The Federal Communications Commission (FCC) has announced a significant hike in the Universal Service Fund (USF) fee factor, which will rise to 34.4% for the third quarter of 2024. This marks a notable increase from previous quarters, reflecting ongoing efforts to sustain and expand the reach of essential telecommunications services across the United States.

Understanding the FCC USF Fee

The FCC USF Fee, also known as the Federal Communications Commission Universal Service Fund Fee, is a charge imposed on telecommunications providers in the United States to support the universal service programs. These programs aim to ensure that everyone has access to affordable telecommunications services, including voice and broadband internet.  The fee is calculated as a percentage of a provider's interstate and international end-user telecommunications revenues, also knows as PIU.

Factors Leading to the Increase

Several factors have contributed to the recent increase in the FCC USF Fee factor for Q3 2024. One key factor is the growing demand for universal service programs as more people rely on telecommunications services for work, education, healthcare, and other essential activities.

Additionally, the expansion of broadband infrastructure and the deployment of advanced technologies require substantial investments. The increased funding need to support these initiatives has led to an upward adjustment in the fee factor.

Strategies to Mitigate the Fee Increase

While the FCC USF Fee increase is a regulatory requirement, there are strategies that consumers and businesses can consider to mitigate its impact.  

Traffic Study: A traffic study conducted by a third party such as ATS is one of the best ways to reduce a carrier's USF obligation by lowering the PIU.  If carriers are still using the USAC Safe Harbor Rate for USF filings, they are guaranteed to be overpaying for USF.

Classification of Services: Properly classify services to differentiate between assessable and non-assessable revenues. Some services might be exempt from USF contributions if correctly classified.

Bundled Services: When offering bundled services, itemize and report only the assessable portion. Proper allocation of revenue can minimize the contribution amount.