USF Subsidy 'Requirements' Totaled $8.7 Billion for 2015, FCC Report Detailing Program Data Says

Total USF subsidy "requirements" were $8.7 billion for 2015, said the FCC’s Universal Service Monitoring Report listed in Wednesday's Daily Digest and docket 10-90. High-cost support led the way at $4.5 billion in demand and related costs, followed by school and libraries E-Rate discounts at $2.4 billion, Lifeline and Tribal Link-Up low-income support at $1.5 billion and rural health support at $271 million. The report generally used information available as of September (including some projections for the remainder of the year). Actual USF disbursements in 2014 were about $7.9 billion, which continued a downward trend from 2012's $8.7 billion and 2013's $8.3 billion. The states receiving the biggest net USF benefit (payments made to providers minus estimated contributions to the program) in 2014 were Alaska ($293 million), Oklahoma ($234 million) and Mississippi ($174 million), while the biggest net payers were California ($273 million), New York ($258 million) and Florida ($244 million). High-cost support claims by ILECs and competitive eligible telecom carriers were projected to be $3.9 billion in 2015, up from 2014’s $3.75 billion but still under 2013’s $4.2 billion. CenturyLink led carriers in high-cost claims for 2014 with $348 million, followed by AT&T’s $347 million, TDS's $182 million, Windstream's $164 million, Frontier Communications' $162 million, and Verizon's $134 million. Low-income support claims dropped in 2014 to $1.6 billion from 2013’s $1.8 billion and 2012’s $2.2 billion, as the number of Lifeline subscribers was down to 12.9 million from 2012’s peak of 16.4 million. America Movil (TracFone’s parent) received the most estimated low-income support with $437 million, followed by SoftBank's (Virgin Mobile USA and Sprint parent) $272 million, AT&T's $164 million and Budget Prepay's $103 million. The industry USF contribution rate was 16.7 percent of interstate/international telecom revenue in Q4 2015 (it’s expected to rise to 18.2 percent next quarter), up from 8.7 percent in Q1 2004. Over the years, USF demand has risen and the industry long-distance revenue base has dropped. “Total telecom revenue” (which also includes intrastate revenue and USF surcharges) dropped to $229 billion in 2014 from $243 billion in 2013 (the peak was $299 billion in 2007). “Local service and payphone revenue” was $91 billion, “mobile service revenue” was $87 billion, and “toll service revenue” was $42 billion -- all continuing recent declines. However, “non-telecom revenue” in 2014 was $268 billion, up from $252 billion in 2013. Total reported revenue was $497 billion, up from $495 billion in 2013. The FCC reclassified broadband access as a telecom service in 2015.