Consumer Information - Telecommunications Surcharges

All telecommunications services, such as landlines or cellphones, are required to pay a surcharge on a monthly basis. The CPUC collects these surcharges to fund the state's Universal Service programs. These programs support affordable telephone and internet services for low-income, deaf, or hearing impaired, rural, and underserved customers, schools, libraries, hospitals, and non-profit organizations.

The surcharge funds California’s six Universal Service Programs:

1. California LifeLine: Provides discounted home phone and cellular phone services to qualifying low-income households, in combination with the federal Lifeline Program.
2. Deaf and Disabled Telecommunications Program: Provides adaptive telecommunications devices to deaf or hearing-impaired consumers and consumers with other disabilities and provides relay service that enables those consumers to make phone calls.
3. California High-Cost Fund-A: Provides subsidies to small telephone companies for providing telephone service to residential customers in rural and high-cost areas.
4. California High-Cost Fund-B:Provides subsidies to certain telephone companies for providing telephone service to residential customers in rural and high-cost areas.
5. California Teleconnect Fund: Provides a discount on select communications services to schools, libraries, hospitals, and other nonprofit organizations.
6. California Advanced Services Fund: Supports the deployment of broadband facilities and broadband services adoption in unserved and underserved areas through project specific grant funding.

For more information on the six Universal Service Programs, see the Universal Service Factsheet or the main Internet and Phone (ca.gov) webpage.

Beginning April 1, 2023, California is moving from six separate surcharges to one flat-rate surcharge to fund the state's six Universal Service programs. The flat-rate amount is calculated based on the number of connections, such as a phone number, that telecommunications companies operate in California. As a result, California phone bills will be simplified and include one flat-rate surcharge beginning in April 2023. All telephone companies who provide traditional landline service, Voice Over Internet Protocol service (VoIP), or wireless cellphone service must collect this surcharge from their subscribers. The CPUC will monitor this surcharge amount and may adjust it up or down based on the needs of the programs.

The CPUC adopted this new surcharge method to address issues with declining revenues and inequities in how much customers were paying in surcharges. The previous method allowed service providers to use different methods to identify how much of their revenue is subject to CPUC surcharges. This resulted in widely different surcharge rates for consumers, depending on whether they had traditional landline service, Voice over Internet Protocol (VoIP) service, or wireless service. The table below shows a sample of consumer bills to demonstrate the disparity in the amounts of surcharges paid by different types of customers: 

In addition, to ensure stable funding for the state's Universal Service programs, the CPUC had to continuously increase the surcharge rates to collect the same level of funding.

To address these problems, the CPUC adopted a single, flat-rate surcharge. This ensures equity between all telecommunications customers regardless of whether they subscribe to traditional landline service, VoIP service, or wireless service. You can learn more about this rulemaking here R.21 03 002.

The flat surcharge of $1.11 is divided among the six Universal Service Programs. See the chart below for an example of the surcharge allocation. The CPUC will adjust the percentages as needed so that each program has enough money to operate. For updates on the current surcharge rate and percentage allocations, see the Surcharge Rates page. Staff forecast that the new surcharge will generate about $738 million in revenue annually.

The User Fee funds the CPUC’s annual operating budget for regulating the telecommunications corporations under its jurisdiction. The User Fee is calculated based on the percentage of a telecommunications carrier’s gross intrastate revenue, excluding inter-carrier sales, equipment sales, and directory advertising.