How the Universal Service Fund Supports Wireless

Created by the Telecommunications Act of 1996, the Universal Service Fund (USF) was designed to ensure an array of important telecommunications services are made available to all Americans, regardless of geography or income. To achieve this goal, the USF is divided into four separate programs: high cost; low income; rural healthcare; and schools and libraries. The High Cost Program, which is essential to promoting the expansion of wireless infrastructure in rural and other high-cost areas, is Wireless Across America’s primary focus for ensuring rural consumers have greater choices in telecommunications services.

How does USF funding supporting high-cost areas work? As it stands now, eligible wireless and wireline providers contribute to the USF via a surcharge to consumers’ bills—funds that are ultimately divided between wireless and fixed line providers for speeding the deployment and delivery of telecommunications choices in areas where the cost of constructing facilities outweighs the economic benefits.

There is a striking imbalance, however, between the amount wireless companies’ consumers are paying into the fund versus the amount of USF funding wireless providers ultimately receive. For example, wireless USF contributions have increased dramatically from 3 percent of the total fund in 1997 to nearly 1/3 of all contributed funds in 2004. And yet, in 2004, incumbent wireline companies took the lion’s share of USF funding—a whopping 81 percent compared to the 7 percent given to wireless providers. (The remaining 12 percent is distributed to competitive rural landline providers and other companies supporting the schools and libraries and health care programs.)

This significant funding gap compromises the ability of wireless carriers to build critical infrastructure that improves wireless coverage and choices in rural areas—where a mobile phone is essential to ensuring the safety, security and prosperity of rural communities. Now, proposals before Congress and the FCC threaten to cut the already scant funding for the expansion and improvement of wireless service in rural America—a perilous policy shift that would place critical national goals in jeopardy. Together, we must urge Congress and the FCC to protect the USF to speed affordable, advanced wireless communications options to all Americans regardless of their geography!