New Record! USF Contribution Factor Set At 26.5 Percent For Third Quarter Of 2020
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.
June 12, 2020 – The Federal Communications Commission’s Office of Managing Director has announced that the proposed universal service fund (USF) contribution factor for the third quarter of 2020 will be 26.5 percent. This breaks the previous USF contribution record of 25 percent from the fourth quarter of 2019. It also is a significant increase from the 19.6 percent contribution factor that was used for the second quarter of 2020. For the third quarter of 2020, the Universal Service Administrative Company (USAC) projects $10.219124 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $2.117610 billion is needed to cover the total demand and expenses for all Federal universal service support mechanisms in the third quarter of 2020. 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.
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, 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. Here’s a look at contribution factors for the last 7 years:
2020-Q1 – 20 | 2020-Q2 – 19.6 | 2020-Q3 – 26.5
2019-Q1 – 20 | 2019-Q2 – 18.8 | 2019-Q3 – 24.4 | 2019-Q4 – 25 | 2019 Average: 22.05
2018-Q1 – 19.5 | 2018-Q2 – 18.4 | 2018-Q3 – 17.9 | 2018-Q4 – 20.1 | 2018 Average: 18.975
2017-Q1 – 16.7 | 2017-Q2 – 17.4 | 2017-Q3 – 17.1 | 2017-Q4 – 18.8 | 2017 Average: 17.5
2016-Q1 – 18.2 | 2016-Q2 – 17.9 | 2016-Q3 – 17.9 | 2016-Q4 – 17.4 | 2016 Average: 17.85
2015-Q1 – 16.8 | 2015-Q2 – 17.4 | 2015-Q3 – 17.1 | 2015-Q4 – 16.7 | 2015 Average: 17
2014-Q1 – 16.4 | 2014-Q2 – 16.6 | 2014-Q3 – 15.7 | 2014-Q4 – 16.1 | 2014 Average: 16.2
2013-Q1 – 16.1 | 2013-Q2 – 15.5 | 2013-Q3 – 15.1 | 2013-Q4 – 15.6 | 2013 Average: 15.57
So what does all of this mean? The answer is clear – the USF contribution system is broken and crumbling. But what can be done? The answer is obvious. Over eight years ago, the FCC revised the USF to specifically support the deployment of broadband networks, instead of telephone lines. When the FCC changed how USF suppport gets distributed, it chose to leave the other part of the USF equation - contributions that make up the fund - as a project for another day. Okay, but if the ever-shrinking contribution base is not addressed, the USF contribution factor will never stop climbing. It’s time for the FCC to act, and there is no better time than now to align the contribution rules to include broadband services in the USF contribution base. I hope you enjoyed my TED talk.
Below is a summary of recent important FCC actions, filings, and data related to USF contributions and the out-of-control contribution factor .
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FCC Asks For Comment On Whether One-Way VoIP Providers Should Contribute To The Universal Service Fund
June 11, 2020 – The FCC’s Wireline Competition Bureau has invited public comments to update the record in the FCC’s 2012 Contributions Reform Further Notice of Proposed Rulemaking as it pertains to “one-way” VoIP service providers. Specifically, comment is requested on whether the FCC should exercise its permissive authority under Section 254(d) of the Communications Act to include one-way VoIP revenues in the Universal Service Fund contributions base. The Bureau also has specifically requested comment on whether one-way VoIP services should be required to pay other fees applicable to interconnected VoIP services, such as regulatory fees. Comments are due on or before July 13, 2020, and reply comments are due July 27, 2020. Comments should reference WC Docket No. 06-122 and GN Docket No. 09-51, and may be filed using the FCC’s Electronic Comment Filing System.
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NTCA Paper Argues For Including Broadband In Services That Contribute To The Universal Service Fund, Shows Reforming USF Contribution System Won’t Harm Broadband Adoption
May 7, 2020 – NTCA-The Rural Broadband Association has released a paper supporting the assertion that broadening the base of contributions to the Universal Service Fund (USF) by including both voice and broadband connections would not undermine broadband adoption and retention. NTCA-The Rural Broadband Association represents nearly 850 independent, community-based telecommunications companies that provide telecommunications and broadband services in rural America.
Currently, wireline telecommunications service providers, wireless telecommunications service providers, and certain VoIP service providers contribute money to the USF based on end user revenue attributable to interstate (and international) telecommunications services. All four of the FCC’s USF programs have been amended to promote broadband, but the current contribution base for the USF does not include broadband services. The paper is based on two authors’ investigation of the economic effects of including broadband services in the USF contribution base on consumer broadband adoption rates. Their findings include results of a survey they conducted to measure the effects on consumer broadband adoption and retention caused by including broadband Internet access services in the contribution base.
The authors conclude that the estimated percentage reduction in demand for broadband services is approximately 0.08% for every 1% increase in total service fees. As explained by NTCA, this would mean, for example, that for every 1,000 consumers spending $80 per month on broadband, an $0.80 USF contribution surcharge might cause one consumer at most to reduce his or her broadband purchase in some way. The paper also notes that the 0.08% estimated reduction “is a conservative estimate based the number of total accessible connections, and does not take into account any other gains in broadband adoption that might be realized and sustained as a result of programs supported by the USF.”
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USAC Files USF Support Mechanisms Fund Size Projections For Third Quarter Of 2020
May 1, 2020 – The Universal Service Administrative Company has filed the Federal Universal Service Support Mechanisms Fund Size Projections for the Third Quarter of 2020. The filing shows the following total projected 3Q 2020 funding requirements for each support mechanism:
High Cost Support Mechanism - $1.205 billion
Low Income Support Mechanism - $206.66 million
Rural Health Care Support Mechanism - $150.96 million
Schools and Libraries Support Mechanism - $554.76 million
USAC projects $60.24 million in administrative costs for 3Q 2020, which breaks out to $35.75 million in direct costs for all four support mechanisms, and $24.49 million in joint and common costs which include costs associated with billing, collection, and disbursement of universal service funds. The FCC will use the of the quarterly funding requirements for the four USF Support Mechanisms, the projected administrative expenses, and the USF contribution base amount, to establish a quarterly USF contribution factor.
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USF Contribution Factor Set At 19.6 Percent For Second Quarter Of 2020
March 13, 2020 – The Federal Communications Commission’s Office of Managing Director has announced that the proposed universal service fund (USF) contribution factor for the Second quarter of 2020 will be 19.6 percent. This is a slight decrease from the 21.2 percent contribution factor that was used for the first quarter of 2020. For the second quarter of 2020, the Universal Service Administrative Company (USAC) projects $10.86513 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $1.765460 billion is needed to cover the total demand and expenses for all Federal universal service support mechanisms in the Second quarter of 2020. 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.
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USAC Files Second Quarter 2020 USF Contribution Base Data: $10.865 Billion
March 2, 2020 – The Universal Service Administrative Company (USAC) has filed information on the universal service fund (USF) contribution base to be used for the second quarter of calendar year 2020. The total projected collected interstate and international end-user revenue base for the second quarter of 2020 is $10,865,131,593. This is roughly a $265 million decrease from the revenue base used for the first quarter of 2020, which was $11,129,976,956. USAC’s estimated revenue base was derived from projected collected revenue for April to June 2020 reported by telecommunications service providers using FCC Form 499-Q in February 2020 – 4,204 reporting carriers, of which 2,844 are USF contributors and 1,360 are non-contributing de minimis carriers. Upon Federal Communications Commission approval of the total USF contribution base, the quarterly funding requirements for the four USF support mechanisms, and projected administrative costs, 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.
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USF Contribution Factor Set At 21.2 Percent For First Quarter Of 2020
December 12, 2019 – 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 2020 will be 21.2 percent. This is a decrease from the 25 percent contribution factor that was used for the fourth quarter of 2019, which also was an all-time high. For the first quarter of 2020, the Universal Service Administrative Company (USAC) projects $11.129976956 billion in total interstate and international end-user telecommunications revenues will be collected. USAC estimates that $1.92554 billion is needed to cover the total demand and expenses for all Federal universal service support mechanisms in the first quarter of 2020. 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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