How ISPs Can Avoid FUSF Fees
- thomas6222
- May 12
- 5 min read
Updated: May 19
If you're an ISP, there's a good chance you've been charged Federal Universal Service Fund (FUSF) fees on your transport circuits — but you might not need to be.
These surcharges, often 30% or more, are applied by default. But under FCC rules, ISPs using circuits solely to deliver broadband may qualify for an exemption. The challenge? It’s a gray area. Many ISPs don’t realize they qualify. Many carrier reps don’t either. And without the proper arrangement, the fees just keep coming.
At CarrierFinder, we’ve helped ISPs across the country correct this — saving them thousands in the process.
Here's what you need to know:
What Is FUSF and Who's Actually Required to Pay It?
The FUSF was established to fund broadband deployment in rural and underserved communities, support schools and libraries, and subsidize low-income telecom programs. Carriers contribute a portion of their interstate and international telecom revenue — and usually recover that cost by passing it along to customers.
But FUSF fees are intended for end users — organizations that consume telecom services for their own operations.
For example, a bank with a private circuit between branches or a healthcare network connecting clinics would be expected to pay FUSF. They’re the direct beneficiary of the service.
ISPs, on the other hand, use transport services to build and operate their own networks — which they use to deliver broadband to their customers. In this context, they’re network operators, not end users, and may be exempt from FUSF if the circuit is used exclusively for broadband delivery and the exemption is properly certified.
How Much Are We Talking?
The FUSF contribution rate changes and can exceed 30% of the base circuit cost. That means a $1,000/month transport line could cost you $300 in fees.
Across multiple circuits or higher cost plans? We've seen tens of thousands in annual overcharges for eligible ISPs who simply didn't file the paperwork.
Private Carriage: The Key to FUSF Exemption
The ability to avoid FUSF fees hinges on whether your circuit qualifies as private carriage — meaning it’s used exclusively to deliver broadband internet access to your customers, not for voice, internal WAN, or other telecom services.
Under FCC guidance, broadband providers offering services on a private carriage basis are not subject to FUSF contribution obligations. In FCC Order 18-75, the Commission reaffirmed:
“The Commission has consistently declined to impose USF contribution obligations on retail broadband Internet access service,” and providers may “offer private carriage transmission services without incurring USF contribution obligations.”
This distinction between private carriage and common carriage is important:
Common carriage refers to services offered broadly to the public under standardized terms — similar to a utility. These are generally subject to FUSF if they’re interstate.
Private carriage involves selectively negotiated agreements with specific customers. When used strictly for broadband delivery, and properly certified, it can be exempt from FUSF.
If your circuit isn’t explicitly certified as private carriage, carriers will typically treat it as common carriage by default — and apply FUSF fees, even when they shouldn’t.
Carriers like Lumen offer formal exemption processes and provide documentation that allows ISPs to certify their usage, such as:
Customer Certification of Using Private Carriage (for FUSF waiver)
ISP Certificate of Use (ISPC-X) (for state/local tax exemption)
Once these are submitted and accepted, FUSF charges can be removed going forward. In many cases, we’re also able to secure backdated credits for incorrect billing — putting real money back in your pocket.
Not all providers support this flexibility (see next section), which makes understanding and leveraging private carriage status critical for ISPs looking to reduce unnecessary fees and optimize transport spend.
Important: Exemptions Are Carrier-Specific
While the FCC allows exemptions for ISPs using circuits solely for broadband delivery, carriers are not required to honor them uniformly.
Some providers — like Lumen — have a clear exemption process and regularly waive FUSF when ISPs certify eligible usage. Others, such as Comcast, currently do not offer this option, even when the circuit is used for broadband only.
That’s why working with a partner who knows each carrier’s internal policies is critical — we’ve seen firsthand which providers honor exemptions and how to make it happen.
Interstate vs. Intrastate: Another Fee Trap
FUSF fees apply only to interstate or international services — not intrastate (in-state) circuits. But many carriers default to billing transport like Ethernet or Optical Wave as interstate, even when both endpoints are in the same state.
We’ve helped ISPs identify circuits that were incorrectly classified and worked with carriers to remove unnecessary FUSF charges. That said, the classification isn’t always straightforward.
Even if both sites are in-state, a circuit may still be classified as interstate if:
It crosses a LATA boundary (Local Access and Transport Area)
The carrier routes traffic through out-of-state facilities
Or the provider only offers that service under an interstate tariff
Carriers often default to interstate billing in these cases, unless challenged — so it’s worth reviewing. Getting the classification right can mean thousands in savings.
What If I’m a 499 Filer?
Being a 499 filer means you report telecom revenue and may contribute to the USF directly.
But it doesn’t automatically exempt you from FUSF charges on services you purchase from upstream carriers.
Why? Because those carriers are also 499 filers — and unless you certify your usage (e.g., private carriage for broadband delivery), they’re obligated to treat you like an end user and apply the surcharge.
So even if you're a filer, you still need to:
Submit exemption forms
Certify your broadband-only use
Ensure circuits aren’t misclassified
The rules don’t assume your usage — it must be clearly documented.
How to Avoid Unnecessary FUSF Charges
If you’re an ISP, here’s how to take control:
Review your invoices — spot circuits with high FUSF charges
Confirm usage — is each one used strictly for broadband delivery?
Submit exemption forms — typically per account or per circuit
Audit billing classifications — check for miscategorized interstate tariffs
Know your carrier’s stance — not all providers offer exemptions, even when usage qualifies
Monitor ongoing billing — exemptions can drop off if the account changes or new services are added
Need Help?
Exemption policies vary widely between carriers. Some — like Lumen — offer a clear path for ISPs to certify usage and waive FUSF fees. Others don’t, or haven’t documented a process.
If you’re being billed by a provider that doesn’t offer exemptions — or you’re not sure — we can help you identify eligible circuits, explore options for replacement, or assist in sourcing new ones that better align with your goals.
We’ve helped ISPs reduce costs, correct misbilling, and improve long-term carrier strategy — all without disrupting their service.
Have questions or want a quick review of your current setup? Reach out — we’re happy to take a look.
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