What Is The Federal Universal Service Fund?

After Andrew S. Fischer discovered that a whopping 40% of his company’s telephone bill was comprised of various taxes and service charges, he decided to suss out one of the most egregious contributors: the mysterious Federal Universal Service Fund.

The FCC describes the tax: “The Federal Communications Commission (FCC) and Congress recognize that telephone service provides a vital link to emergency services, government services, and surrounding communities. To help promote telecommunications service nationwide, the FCC, as directed by Congress, developed the Federal Universal Service Fund.” What does that all mean? Fischer has written a highly entertaining dissection of the tax:

There are four components to the Federal Universal Service Fund. They are:

* Low-Income. This program provides telephone service discounts to consumers with qualifying low-incomes.

Translation: we charge you more and selected poor people less, but don’t call us socialists.

* High-Cost. This program provides financial support to companies that provide telecommunications services in areas of America where the cost of providing service is high.

Translation: We subsidize businesses where phone service isn’t profitable, but don’t accuse us of “state capitalism.”

* Schools and Libraries. This program helps to ensure that the nation’s classrooms and libraries receive access to the vast array of educational resources that are accessible through the telecommunications network.

Translation: We use your money to fund services that we, in our infinite wisdom, deem fit for our youth propaganda camps, but don’t ask where in the Constitution it says the government is permitted to do this.

Universal Service Fraud [LewRockwell.com]


Edit Your Comment

  1. KevinQ says:

    Oh, boo hoo. Taxes are bad. Gimme my money. If he wanted to be useful, he could have found out exactly which programs are being funded by this tax, and how much they are getting. Is Halliburton getting a huge chunk of this cash? That might be a story. Some whiny pisser complaining about the poor, burdened upper classes? Don’t care.


  2. Paul D says:


    High five! Well said.

  3. Jesse says:

    Seriously! Let’s make sure that poor people don’t have phones so that they have no chance of rising out of poverty. Let’s not have taxes go to schools, so that — well so that poor people have any chance of rising out of poverty. What an asshole.

  4. Nick says:

    Where’s the fourth component of the Federal Universal Service Fund?

  5. Morgan says:

    Follow the conveniently provided link, Nick, and you’d find it:
    Rural Health Care. This program helps to link health care providers located in rural areas to urban medical centers so that patients living in rural America will have access to the same advanced diagnostic and other medical services that are enjoyed in urban communities.
    Translation: We give your money away to people who have thoughtlessly chosen to live far away from medical services.

    Yes, because, say, everyone providing food for the country in the midwest is thoughtless and shouldn’t be helped in a medical emergency…

  6. Morgan says:

    Oh, and a note on the schools and libraries thing- giving schools and libraries internet access (which I’m pretty sure is the real translation of “access to the vast array of educational resources that are accessible through the telecommunications network” these days) hardly seems like it lends itself easily to “youth propaganda camps.”

  7. Bubba Barney says:

    While I agree with the comments, there is one thing about the USF that is kinda shady. I work for a telecom co and was a grunt in Customer Service for a while.

    Companies are required to pay it to the government, but they aren’t required to charge it to the end user [customer]. Instead of giving a CEO a huge bonus, or other benefits, companies choose to pass this tax on to the customer. I think that’s lame.

  8. Bubba Barney says:

    Oops, I meant that instead of taking the money out of a CEO’s bonus or elsewhere, they pass the tax on to us when they don’t have to.

  9. RowdyRoddyPiper says:

    Ummm…taxes are like the easiest thing to pass through to a consumer, because, well they’re going to blame the tax man and not the company. Plus, who do you think decides if the USF comes from the consumer or the CEO’s bonus?

  10. Felix says:

    Of all the taxes I pay, this one makes the MOST sense, not the least — because I directly benefit from the network effects of expanding the telecommunications network to the poor and the remote. There is a direct correlation between the value of a telephone to me and the number of other people who have telephones. If this tax brings telephony to people who would otherwise not have it, everybody with a telephone benefits. And the idea that this is in any way unconstitutional is laughable.