USF Surcharge Rate Hike – Now Up to 35.8%

On September 11, the FCC's Office of Managing Director announced that the Universal Service Fund (USF) contribution factor for the fourth quarter of 2024 will be 35.8% This appears to be an all-time high and serious concern for voice consumers who bear the burden of paying for USF surcharges. Absent any unlikely intervention by the FCC's Commissioners, the proposed rate will soon go into effect.

Functionally, USF surcharges are taxes paid by voice consumers on the long-distance portion of their monthly voice service bills. The USF tax money collected by the voice carriers goes to the Universal Service Administrative Company (USAC), a corporation established by the FCC, which is the administrator of the USF program and distributes the money to program recipients. For additional background on the recent history of persistent and worrisome increases in the USF surcharge rate, see Free State Foundation President Randolph May's June 14, 2024 blog post, "The Telephone Tax Rises Again – Now 34%." 

 

My August 9 Perspectives from FSF Scholars, "Court Ruling on USF's Unconstitutionality Should Spur Reform in Congress" explained that the Fifth Circuit’s decision holding the USF contribution scheme unconstitutional in Consumers' Research v. FCC should serve as a catalyst for Congress to promptly undertake fiscal reforms of the USF program and put it on stronger constitutional footing.