Universal service remains a concern of state legislatures and commissions as policy makers seek to maintain ubiquitous and affordable basic telephone service. One strategy is to establish a high cost fund to provide support for carriers serving high-cost areas. This report focuses on these state funds, analyzing the steps involved in establishing and maintaining them. The report, which is intended for state commissions and state legislatures that are considering adopting a fund, explains why these funds typically have been created and discusses how those varying purposes are reflected in support mechanisms. The report is also intended for states that already have such funds but are considering changes to improve their function or effect. States also use other universal service programs such as Lifeline and school and library programs, but those programs are not the subject of this report.

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