Minnesota Updates Universal Service Fund (USF) Rules: What Providers Need to Know

Minnesota just rolled out some big changes to its Universal Service Fund (USF) rules — and if you’re a telecom, VoIP, or broadband provider, your compliance playbook just shifted.

The updates, effective July 1, 2025, mean a new surcharge rate, broader provider eligibility, and a modernized reporting process. In short: more clarity, but also more responsibility.

Why the Change?

The Minnesota Public Utilities Commission (MPUC) has been working for years to modernize USF administration and bring it in line with federal FCC programs. Three big drivers pushed this update across the finish line:

• Customers moving from landlines to broadband and VoIP.
• State USF rules not matching up with FCC Lifeline and federal USF programs.
• Industry complaints about outdated definitions and clunky reporting.

Key Changes at a Glance

• Who’s In: Broadband providers are now eligible for reimbursements (especially in underserved areas).
• What’s Taxed: The USF contribution base now includes intrastate revenues from telecom, VoIP, and some broadband services.
• The New Rate: As of July 1, the USF surcharge is 3.1%. Future reviews happen every six months.
• Reporting: Still quarterly, but now through a streamlined digital portal with simplified forms.
• Definitions: Updated to match FCC standards (goodbye, ambiguity).
• Compliance: Providers get 45 days to dispute assessments; penalties now range from warning letters to fines and, in extreme cases, losing state authority.
• Consumer Protections: Rules ensure low-income and rural customers keep access to affordable service.

Why This Matters

These changes aren’t just paperwork — they affect how you bill, how you report, and potentially how you compete. Providers need to:

• Update billing systems to reflect the 3.1% surcharge.
• Adjust revenue classification logic to the new definitions.
• Make sure compliance teams or vendors are set up for the new quarterly process.
• Check if you qualify for state broadband support reimbursements.

What’s Next

Keep an eye on:

• MPUC’s implementation checklist (coming soon).
• The next USF rate review in January 2026.
• Potential compliance audits under the updated framework.
• Other states considering copycat reforms.

Read more here: Minnesota PUC – Universal Service Fund Rulemaking

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