Policy
Rising Q3 2026 contribution factors for the Universal Service Fund (USF) could raise phone bills and stakes for a rework of the program.
By Brad Randall, Broadband Communities
A widely reported prediction from analyst Billy Jack Gregg says the USF’s contribution factor will likely hit a record 42.3% in Q3 2026.
That’s up from the program’s current contribution factor for Q2, of 37%.
If the prediction for Q3 2026 holds steady, it’ll be the first time the USF contribution factor has topped 40%.
Why it matters
Costs for USF contributions, which are mandated by law, are typically passed onto consumers by telecom carriers, according to a March 2026 report from Digital Liberty.
The eye-popping Q3 outlook is putting new pressures on a congressional working group, which is planning to release its draft revamp of the USF this month.
House Communications Subcommittee Chairman Richard Hudson this month told Communications Daily his timeline for the release had slipped slightly but said he’s still eyeing a June rollout.
That’s significant, considering Hudson dampened expectations in April, when he cautioned that the window to pass reform was shrinking.
As it stands, Digital Liberty calls the USF surcharge “one of the largest add-ons on communications bills during a period when many families face rising costs elsewhere.”
The FCC has responsibility with overseeing the USF program, which provides support mechanisms for low-income customers, rural healthcare providers, and qualifying telephone companies that serve high-cost areas.
Additionally, the program supports connectivity at schools and libraries, providing telecommunications services to eligible institutions through the E-Rate program.
In June 2025, the U.S. Supreme Court reversed a 2024 ruling from the Fifth Circuit Court of Appeals that ruled the Universal Service Fund (USF) unconstitutional.
Originally, the USF’s Constitutionality was challenged by Consumers’ Research, a conservative group, in the landmark case FCC v. Consumers’ Research.
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