The Universal Service Fund fee will hit a record-high 15.3% for the second quarter of 2010, according to an FCC public notice released March 12.

The USF was implemented as a result of the Telecommunications Act of 1996 and was originally conceived to be assessed on carrier revenue only.

Today, carriers simply pass the expense onto consumers.  The billions of dollars collected are  supposed to be used to help subsidize phone service for schools, libraries, rural health care organizations and low-income subscribers.

USF Reform in the Works

Surprisingly, Federal law still prohibits using any money from the USF to expand broadband services - even in rural areas.

The explosion and consumer craving for high-speed internet services are beginning to raise questions on whether the USF has become outdated and ready for serious reform.

Rep. Rick Boucher (D-Va.), will soon begin working with the FCC to propose changes to allow a portion of the Universal Service Fund to be directed towards establishing a nationwide broadband network.

As chairman of the House Subcommittee on Communications, Technology and the Internet,  Boucher has long pushed for changes to that 1996 program, which guarantees money for the establishment of universal telecommunications services nationwide.

“It is essential that the funds be expended in a manner that helps achieve nationwide broadband deployment, and I look forward to working with the FCC to pass the comprehensive reform legislation that achieves that goal,” Boucher said in a statement.

Deploying broadband throughout the United States is an expensive proposition.   With the USF percentage already at a record high, the idea of using the money to help deploy a nationwide broadband network will surely send it even higher.

Below is an excellent video report and interview with the Chairman of the FCC, Julias Genachowski.