Is It Time To Reform USAC?

On April 15, the Federal Communications Commission's Wireline Competition Bureau and the Office of the Managing Director released a public notice seeking input on potential reforms to the operations and management of the Universal Service Administrative Company (USAC). USAC is a subsidiary of the National Exchange Carrier Association (NECA), and is the private not-for-profit corporation created to serve as the administrator of the FCC's Universal Service Fund (USF). USAC’s function is purely administrative. As the USF administrator, USAC’s operations are prescribed by FCC regulations and subject to FCC oversight. USAC has no authority to make policy, interpret unclear provisions of the statute or rules, or interpret the intent of Congress, and USAC must seek guidance from the Commission when the Act or rules are unclear. A Memorandum of Understanding (MOU) operationalizes the FCC-USAC relationship. The current MOU was signed quite recently—on October 17, 2024—which makes the FCC's questions about modifying it somewhat pointed. Previously, Senator Ted Cruz (R-TX) asked the U.S. Government Accountability Office to review several aspects of USAC’s governance. The resulting report, Administration of Universal Service Programs Is Consistent with Selected FCC Requirements, examined USAC’s efforts to 1) establish and report on its goals, 2) manage its operating budgets in accordance with selected FCC requirements, including trends in its expenditures, and 3) maintain an ethics policy consistent with FCC requirements. In the July 2024 report, GAO found that USAC's practices were consistent with applicable FCC requirements. In 2025, USAC oversaw the distribution of nearly $8.5 billion in USF support and spent about $266.6 million to administer those programs. USAC's annual operating expenses have decreased by more than $100 million since 2023. According to USAC, much of the drop reflects the wind-down of the COVID-era emergency programs (Affordable Connectivity Program, Emergency Connectivity Fund), not just core USF administration efficiencies.