USF is only valid on connections that start and end in different states.

The litmus test is 'intra-state' vs 'inter-state'. Some snippets in a
discussion between myself and one of my consulting clients when they were
presented with the USF fees you mention (IANAL!):

(http://www.usac.org/cont/about/who-must-contribute/default.aspx) is very
informative.

To quote the site (highlighting is ours):

The term "telecommunications" refers to the transmission, between or among
points specified by the user, of information of the user's choosing,
without change in the form or content of the information as sent and
received. For the purpose of filing, the term "interstate
telecommunications" includes, but is not limited to, the following types of
services:

...
private line;
...

I took a look at our notes from the FCC Report and Order 97-157 p14 and
section 2(b) of the Communications Act that outlines (again bolding ours):

"nothing in this Act shall be construed to apply or to give the Commission
jurisdiction with respect to . . . charges, classifications, practices,
services, facilities, or regulations for or in connection with intrastate
communication service by wire or radio of any carrier."

The FCC specifically states in its website to explain USF in simple terms (
http://www.fcc.gov/guides/universal-service-support-mechanisms)

"...when a company chooses to recover its USF contributions directly from
its customers by billing them this charge. The FCC does not require this
charge to be passed on to customers."


 The reaction from this customer's ISP was great and we saved THE ISP
(reselling Comcast fiber) a great deal of monies.

Just keep asking the same question over and over: "Is this 'intra-state' or
'inter-state' service?" Once they call The USAC and ask then USAC person
will more or less hit them with a clue-by-four and tell them that they
cannot charge USF for intra-state!

ryan
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