Universal Service Fund

Prior to the Telecommunications Act of 1996, the Universal Service Fund (USF) operated as a mechanism by which interstate long distance carriers were assessed to subsidize telephone service to low-income households and high-cost areas. The Communications Act of 1934 stated that all people in the United States shall have access to “rapid, efficient, nationwide. . . communications service with adequate facilities at reasonable charges.”

The Telecommunications Act of 1996 expanded the traditional definition of universal service &mdash; affordable, nationwide telephone service &mdash; to include among other things rural health care providers and eligible schools and libraries. Today, FCC provides universal service support through four mechanisms:


 * 1) High Cost Support Mechanism provides support to telephone companies that serve high cost areas, thereby making phone service affordable for the residents of these regions.
 * 2) Low Income Support Mechanism assists low-income customers by helping to pay for monthly telephone charges as well as connection charges to initiate service.
 * 3) Rural Health Care Support Mechanism allows rural health care providers to pay rates for telecommunications services similar to those of their urban counterparts, making telehealth services affordable.
 * 4) Schools and Libraries Support Mechanism, popularly know as the “E-Rate,” provides telecommunication services (e.g., local and long-distance calling, high-speed lines), Internet access, and internal connections (the equipment to deliver these services).