FAQs

About Universal Service Funds and How I Can Help

What is a Universal Service Fund (USF)?

USF stands for the Universal Service Fund. The goal of the Universal Service Fund is for all people in the United States to have access to telecom service. It was initially a way in which long distance companies helped subsidize local service to areas in which providing telecom service was very expensive. In the Telecommunications Act of 1996, this was expanded to include schools, libraries, low income households and rural health care providers.

Subsidies provided by the fund initially covered just telephone service and only what we today call land lines, but was expanded by President George W. Bush to cover cell phones after Hurricane Katrina in 2005, and by President Barack Obama to cover broadband service as well. The USF does not provide free service to anyone; it subsidizes a discount from regular service that is paid directly to companies or organizations that participate in Universal Service programs.

The Federal Universal Service Funds were the first funds to exist; since then most states have created State Universal Service Funds.

The FCC Forms 499

How many 499 forms are there, anyway? There seem to be a whole bunch of them.

There are only two forms, the 499A and the 499Q. The 499A is due annually on April 1, and the 499Q is due quarterly on the first of February, May, August, and November.

Aside from the name and number of times they're due, what's the difference between the two?

The 499A is like your taxes in that you fill it out after the year is over and you report your actual revenue. The 499Q is very different, because you have to forecast the amount of assessable revenue you expect to make in the next quarter. The 499A has 8 pages and the 499Q has one page, but the 499Q is more difficult to fill out accurately because you have to know what revenue is assessable and what is not. Luckily for you, we know that and we're expects at filling them out. Give us a call or send us an email message, and we can help!

Why is it so complicated?

You use the 499Q to project the amount of revenue you'll have next quarter, and USAC uses that to bill you. Since it's a projection, it's not always accurate. The 499A reports the amount of revenue you've made for the year after the year is over and you can show the actual amounts. USAC will use the 499A to compare the forecasts with the actual amounts and adjust your bills to account for having either over-billed you or under-billed you for the year. USF is not a tax, but if you think of it as being similar to your personal taxes in that you compare the money you had withheld over the year with the amount you are required to pay, you'll get the idea.

Does my company really have to do this?

This seems like a lot of work, and the prize at the end is that I have to pay something. Do I really need to do this?

The FCC requires every company that provides telecommunications services (as defined by the FCC) in the U.S. to fill out the forms, and companies that provide certain categories of service to contribute to the Universal Service Fund. There are categories of telecom provider who don't have to fill out all of the forms, and an extremely limited number of companies that for specific reasons don't have to contribute, but there are very few of them and if your company provides telecom services to the general public, you are not one.

I was told that there are ways to make yourself exempt from paying USF.

Some companies are exempt from paying USF directly to USAC because they don't receive enough assessable revenue in the year. They are called de minimis companies. Those companies are not exempt from paying USF, though. They just have to pay it to their underlying provider, which is the company from which they purchase service.

No, I meant ways to make it so that your company doesn't have to pay USF to anyone.

I suppose there are ways to cheat, but USAC is always working on new ways to catch companies that are attempting to flout the FCC rules for the forms. You might be able to get away with cheating for a little while, but you won't in the long term, and the penalties for not paying what you owe on time are onerous. USAC can audit your company and figure out what you should have paid, and you will owe what you should have paid plus penalties, late fees, and interest. In some cases, the FCC Enforcement Bureau is notified, and the Enforcement Bureau has vastly more scope to apply penalties for not filing and/or paying correctly. The Enforcement Bureau has levied fines of millions of dollars in the past in addition to the amounts owed to USAC on companies that it feels have egregiously evaded or violated the laws for Universal Service collection and programs. It is in a company's best interests to comply with the law.

Well, then what can I do?

While it's in a company's best interests to comply with all Universal Service regulations, there is no requirement to pay more than the minimum the law requires. When USAC audits companies, they often find that companies are overpaying USF because they don't know what they don't need to count as assessable revenue. At Telecom Regulatory Solutions, we know what is and what isn't assessable revenue. We can make sure your company pays only what you owe and never any more than you owe.

If you worked at USAC does that mean you're going to tell them things about my company I don't want them to know?

Absolutely not. Your data is your company's proprietary information, and I don't share it with anyone. I've worked with proprietary or classified information for most of my career, and I'm used to not sharing data. When I've completed your forms, I discuss the results with you and no one else. The FCC requires that an officer of the company sign the form, and it's usually that person I talk to about how I've completed the form, but it could also be someone else. I don't discuss numbers or products or how revenue was divided between the lines to anyone not an officer or the officer's designee. Not USAC, not other companies. While there is technically no Consultant - Client privilege, I operate as though there is.