Proposed Q2 Contribution Factor for USF is Highest Ever

The proposed Universal Service Fund contribution increase to 15.3 percent for the 2010 second quarter is no surprise, but continues to show the need for reform, said Steve Berry, CEO of Rural Cellular Association. “We knew it was coming,” he said in an interview. “But the commission has to reform the current process and restructure USF.” Berry said wireless carriers, whose contributions are capped, are not to blame: “The issue is you have a wireline component that loses subscribers every year but their contributions increase every year.” There’s “an antiquated system that supports an antiquated technology and we haven’t figured out a way to reduce that support as people choose to go with different technologies."

At 15.3 percent, the proposed Q2 factor is the highest ever, and it’s 1.2 percentage points more than the current quarterly contribution. More than $2.18 million is projected for demands and expenses in Q2, the Universal Service Administrative Co. said. That amount includes more than $1.1 million for the high-cost program and about $560 million for schools and libraries. The USAC projects about $16.6 billion in collected interstate and international end-user telecom revenues.

The factor “translates to money out of consumers’ pockets,” said Verizon spokesman David Fish. We hope “the commission will focus very soon on how to fix the broken contribution system. The current situation is unsustainable."

"Clearly the universal service contribution factor has increased over time and this last increase continues that trend,” Windstream spokesman Larry White said. “Windstream has supported, and continues to support, reasonable and rational Universal Service Fund reform.”