USF Announces Another Rate Hike for Q4 2025 

By Rohan Naval

Today, the Federal Communications Commission announced yet another Universal Service Fund rate hike for Q4 2025. In what is becoming a quarterly ritual for the overstretched $8 billion program, the FCC increased the mandatory fee on phone bills to a whopping 38.1 percent. Nearly four of every ten dollars on phone bills will now go to bail out this struggling program absent serious reforms. 

The Universal Service Fund is a federal program that requires telecommunications companies to contribute a percentage of their interstate and international revenue towards funding four different programs: the Lifeline program, the E-Rate program, the Rural Health Care program, and the Connect America program. The program costs between $8 billion and $9 billion a year, with most of the program being covered by customers through a “phone bill surcharge.” 

The contribution factor is likely to hit 38.1 percent, which represents a significant jump from the 36 percent seen in Q3. This rate has risen, and will continue to rise, as the taxable base of legacy providers decreases. In coming years, as USF expands the long list of things it wishes to cover, policymakers may look to raise revenue from other services to make up for the shrinking tax base.  

A coalition consisting of the Schools, Health & Libraries Broadband (SHLB) Coalition, the American Library Association (ALA), and the School Superintendents Association asked the  FCC to “modernize the USF to keep the fund sustainable.”  Implied in these arguments is a request for the FCC to expand the items eligible for USF contributions. Such an expansion would lead to a massive rise in prices for consumers’ broadband bills, and reducing access to coverage for many Americans.  

The USF is another government program that suffers from a spending problem, and not a revenue problem. Instead of asking customers and taxpayers to front the costs of inefficient bureaucracies, it is time for the FCC to revisit this program and consider winding it down. At the current rate, USF will eat half of our phone bills in five years. 

This cannot be allowed to go on much longer.