In 2008, the USF totaled over $7 billion and was divided among the four USF programs: High Cost, Low Income, Rural Health Care, and Schools and Libraries. USAC manages the collection and distribution of money in the USF. Below are brief descriptions of each program, along with 2008 levels of USF funding:

The High Cost Program ensures that rural consumers across the country have access to and pay rates for telecommunications services that are reasonably comparable to urban areas. In 2008, the program provided almost $4.5 billion in support.

The Low Income Program, commonly known as Lifeline and Link Up, helps low-income consumers establish and maintain telephone service by discounting services provided to them by local telephone companies. In 2008, the program provided over $800 million in support.

The Rural Health Care Program ensures that rural health care providers pay no more for telecommunications in the provision of health care services than their urban counterparts. In 2008, the program provided almost $50 million in support.

The Schools and Libraries Program, commonly known as E-rate, provides discounts to schools and libraries in every U.S. state and territory for telecommunications, Internet access, and internal connections. In 2008, the program provided about $1.8 billion in support.

Access to telecommunications services means something different in each of the four USF programs.

High Cost: In mountainous Alexandria, Minnesota, cellular towers are only accessible by foot, all-terrain vehicles, or helicopter. This makes providing services to customers in and around Alexandria costly. But a local wireless carrier has been able to upgrade towers and switching facilities with support received from the USF High Cost Program. Customers can enjoy landline-quality cellular service in the most remote regions of the area because USF support has made it possible for the provider to deploy newer technology with a greater reach that also requires less maintenance.

Low Income: A discount of $10 a month makes a real difference for the elderly community in Pikeville, Tennessee. With many residents living on monthly incomes of only $300 to $400, it can make the difference of being able to call for help in an emergency. According to a local telephone carrier, providing the critical link to basic telephone access is possible only through the support of the USF Low Income Program.

Rural Health Care: In Falls River Mills, California, there is no bus or mass transit system to help patients travel to meet with health care specialists. A local Health Care Provider (HCP) notes that asking their elderly patients to drive to a nearby hospital would be "an undue hardship." With support from the USF's Rural Health Care Program, a high-speed Internet connection allows the HCP to bring a patient and a specialist together without waiting or worrying about transportation. Without a telemedicine program, "a patient could wait six weeks for an in-person visit with a dermatologist." For someone with skin cancer, "time is of the essence."

Schools and Libraries: "I have worked in school districts for over twenty years, and this is the poorest community I have worked in," says a school district representative in Bridgeport, Connecticut. With support from the Schools and Libraries Program, a network infrastructure was built throughout Bridgeport's schools. Students can now take online practice tests for exams related to the No Child Left Behind Act and have access to supplemental reading materials. Universal service funding means that access to vital advanced telecommunications technology—and the communications networks and activities they support—is available to all schools and libraries, no matter their resources, throughout the country.

Example of the Quarterly Collection and Disbursement Process

This process is repeated each quarter.

How program participants claim support in each of the programs:

High Cost: Rural and non-rural incumbent local exchange carriers (ILECs) and competitive carriers that are eligible telecommunications carriers (ETCs) submit line count data, certain cost data, and certifications to USAC to receive High Cost support.

Low Income: ETCs that provide consumers with Lifeline discounts file the Lifeline and Link Up Worksheet (Form 497) with USAC to receive Low Income Program support that reimburses them for providing service at discounted rates.

Rural Health Care: All health care providers (HCPs) or consortia of HCPs seeking to participate in the Rural Health Care Program conduct a competitive bidding process for services to be used in providing health care. Once the service providers and services are selected, the health care provider completes and submits a funding request to USAC and later a notice that actual service has begun. The HCP then receives the benefit of the reduced rates from the Rural Health Care Program, which pays the selected service provider for the discounts it provides to the HCP.

Schools and Libraries: Eligible applicants in this program open a competitive bidding process to receive bids on the products and services they seek. Service providers submit bids, which are reviewed by applicants under applicable program rules. Applicants select the service provider for the service or product and submit the appropriate forms to USAC for review. USAC then makes a funding commitment decision based on the program rules. Once funds are committed, applicants file invoices for the products and services they use.

In its ten years of existence (1998-2008), USAC has disbursed over $58 billion to support the goals of universal service and to help keep Americans connected.

USAC performs a wide range of complex, large-scale operations:

Administering each of the USF programs

Highlights for 2008 include:

• High Cost Program
• $4.5 billion in disbursements
• 1,974 participating companies
• 169 million lines supported
• Low Income Program
• $820 million in disbursements
• 1,783 participating companies
• 8.5 million households supported
• Rural Health Care Program
• $49.5 million in disbursements
• 2,300 health care providers
• Schools and Libraries Program
• $1.8 billion in disbursements
• 40,642 applications
• 115,000 participating schools and libraries

Billing, collecting, and distributing for the USF programs

Highlights for 2008 include:

• $7.1 billion in overall disbursements
• Over $600 million collected every month
• 100% of 47,004 invoices processed on time
• 77,612 individual disbursements
• High Cost: 18,241
• Low Income: 17,863
• Rural Health Care: 973
• Schools and Libraries: 40,535

Providing customer service

Highlights for 2008 include:

• Over 100,000 phone calls answered from USF program participants
• 14 large-scale training sessions
• Dozens of appearances at professional meetings of carriers, health care providers, schools, libraries, and auditors
• Customized support for individual program participants, with over 3,000 site visits since 2005
• 0.1% ratio of complaints to total inquiries
• 102 Congressional and media inquiries, with responses on average in less than one full business day

Effective, responsible stewardship of the USF

• 2.4% administrative expense rate
• Robust FCC oversight, governed by the FCC-USAC Memorandum of Understanding
• Extensive audit program
• Over 1,600 audits conducted since USAC's inception
• USF investments have earned $200 million more than it has cost to run USAC for its entire history

USAC may not:

• Make policy
• Interpret unclear provisions of the statute or rules
• Interpret the intent of Congress
• Advocate policy positions before the FCC or its staff, but may advocate positions on administrative issues for managing the USF