In 1996 Congress passed the Telecommunications Act of 1996, which mandates that all providers of telecommunications services must contribute to federal universal service in some “equitable and nondiscriminatory” manner. In 1997, the United States Federal Communications Commission (FCC) created the Universal Service Fund (USF) to help meet the goals of the Telecommunications Act.
The Lifeline Assistance and Affordable Connectivity Programs are funded by the Universal Service Fund (USF) which is, in turn, funded by contributions from telecommunications companies. The whole shebang is administered by the FCC, which is responsible for ensuring that the money collected is used to support telecommunications services for low-income households.
When we use the word “contributions,” it definitely does not mean that the telecommunications companies are handing over billions of dollars out of the kindness of their hearts. Hardly. They are required by law to contribute a percentage of their revenue. This includes all companies that provide telephone, internet and broadband services.
One more wrinkle. The telecommunication companies aren’t “contributing” their own money. Everyone who has a phone or internet account pays. Look closely at your phone bill, for example, ad you’ll see a line item called “Universal Service Fund.” A few cents is tacked on to every phone bill and every internet bill each month, and all those pennies are put into a program called LifeLine to bring quality telephone service to low-income Americans.
A few pennies here, a few pennies there, multiplied by millions of telephone and internet accounts and it quickly balloons into billions of dollars.