USF Contribution Factor to Hit Record 38.1 Percent

WASHINGTON, Sept. 17, 2025 – The Universal Service Fund’s contribution factor will likely be 38.1 percent in the fourth quarter, a 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 USF buoys four programs that subsidize building and maintaining rural broadband networks and internet discounts for low-income households, schools and libraries, and healthcare centers.

That need 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 an ultimately unsuccessful lawsuit alleging the fund was unconstitutional, but has started back up again. Trade groups submitted comments on future reforms to Congress on Monday, and floated sources of revenue like broadband ISPs and tech giants. Adding the latter to the mix is favored by broadband providers and FCC Chairman Brendan Carr.

The new contribution factor was proposed Monday by the Universal Service Administrative Company, a nonprofit that does the fund’s accounting work for the Federal Communications Commission. If the FCC doesn’t say otherwise by Sept. 29, the 38.1 percent factor will be adopted and go into effect for the fourth quarter. It’s currently 36 percent, down from 36.6 percent in the second quarter of 2025.

The Supreme Court upheld the fund in June, but the conservative nonprofit that challenged it isn’t giving up easily. Consumers’ Research submitted a filing with the FCC Monday, as it does each quarter, arguing the contribution factor should be set to zero.

Among other things, the group said some parts of the law standing up the fund weren’t cleared by the Supreme Court and were in fact still unlawful. It has raised the same argument in its recent efforts to get the Fifth Circuit to hear the case again and potentially side with the group a second time.

The FCC disputes the argument and has asked judges to close the case without any extra briefings or arguments. The agency said because Consumers’ Research never raised the argument before – it comes from a dissent authored by Justice Neil Gorsuch and joined by Justices Clarence Thomas and Samuel Alito – the group is barred from pursuing it in the same appeal now. 

A panel of Fifth Circuit judges has yet to decide whether they will rehear the case. Judges sought and received in late August additional briefs on the issue over the objections of the FCC.