USF Contribution Factor Hits Record 38.8% in Third Quarter
FCC reduced projected demand by $125 million, but the assessment rate still reached an all-time high.
WASHINGTON, June 15, 2026 – The federal Universal Service Fund contribution factor will rise to a record 38.8 percent in the third quarter of 2026.
The approved contribution factor was released Friday in a notice from the Federal Communications Commission's Office of Managing Director.
The approved contribution factor is up from 37 percent in the second quarter and marks the highest quarterly assessment factor in the history of the USF. The final figure, however, came in below earlier projections that suggested the factor could exceed 40 percent.
Analyst Billy Jack Gregg had previously projected a contribution factor of 42.3 percent based on demand and revenue projections released by the Universal Service Administrative Co. on May 1 and June 1.
According to Gregg, the lower-than-expected contribution factor resulted from OMD's decision to apply $125 million in unused funds to reduce projected third quarter demand in the Schools and Libraries Fund, commonly known as E-Rate.
“Even though the assessment factor is going up, it will be 350 basis points less than indicated by the USF demand and revenue projections previously filed,” Gregg said in an email.
Gregg noted that OMD has made post-projection revisions to USAC's work in nine of the past thirteen quarters. OMD has reduced projected demand in eight of those quarters by a total of $632.4 million and increased projected demand in one quarter by a total of $219.2 million.
“In spite of the decrease, the quarterly assessment factor for the third quarter of 2026 will still be the highest in the history of the USF,” Gregg said.
The contribution factor represents the percentage of assessable telecommunications revenue providers must contribute to support the universal service programs.
In 2025, USAC authorized $8.45 billion in Universal Service Fund support, consisting of $4.55 billion for the High Cost program, $2.38 billion for E-Rate, $923.9 million for Lifeline, and $601.0 million for the Rural Health Care program.
The contribution factor has steadily increased in recent years as the pool of assessable traditional voice service revenues have declined. Many providers pass the charge through to customers as a line item on monthly bills.
Sen. Deb Fischer, R-Neb., recently told Broadband Breakfast that lawmakers remain on track to release draft legislation this summer to reform the Universal Service Fund.
“Our goal is to release a discussion draft this summer; we want it to be a bipartisan, bicameral product,” Fischer said. “Right now, we’re working through stakeholder feedback and input from USF working group House and Senate co-chairs and members.”
Some stakeholders have advocated for expanding the contribution base to include broadband internet providers or large technology companies, arguing that doing so would spread the cost of supporting universal service across a broader segment of the communications marketplace.
