Since 1998, the Universal Service Administrative Company (USAC) has been an independent, not-for-profit corporation that operates under the FCC to control and run all of the Universal Service Fund (USF) administrative tasks, including handling billing and collection, disbursement, and additional common functions, in order to increase efficiency and establish clear lines of accountability for the Fund itself.
According to the Commission,
USAC was structured to take into account each support mechanism through divisions that would perform the duties and functions of the Schools and Libraries Corporation, the High Cost and Low-Income Committee, and the Rural Health Care Corporation as directed by the committees of the USAC Board. USAC’s function is purely administrative. As the USF Administrator, USAC’s operations are prescribed by FCC regulations and subject to FCC oversight. (FCC Public Notice, Released April 15, 2026).
Although designed to be neutral, in recent years, as the USF contribution factor and the overall Fund amount has increased drastically, USAC has been subject to increased criticism. Claims have been made that it and the USF fund are rife with fraud, and its members have incentives to keep the Fund growing. Responding to the growing concerns, the FCC recently opened a proceeding (Docket 96-45) in which it is seeking comments on potential reforms to the operations and management of USAC. Industry comments are due on May 15, 2026.
Some of the specific areas the Commission is examining include:
The Current State of USAC
First, the agency seeks comment on the current state of USAC operations and on ways the administration of the USF should be reformed or made more efficient to better effectuate the USF’s statutory purpose.
What improvements to USAC are appropriate, and how can the Commission effectuate these improvements? Commenters should identify whether these improvements require changes to the Commission’s rules and provide other relevant details on how the Commission can accomplish these improvements.
How can the Commission create additional efficiencies in USAC administration? Which areas or processes are most needed for streamlining today? Are there past examples of new efficiencies in USAC operations or operations of other organizations that could serve as a model for USAC?
What challenges are there to reforming the processes administered by USAC, and how should these challenges be addressed?
Operations and Internal Management Processes
Second, the FCC seeks comments on what changes are needed to USAC operations and internal management processes to maximize efficiency, transparency, accountability, and speed of operations. Commenters should address the following questions:
Are there USAC processes that cause undue delay or burden on program participants?
Could changes in the FCC’s oversight of
and guidance to USAC increase responsiveness for program participants and stakeholders, such as shot clocks or clear deadlines for USAC action?
Are there any other improvements to USAC’s structure or processes that would benefit the USF programs? If those improvements require changes to the Commission’s rules, which rules should be updated to improve efficiency, transparency, and accountability in the administration of the USF?
Improving Efficiency
The Commission seeks comments on improving the efficiency of USAC’s role in the recoveries of USF funds and audits of USF program beneficiaries, and ways to ensure that the Commission can recover all improperly disbursed funding subject to recovery.
Improving Audit Processes
Each year, USAC must retain an independent auditor to examine its operations and books of accounts to determine whether it is properly administering the USF.
What changes, if any, should be made to the USAC annual audit to make it more efficient and cost-effective?
Are there ways to make USAC’s administration more cost effective?
Board Composition
The Commission seeks comments on the composition of USAC’s Board of Directors. The Commission’s rules specify the number of members of USAC’s Board of Directors, the composition of the Board by stakeholder group, the selection process for Board members, and Board member terms.
What changes to USAC’s Board of Directors could the agency consider to promote more efficient administration of USF support?
Should the composition of the Board be modified to include new stakeholders or independent directors? Are there any areas of expertise that are not represented on the USAC Board?
Should the size of the USAC Board be changed?
Should there be changes to the USAC Board nomination and selection process?
Under what circumstances may the Commission Chairperson remove a Board member prior to the end of their term?
Should the Commission’s rules establishing Divisions and Committees of the USAC Board be modified?
Conflicts of Interest
Finally, the FCC seeks comments on preventing USAC Board member conflicts of interest. The USAC rules prohibits USAC’s Board members from having “any organizational or personal conflicts of interest or the appearance of a conflict of interest in any aspect of the management of the USF, including the USF programs, and the operations of USAC.”
What changes should the Commission make to strengthen and improve its oversight regarding potential conflicts of interest for USAC Board members?
Should the Commission rules, and not just USAC’s ethics policy, require USAC Board members, when acting in their capacity as Board members, to represent the interest of the USF, and not just the Board member’s personal employer or constituency?
Should the Commission adopt new conflict of interest rules?
Should certain individuals/entities be prohibited from serving on the USAC Board due to conflicts of interest?
If your company has been unhappy about any aspect of USAC’s operation, it is time to let the FCC know.