Universal Service Overview

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1 Universal Service Overview

2 The term Universal Service is usually first attributed to AT&T President Theodore Vail, from the company s Annual Report in Scholars like Milton Mueller would argue that the meaning of Universal Service has shifted significantly since that time. Shifted from the idea of a single network controlled by one company. To a public policy of subsidizing telephone service to many subscribers, regardless of income or geographic limitations. Would you agree?

3 The goals of Universal Service, as mandated by the 1996 Act, are to: Promote the availability of quality services at just, reasonable and affordable rates for all consumers Increase nationwide access to advanced telecommunications services Advance the availability of such services to all consumers, including those in low income, rural, insular, and high cost areas at rates that t are reasonably comparable to those charged in urban areas Increase access to telecommunications and advanced services in schools, libraries i and rural health care facilities Provide equitable and non discriminatory contributions from all providers of telecommunications services to the fund supporting universal service programs Source:

4 The High Cost program The Low Income program, including initiatives for Native Americans The Schools and Libraries program, commonly referred to as E rate The Rural Health Careprogram Source:

5 The Universal Service High Cost poga program: Designed to ensure that consumers in rural, insular, and high cost areas have access to telecommunications i services at rates that are affordable and reasonably comparable to those in urban areas. The program fulfills this universal service goal by allowing eligible carriers who serve these areas to recover some of their operating costs from the federal Universal Service Fund. Source:

6 The Low Income program provides discounts on telephone tl installation ti and monthly telephone service to qualifying consumers. The Low Income program is one of the components of the FCC's Universal Service Fund. There are two programs available to qualified low income consumers: Link Up America helps consumers with telephone installation costs. Lifeline provides discounts on monthly telephone service. Additional discounts are available to qualified subscribers living on tribal lands. Source:

7 The FCC is working to bring every e yschool in America into the information age. The Schools and Libraries Universal Service program was established as part of the Telecommunications Act of 1996 to provide affordable telecommunications services to all eligible schools and libraries, especially those in rural and economically disadvantaged areas. Source:

8 The Rural Health Care program provides funding to eligible health care providers for telecommunications services, including broadband, necessary for the provision of health care. The goal of the program is to improve the quality of health care available to patients in rural communities ii by ensuring that eligible ibl health h care providers have access to affordable telecommunications services. The program provides discounts on the purchase of telecommunications i services by eligible ibl rural health h care providers. Paid for by the Universal Service Fund, these discounts result in rates for service that are nearly the same as those in urban areas, where telecommunications rates typically are lower. Funding is capped at $400 million annually. Source:

9 Carrier Information o on Providing Lifeline eand Link Up to Subscribers: Over 1500 telephone companies in the United States and its territories i participate i t in the Federal Low Income program. Many competitive and wireless telephone companies are eligible ibl to provide Lifeline and Link Up support. In order to provide Lifeline and Link Up, carriers must be designated as Eligible Telecommunications Carriers (ETCs) by their state commission or the FCC. After receiving ETC designation, carriers must file a Form 497 each quarter with the Universal Service Administrative Company (USAC) to receive support for the discounts they provide customers.

10 For states that rely eysolely on the federal Lifeline eand Link Up program eligibility criteria, subscribers must either: Have an income that is at or below 135% of the federal Poverty Guidelines, or Participate in particular assistance programs, like Medicaid, Food Stamps, SSI, LIHEAP The qualifying income in all federal default states except Alaska and Hawaii varies from a maximum of $14,040 for a family of one to a maximum of $48,060 for a family of eight.

11 Lifeline eassistance sta po provides desdscou discounts tson basic monthly service at the primary residence for qualified telephone subscribers. These discounts can be up to $10.00 per month, depending di on your state. Link Up America helps income eligible consumers initiate telephone service. This program pays onehalf (up to a maximum of $30) of the initial installation fee for a traditional, wireline telephone or activation fee for a wireless telephone for a primary residence.

12 These poga programs sae are funded dedby the euniversal Service Fund. Telecommunications providers must contribute to the fund through an assessment on their hi interstate and international i revenues. The Commission appointed the Universal Service Administrative Company, or USAC, to administer the four programs and the Universal Service Fund. Source:

13 All telecommunications eco cat o service po providers desand dcertain other providers of telecommunications must contribute to the federal USF based on a percentage of their hi interstate and international i end user telecommunications revenues. These companies include wireline phone companies, wireless phone companies, paging service companies, and certain Voice over Internet Protocol (VoIP) providers. Source: / f t /lll

14 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. Source:

USAC Overview & Update

USAC Overview & Update Robert Binder Director Industry Support High Cost & Low Income Division Universal Service Administrative Company Minnesota Telecom Alliance Annual Convention 2011 1 USF Overview