Understanding your Telephone Bill: Universal Service Fund

By Ken Rothacker

This is part two in our ongoing series about understanding your phone bill. Here is the second question you should ask before you sign on the dotted line:

What do you charge for Universal Service Fund (USF)? Also a product of the Telecom Act of 1996, USF has been charged since January 1998. USF is different from PICC, though. Where PICC funds go to the local carriers, USF revenues are designed to assist low income and certain other customers (schools, libraries, and rural health care providers, for example) in paying for services such as telecommunications and Internet access. Long distance carriers are assessed a percentage of previous years’ revenues for USF, but the formulas that they use to actually pass these fees back to customers vary.

Most carriers charge around 10 percent of your interstate usage each month. Some may also charge a percentage of your international usage. Remember, USF is not a tax. A tax is fee or charge mandated by a government body, applying equally to all. Carriers determine how much they assess for USF. You are paying USF now. You will see a line item for this fee on your bill. Don’t expect your carrier to waive USF charges, in most cases.

Strategy: USF is another mandated fee, but what you pay can vary. Make sure you know how much you will be charged and avoid surprises.

While this might be a question that your rep doesn’t want to get into, knowing this information empowers you to compare programs accurately and positions you to make the best decision for your business.

In the next issue, we will cover Monthly Fees for Toll Free Numbers.

Industry veteran Ken Rothacker is president of OmniConnect, Inc, a Chicago based telecommunications services agency. Contact Ken via email at ken@omni-connect.com.

For more Understanding Your Telephone Bill, see Ken’s previous and subsequent articles.

[From Connection MagazineJan/Feb 2003]