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 — affordable, nationwide telephone service — to include among other things rural health care providers and eligible schools and libraries. All telecommunications carriers, and other entities providing interstate telecommunications services, are required to contribute to the Fund, unless exempted by the FCC.
Today, the FCC provides universal service support through four mechanisms:
- 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.
- Low Income Support Mechanism — assists low-income customers by helping to pay for monthly telephone charges as well as connection charges to initiate service.
- 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.
- Schools and Libraries Support Mechanism, popularly know as the “E-Rate,” provides telecommunications services (e.g., local and long-distance calling, high-speed lines), Internet access, and internal connections (the equipment to deliver these services).
- ↑ 47 U.S.C. §254.