FCC Proposes 17.1% Q3 USF Contribution Factor

The FCC proposed a Q3 industry USF contribution factor of 17.1 percent, said the Office of Managing Director in a public notice in docket 96-45 that also appeared in Monday's Daily Digest. That means telecom carriers would generally have to contribute 17.1 percent of their interstate and international telecom revenue to the USF mechanism, which is slightly down from Q2's 17.4 percent but up from Q3 2014's 15.7 percent. The USF contribution factor has been trending up over time as USF demand increases and the industry interstate/international telecom revenue base erodes. Industry contributions pay for USF's four programs, which are projected to need $2.17 billion in Q3. High-cost rural support remains the most expensive program, needing $1.14 billion (after certain adjustments), followed by schools and libraries (E-rate discounts) at $618.9 million, low income (Lifeline) at $344.6 million, and rural healthcare at $68 million. The industry's interstate/international end-user telecom revenue base was calculated at $15.05 billion, which is down from Q2's $15.15 billion and Q3 2014's $16.02 billion. After adjustments to account for "circularity" (taking out the amount needed to fund USF) and uncollectible contributions, the industry revenue number is divided by the $2.17 billion in projected USF demand to produce the 17.1 percent industry contribution factor. If the FCC takes no further action, the proposed contribution factor will be deemed approved June 26. Carriers are allowed to recover line-item fees on consumer phone bills but those fees can't exceed 17.1 percent of the interstate/international telecom charges.