarter rate increases have occurred since 2018.
The $8 billion fund receives 75 percent of its contributions from customers of the 10 largest telecommunications companies – like AT&T, Verizon, Comcast, and Charter.
The fund has been beset by controversy and calls for reform. Ruled unconstitutional by the Fifth Circuit for the U.S. Court of Appeals, the fund was preserved in late June by the Supreme Court, which found that the fund’s contribution scheme was constitutional.
Suggested reforms have included directly funding USF through annual Congressional appropriations or expanding the base of contributors to include Big Tech and social media platforms.
A bicameral and bipartisan working group, led by Sens. Ben Ray Luján, D-N.M., and Deb Fischer, R-Neb. was relaunched in June to examine possible reforms to USF. That group is currently seeking public comment and suggestions.
The FCC has not yet publicly released the official Q4 2025 contribution factor. The 39.3% projection was based on JSI’s analysis of USAC data.
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