An FCC order directed the National Exchange Carrier Association (NECA) to create a non-profit subsidiary called the Universal Service Administrative Company (USAC) to administer universal service funds as directed by the Telecommunications Act of 1996. Over 1,000 telcommunications companies are members of NECA and subject to interstate tariffs.
The 2016Q2 "contribution factor" is 17.9 percent. Universal service funds for the quarter are approximately $2.2 billion. The contribution factor is applied to the adjusted contribution base of $12.4 billion, based on projected quarterly industry revenues of $14.5 billion from FCC Form 499-Q filings. Each quarter, calculations include an adjusted contribution base, unadjusted contribution factor, proposed contribution factor, and proposed circularity discount factor.