In past, only long distance companies paid fees to support Federal Universal Service Fund. In 1996, Congress passed a law that expanded types of companies contributing to Universal Service. Currently, all telecommunications companies that provide service between states, including long distance companies, local telephone companies, wireless telephone companies, paging companies, and payphone providers, are required to contribute to Federal Universal Service Fund.

How is Amount a Company Pays to Universal Service Fund Determined? Telecommunications companies must pay a specific percentage of their interstate and international revenues into Universal Service Fund. This percentage is called Contribution Factor. You can go to FCC’s Web site, www.fcc.gov, to see current Contribution Factor.

The Contribution Factor changes each quarter of year, depending on needs of Universal Service Fund and consumers it is designed to help. Because Contribution Factor will increase or decrease, depending upon projected needs of Universal Service Fund, amount owed to Fund by each affected telecommunications company will also increase or decrease accordingly. Different events, such as changes in demand for support or FCC regulatory action, may result in changes in Contribution Factor. For example, increased demand for a particular Universal Service program may result in an increase to Contribution Factor, but such increase might be offset by decreased demand for a different program or a decision to credit back to carriers any unused balances that remain in Fund.

Does FCC Require That Phone Companies Recover Their Universal Service Contributions From Their Customers? The FCC does not require telecommunications companies to recover their Universal Service contribution from their customers. Companies that do choose to recover their contributions from customers may do so in different ways, however, they may not shift more than an equitable share of contribution to any customer or group of customers. The actual percentage or fee that a company recovers from its customers may be different from Contribution Factor, and may vary from company to company. If contribution factor increases, not all companies will adjust fees they charge customers in same way." Information Taken From www.fcc.gov