In 1998, the Universal Service Administrative Company (USAC) was created to run the Universal Service Fund (USF). It is a private not-for-profit corporation that operates entirely under the auspice of the FCC and has no discretion other than to do what it is told by the Commission.
Unfortunately, as the years have passed, the USAC has been heavily criticized for its lack of transparency, lack of subject matter expertise and waste of the ever-growing contributions to the Fund. There has never been a systematic review of USAC since its creation, until now.
On July 16, 2026, FCC Chairman Brendan Carr revealed that in its upcoming August 6, 2026, meeting the agency would initiate a Notice of Proposed Rulemaking (Notice) in Docket 26-173 to finally closely examine the operations of the USAC. According to Carr
Picking up on our efforts to conduct a top-to-bottom review of all aspects of the Universal Service Fund, this proposal reviews the structure and operating costs of USAC and USF administration. In taking up this effort, we will improve oversight, reduce administrative costs, and increase accountability of USAC and its Board of Directors. Our end goal is to ensure Americans receive the best bang for their buck on universal service spending—a commonsense win for government efficiency and accountability. (FCC July 16, 2026, News Release).
The Notice will seek industry comments in four areas:
1) The processes used today by the Universal Service Administrative Company (USAC) to administer the USF and the Commission’s oversight of those processes;
2) USAC’s role and responsibilities related to USF administration;
3) Operating costs associated with USF administration; and
4) The impact of USAC’s Board of Directors (Board) on USF administration.
The Notice would also propose ways to improve the efficiency of audits of USF program beneficiaries and contributors and to ensure that the Commission is able to timely recover all improperly disbursed funding. Additionally, the Notice would seek comment on whether changes to the structure of USF administration and the composition of USAC’s Board could benefit USF administration. These proposals are aimed at strengthening the administration, management, and oversight of the USF and ensuring the efficient use of finite USF funds. FCC Draft Notice Fact Sheet).
Specifically, the Notice would do the following:
Seek comment on ways to streamline USAC processes or otherwise improve the transparency, accountability, and cost effectiveness of USF administration, and propose to require USAC to report publicly on its speed of operations.
Seek comment on ways to improve the efficiency of audits of USF program beneficiaries and ensure that the Commission can timely recover improperly disbursed funding.
Propose modifying the Commission’s rules to codify the administrator’s ability to audit nonservice provider beneficiaries of USF programs
Propose modifying the Commission’s rules governing audit controls to codify USAC’s ability to calculate recoveries by extrapolating a statistically valid sample of disbursements.
Seek comment on ways to minimize the costs of USF administration.
Propose to update the Commission’s rules to reflect how USF funds are held in and disbursed from the U.S. Treasury.
Seek comment on the structure of USF administration and whether changes should be made to the administrator or its current responsibilities related to USF administration.
Seek comment on updating Commission rules regarding the USAC Board of Directors, including: (1) enhancing measures taken to ensure Board members avoid conflicts of interest, (2) reducing the size of the Board, and (3) modifying the composition of the Board as well as Board committees.
Assuming the notice is adopted on August 6, industry comments would be due 30 days after it appears in the Federal Register.