Telephone service is considered a necessity for daily modern life. Yet the cost of starting and maintaining such service may be too high for some consumers. Under Congressional mandate, the federal Universal Service Fund (USF) supports the Lifeline Assistance and Link-Up America programs. These programs provide discounts on basic monthly service and initial installation or activation fees for telephone service at the primary residence to income-eligible consumers. The Federal Communications Commission (FCC), with the help of the Universal Service Administrative Company (USAC), administers the USF.
All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their interstate and international end-user telecommunications revenues. These companies include wireline phone companies, wireless phone companies, paging service companies, and certain Voice over Internet Protocol (VoIP) providers.
Some consumers may notice a Universal Service line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs. These charges usually appear as a percentage of the consumers phone bill. Companies that choose to collect Universal Service fees from their customers cannot collect an amount that exceeds their contribution to the USF. They also cannot collect any fees from a Lifeline program participant.