You’ve probably noticed the term “Universal Service Fund” and wondered what it meant. We’ll do our best to explain this as simply as possible. The Federal Communication Commission created the Universal Service Fund back in 1997 to help achieve goals set by Congress in the Telecommunications Act of 1996. According to the 1996 Act all providers of telecommunications services (otherwise known as phone companies) must contribute to federal universal service in some equitable and nondiscriminatory manner.
The “universal” part of the name means that the phone companies must offer advanced telecommunications service to everyone who cannot afford to pay for it -– including all schools, classrooms, health care providers, libraries and, of course, the needy. Every paying telephone customer has a small fee (usually less than a dollar) to their phone bills every month. Those fees are collected in a Universal Service Fund that is used to provide discounted and free service to everyone who needs it.
The Universal Service Fund is where the money comes from to pay for the Lifeline cell phones from Safelink Wireless, Assurance Wireless, ReachOut Wireless and other providers of cell phones to the needy.