FCC Announces Record 42.0% Fourth Quarter 2026 USF Contribution Factor

The Federal Communications Commission (FCC or Commission) has proposed a fourth quarter 2026 Universal Service Fund (USF) contribution factor of 42.0 percent, the highest rate in the program’s history. Absent Commission action, the factor will be deemed approved on September 28, 2026, and will apply to interstate and international telecommunications revenue for October through December 2026.

The Universal Service Administrative Company (USAC) calculates the contribution factor quarterly based on the ratio of projected USF program costs to projected interstate and international end-user telecommunications revenue. During the fourth quarter, carriers may not recover more than 42.0 percent of a customer’s interstate telecommunications charges through the federal universal service line item. Providers with a small share of interstate revenue relative to their combined interstate and international revenue should also check whether they qualify for a waiver under the Limited International Revenues Exception (LIRE).

Next Steps

This latest increase adds to the growing case for broader USF contribution reform, an issue currently before both the FCC and Congress, and JSI can help you evaluate what the rising factor means for your rate structure and pass-through approach. We also encourage clients to share their operational experience as these contribution reform discussions continue, since provider input carries real weight in shaping the outcome. For questions about your fourth quarter contribution obligations or about getting involved in these policy conversations, please contact Brett Hallagan.