Universal Service Fund: Background and Options for Reform Page: 2 of 33
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Universal Service Fund: Background and Options for Reform
The concept that all Americans should be able to afford access to the telecommunications
network, commonly called the "universal service concept" can trace its origins back to the 1934
Communications Act. Since then, the preservation and advancement of universal service has been
a basic tenet of federal communications policy, and Congress has historically played an active
role in helping to preserve and advance universal service goals. The passage of the
Telecommunications Act of 1996 (P.L. 104-104) not only codified the universal service concept,
but also led to the establishment, in 1997, of a federal Universal Service Fund (USF or Fund) to
meet the universal service objectives and principles contained in the 1996 Act. According to Fund
administrators, from 1998 through end of year 2009, over $65.7 billion was distributed, or
committed, by the USF, with all 50 states, the District of Columbia and all territories receiving
The Federal Communications Commission (FCC) is required to ensure that there be "specific,
predictable and sufficient ... mechanisms to preserve and advance universal service." However,
changes in telecommunications technology and the marketplace, while often leading to positive
benefits for consumers and providers, have had a negative impact on the health and viability of
the USF, as presently designed. These changes have led to a growing imbalance between the
entities and revenue stream contributing to the fund and the growth in the entities and programs
eligible to receive funding. The desire to expand access to broadband and address what some
perceive as a "digital divide" has also placed focus on what role, if any, the USF should take to
address this issue. The FCC's national broadband plan, Connecting America: The National
Broadband Plan, calls for a major restructuring of the USF to enable it to take a major role in
achieving the goal of nationwide broadband access and adoption.
There is a growing consensus among policy makers, including some in Congress, that significant
action is needed not only to ensure the viability and stability of the USF, but also to address the
numerous issues surrounding its appropriate role in a changing marketplace. How this concept
should be defined, how these policies should be funded, who should receive the funding, and how
to ensure proper management and oversight of the Fund are among the issues framing the debate.
The current policy debate has focused on five concerns: the scope of the program; who should
contribute and what methodology should be used to fund the program; eligibility criteria for
benefits; concerns over possible program fraud, waste, and abuse; and the impact of the
Antideficiency Act (ADA) on the USF.
The House Subcommittee on Communications, Technology, and the Internet and the Senate
Commerce Committee are among the Committees that have held hearings on USF reform and the
FCC's national broadband plan. Legislation (H.R. 3646, H.R. 4619, H.R. 5828, S. 2879) to
reform and/or expand the role of the USF has been introduced. The FY2010 Consolidated
Appropriations Act, which was enacted into law (P.L. 111-117) contained a provision to extend
the USF ADA exemption until December 31, 2010. S. 348, introduced January 29, 2009, by
Senator Rockefeller, and H.R. 2135, introduced April 28, 2009, by Representative Rehberg, as
well as provisions contained in H.R. 5828, provide for a permanent ADA exemption for the USF.
This report will be updated as events warrant.
Congressional Research Service
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Universal Service Fund: Background and Options for Reform, report, August 20, 2010; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc817835/m1/2/: accessed October 21, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.