USF Contribution Factor to be 36.3% in January

WASHINGTON, Dec. 13, 2024 – The contribution factor for the Universal Service Fund is set to be 36.3 percent in the first quarter of 2025, the Federal Communications Commission announced Thursday.

That means telecoms will pay 36.3 percent of their interstate and international voice revenue into the fund, the highest rate yet. The charge is typically passed on to consumers' phone bills. Started in the 1990s to increase access to communications services, the USF now spends roughly $8 billion per year subsidizing rural broadband deployments, plus internet discounts for schools, libraries, health care centers, and low-income households.

The funding scheme is broadly considered unsustainable as voice revenue shrinks and rural networks continue to rely on support. A working group of lawmakers from both chambers of Congress has been crafting legislation to modernize the fund for more than a year, but nailing down just which industries should be tapped to pay into USF has been difficult. 

The effort is complicated by a case the Supreme Court recently agreed to hear. The Fifth Circuit broke with precedent and ruled in July that the fund itself was unconstitutional. Depending on the high court’s ruling, more changes might be needed to keep theUSF going. Using the typical 45 day briefing deadline after justices agree to take up a case, the government’s brief will be due Jan. 6, 2025.