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Launched by the Federal Communications Commission in 1997, the Universal Service Fund was an attempt to ensure that every American had access to affordable telephone service.
The fund is paid for by a $2.50 to $2.75 monthly tax on all cellphone and land-line bills. The tax is expected to raise $9 billion this year.
Of the fund’s four major components the “high cost” program was the most complex, aiming to make sure that consumers in rural areas had access to telephone service comparable to what was available in urban areas.
Another program, known as “Lifeline,” was designed to guarantee affordable telephone service for low-income consumers. The other two programs involved using broadband to support telemedicine in rural areas and to provide Internet access to schools and libraries in economically disadvantaged areas.
In 2011 the FCC decided to overhaul the fund because of advances in telecommunications technology as well as a recognition that there was a need to curb abuses and loopholes.
Despite the problems, the Universal Service Fund is considered to have achieved many of its intended goals, making affordable phone service available to almost all Americans and allowing many rural telecommunication providers to upgrade their service.