AVL Blog - Communications Law & Technology

View Original

USF Contribution Factor Reaches 25 Percent For Fourth Quarter Of 2019

Tony Veach

UPDATE: USF Contribution Factor Skyrockets To 31.8 Percent – New All Time High Set For First Quarter 2021

December 14, 2020 – The Federal Communications Commission’s Office of Managing Director has announced that the proposed universal service fund (USF) contribution factor for the first quarter of 2021 will be 31.8 percent.

September 12, 2019 – The Federal Communications Commission’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the fourth quarter of 2019 will be 25 percent, the highest ever. This gives 2019 the highest yearly average USF contribution factor ever – 22.05 percent.

Every telecommunications carrier that provides interstate (and international) telecommunications services must contribute to the USF. The amount of money that each carrier gives to the USF is based on their end-user revenues from telecommunications services and the quarterly contribution factor. Carriers add a universal service fee to their subscribers’ monthly landline phone and cell phone bills to recover this cost, meaning consumers are the ones that ultimately pay.

This system has been in place since 1997. The current rules were adopted when wireline voice services (and long-distance) were a large source of revenue for telecommunications carriers. Over the past 20 years, however, the communications marketplace has evolved dramatically. Industry changes have made administration of the USF harder – it is more difficult to identify revenues that should be included in the USF contribution base; the overall contribution base continues to steadily decline, and over the past two years, the universal service contribution factor has climbed to record highs.

So what does all of this mean? The answer is clear – the FCC needs to reform the USF contribution system. It’s obvious that the ever shrinking contribution base must be addressed or else the USF contribution factor will never stop climbing. There are many other changes that could be made as well. It will take considerable effort to make this happen though, and it’s an uphill battle for sure. But, if you’ve been listening, you know the fight has already begun.

Below is a summary of every quarterly USF contribution factor from 2018 and 2019.

**********

USF Contribution Factor Reaches 25 Percent For Fourth Quarter Of 2019 – Another New Record!

September 12, 2019 – The Federal Communications Commission’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the fourth quarter of 2019 will be 25 percent, a new record high. The 25 percent contribution factor breaks the previous all-time high USF contribution factor of 24.4 percent, which was used for the third quarter of 2019. This gives 2019 the highest yearly average USF contribution factor ever – 22.05 percent. Below are the universal service contribution factors for each quarter of 2019-2016, along with the yearly average:

  • 2019: Q1-20; Q2-18.8; Q3-24.4; Q4-25

  • 2019 Average: 22.05

  • 2018: Q1-19.5; Q2-18.4; Q3-17.9; Q4-20.1

  • 2018 Average: 18.97

  • 2017: Q1-16.7; Q2-17.4; Q3-17.1; Q4-18.8

  • 2017 Average: 17.5

  • 2016: Q1-18.2; Q2-17.9; Q3-17.9; Q4-17.4

  • 2016 Average: 17.85

For the fourth quarter of 2019, the Universal Service Administrative Company (USAC) projects $11.017439561 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $2.184230 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the fourth quarter of 2019. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved. Historical information on quarterly universal service fund contribution factors is available online from the FCC.

**********

USAC Files Fourth Quarter 2019 Contribution Base Data: $11.017 Billion

September 1, 2019 – The Universal Service Administrative Company (USAC) has filed information on the universal service contribution base to be used for the fourth quarter of calendar year 2019. The total projected collected interstate and international end-user revenue base for 4Q2019 is $11,017,439,561, which was derived using projected collected revenue reported on the FCC Form 499-Q submissions. Upon FCC approval of universal service fund support mechanisms quarterly funding requirements, projected administrative costs,  and total contribution base, the FCC will establish a quarterly USF contribution factor. USAC will then bill USF contributors on a monthly basis for their individual obligations based on the approved contribution factor.

**********

A New Record! USF Contribution Factor Hits 24.4 Percent For Third Quarter Of 2019

June 12, 2019 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the third quarter of 2019 will be 24.4 percent, a new record high. The proposed 24.4 percent contribution factor shatters the previous all-time high USF contribution factor of 20.1 percent, which was used for the fourth quarter of 2018. With one quarter left, 2019 is on pace to have the highest yearly average USF contribution factor ever. For the third quarter of 2019, the Universal Service Administrative Company (USAC) projects $11.483306 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $2.22869 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the third quarter of 2019. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved. Historical information on quarterly universal service fund contribution factors is available online from the FCC.

**********

USF Contribution Factor for 2Q 2019 Will Be 18.8 Percent

March 13, 2019 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the second quarter of 2019 will be 18.8 percent. This is a slight decrease from the 20 percent contribution factor that was used for the first quarter of 2019. For the second quarter of 2019, the Universal Service Administrative Company (USAC) projects $12.266 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $1.921370 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the second quarter of 2019. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved. Historical information on quarterly universal service fund contribution factors is available online from the FCC.

**********

USF Contribution Factor For First Quarter Of 2019 Will Be 20 Percent

December 12, 2018 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the first quarter of 2019 will be 20 percent. This is nearly identical to the 20.1 percent contribution factor that was used for the fourth quarter of 2018. For the first quarter of 2019, the Universal Service Administrative Company (USAC) projects $12.289162 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $2.024470 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the first quarter of 2019. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved.

**********

New Record! USF Contribution Factor Will Be 20.1 Percent for Q4 2018

September 12, 2018 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the fourth quarter of 2018 will be 20.1 percent. This is a new record high for a USF contribution factor, breaking the previous record of 19.5 set in the first quarter of 2018. Here are all the contribution factors for 2018:

  • 2018-Q1 – 19.5

  • 2018-Q2 – 18.4

  • 2018-Q3 – 17.9

  • 2018-Q4 – 20.1

  • 2018 Average: 18.975

The Universal Service Administrative Company (USAC) projects $12.40 billion in total interstate and international end-user telecommunications revenues will be collected from October through December 2018. USAC estimates that $2.05876 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the fourth quarter of 2018. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved.

**********

USF Contribution Factor Dips to 17.9 Percent For Q3 2018

June 13, 2018 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the third quarter of 2018 will be 17.9 percent. This is a decrease from the 18.4  percent used for the second quarter of 2018. The Universal Service Administrative Company (USAC) projects $12.951 billion in total interstate and international end-user telecommunications revenues will be collected during the third quarter of 2018 (July through September). USAC estimates that $1.946 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the third quarter of 2018. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved.

**********

USF Contribution Factor Will Be 18.4 Percent for Q2 2018

March 9, 2018 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the second quarter of 2018 will be 18.4 percent. This is a decrease from the record high 19.5 percent used for the first quarter of 2018. The Universal Service Administrative Company (USAC) projects $12.80 billion in total interstate and international end-user telecommunications revenues will be collected from April through June 2018. USAC estimates that $1.968 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the second quarter of 2018. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved.

**********

New Record: USF Contribution Factor Set at 19.5 Percent For Q1 2018

December 14, 2017 – The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service fund (USF) contribution factor for the first quarter of 2018 will be 19.5 percent. This is a new record high, breaking the previous all-time high of 18.8 percent set in the fourth quarter of 2017. OMD also announced that for the first quarter of 2018, the Universal Service Administrative Company (USAC) projects that it will collect $12.87 billion in total interstate and international end-user telecommunications revenues. USAC estimates that $2.081 billion will be needed to cover the total demand and expenses for all Federal universal service support mechanisms in the first quarter of 2018. If the FCC takes no action on the proposed USF contribution factor within 14 days, it will be declared approved. Historical information on quarterly universal service fund contribution factors is available online from the FCC.

**********