A pending FCC formal complaint filed by Life Time, Inc. against Verizon Business Network Services LLC has put a familiar but often misunderstood Universal Service Fund issue back in the spotlight: whether a broadband provider may assess federal USF surcharges on the transmission facility used to deliver dedicated Internet access, or “DIA,” to enterprise and multi-location business customers.
The case is pending before the FCC’s Enforcement Bureau as Life Time, Inc. v. Verizon Business Network Services LLC, Proceeding No. 26-95, Bureau ID No. EB-26-MD-003. According to FCC ECFS, the docket was created in April 2026 and currently includes several filings, including Life Time’s formal complaint and Verizon’s discovery-related opposition.
Life Time’s core allegation is straightforward: it says it purchased broadband Internet access from Verizon, not a stand-alone telecommunications service, and therefore Verizon should not have assessed federal USF surcharges on the transmission facility element of the service. Life Time argues that, because broadband Internet access is presently treated as a Title I information service, Verizon’s practice of imposing FUSF charges on the facilities underlying that Internet access is unlawful and unreasonable. Life Time also alleges that it paid more than $1.67 million in disputed FUSF surcharges from December 2023 through May 2026, and that other providers serving Life Time locations did not impose comparable FUSF charges on DIA.
Verizon’s position appears to be that Life Time did not purchase one indivisible broadband Internet access service. Instead, Verizon contends that Life Time purchased two distinct services: Internet Dedicated Service and a separate Access Service, with the latter treated as an interstate telecommunications service subject to USF contribution obligations under 47 C.F.R. § 54.706. In its public discovery response, Verizon also objected to Life Time’s use of “broadband Internet access” as applied to the enterprise services at issue, noting that the Commission has historically used that term in the mass-market context, and emphasizing that Life Time purchased an enterprise service.
This is where the case becomes important for providers beyond Verizon.
For years, many enterprise customers, SMBs, managed service providers, broadband resellers, and access-dependent Internet service providers have treated the USF treatment of DIA as settled by shorthand: “Internet access is information service; information service isn’t assessable; therefore DIA isn’t subject to USF.” That is directionally correct in many common retail Internet access scenarios, but it can become dangerously oversimplified when the provider’s service architecture, contract documents, invoices, product catalog, tax engine mapping, and upstream access arrangements don’t all tell the same story.
The most important question is not simply whether the customer calls the service “DIA.” The harder question is whether the provider is selling one integrated Internet access service, or whether it is separately selling a telecommunications transmission service that remains assessable. Life Time says the transmission facility is merely an input or component of an integrated broadband Internet access service. Verizon says the access component is a distinct interstate telecommunications service. That distinction, if addressed directly by the FCC, could have consequences well beyond the parties.
There is also an important facilities-based versus non-facilities-based distinction, but it is not as clean as many customers assume.
A facilities-based broadband provider that owns the last-mile facilities used to deliver Internet access may be better positioned to treat the retail offering as a single integrated broadband Internet access service, assuming the contract, service descriptions, billing, tax mapping, and actual service delivery all support that characterization. In that model, there may be no separately purchased special access input from another carrier and no separately billed retail transmission service.
By contrast, a provider that must buy special access, Ethernet, private line, wavelength, or other last-mile transmission from an underlying carrier faces a more complicated reality. The upstream carrier may treat that loop as a telecommunications service and may itself report the associated revenue for USF purposes, unless a valid reseller exemption or other non-assessable treatment applies. The provider buying that loop may experience the USF cost directly as a supplier pass-through, even if the provider’s own retail sale to the end-user is characterized as Internet access. That does not automatically mean the provider may or should impose a federal USF surcharge on the end-user’s entire Internet access bill, but it does mean the economic burden of USF may still exist in the cost stack.
That distinction matters. Customers often assume that if they are buying “Internet,” any USF charge appearing anywhere on the invoice must be unlawful. Providers often assume the opposite: if a carrier upstream charges them USF on the loop, they can pass that same charge through downstream as “FUSF.” Neither assumption is always safe.
The FCC may also have institutional reasons to tread carefully. The Universal Service Fund is already under significant funding pressure. A decision broadly endorsing Life Time’s position could invite enterprise customers across the country to seek refunds on years of DIA-related USF surcharges. That could reduce assessable revenue or create pressure on carriers to reclassify large categories of enterprise transmission revenue out of the USF base. On the other hand, a decision broadly endorsing Verizon’s position could be read as confirming that access facilities sold in connection with enterprise Internet access may remain separately assessable telecommunications services. That outcome could backfire for customers and providers hoping for categorical USF relief.
In other words, the most likely risk is not simply that the FCC “sides with Life Time” or “sides with Verizon.” The larger risk is that the FCC uses the case to clarify a misunderstood rule in a way that exposes inconsistent industry practices.
That clarification could be uncomfortable for providers that have not been contributing to USF on revenues associated with separately stated access, transport, or transmission components. It could also be uncomfortable for providers that have been passing through USF-like charges to enterprise or SMB customers without a defensible basis in the governing service classification, contract language, invoice presentation, or upstream contribution treatment.
For providers offering DIA, broadband, SD-WAN connectivity, managed Internet, private access to cloud, or bundled Internet-plus-network services, the practical takeaway is simple: this is a good time to review how the service is described, sold, invoiced, and mapped for USF purposes.
Providers should pay particular attention to whether their customer-facing documents describe the service as a single integrated Internet access service or as multiple separately purchasable components; whether “access,” “loop,” “port,” “transport,” “Ethernet,” “Internet dedicated,” and similar terms are used consistently; whether invoices separately state charges that could look like telecommunications transmission; whether tax engines and billing systems map those charges consistently with the legal classification; whether underlying carrier invoices include USF pass-throughs; and whether any customer surcharge is tied to an actual assessable revenue base rather than used as a generic cost-recovery mechanism.
The Life Time complaint also underscores a sales and contracting lesson. Life Time alleges that Verizon’s pre-contract communications, proposals, and product descriptions framed the service as DIA, while Verizon later relied on product catalog and contract language to argue that a separate access service existed. Whether or not Life Time ultimately prevails, the record illustrates the risk created when sales terminology, technical design documents, product guides, invoices, and regulatory classifications are not aligned.
The case should not be read as establishing a new rule yet. It is a pending complaint, and Verizon has not yet been adjudicated to have violated the Communications Act. But the dispute is important because it forces the FCC to confront an issue many providers and customers have preferred to treat as settled at a high level, even though the real-world facts are often messier.
For enterprise and SMB customers, the advisory point is equally important: a USF surcharge on an Internet-related invoice is not automatically unlawful, but it should be examined. The answer may depend on what was purchased, how it was contracted, whether any transmission component was separately sold, how the provider reports the revenue, and whether the charge is a true pass-through of a contribution obligation or a discretionary cost-recovery fee.
For providers, the risk is not limited to Verizon-style enterprise DIA offerings. Any provider that sells Internet access over facilities it does not own, bundles managed services with transmission, separately invoices access or loop charges, or passes through supplier-imposed USF charges should review its practices before a customer, auditor, competitor, or regulator does it for them.
The CommLaw Group will continue monitoring Proceeding No. 26-95. Providers with DIA, managed Internet, enterprise broadband, special access, or bundled connectivity offerings should consider a targeted review of their USF contribution treatment, customer surcharge practices, invoice descriptions, and tax-engine mappings.
Contact Jonathan Marashlian at jsm@commlawgroup.com or Jackie McHugh at jrm@commlawgroup.com for assistance or to obtain a copy of Life Time’s Complaint and Verizon’s Opposition.