USAC Analysis Results in 2018-2019 Rate-of-Return Carrier Funding Shortfall

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The Universal Service Administrative Company (USAC) released its 2018-2019 budget analysis for high-cost support for rate-of-return (RoR) carriers, and due to the “budget control mechanism” adopted by the FCC in its 2016 Rate-of-Return Order, it found that it will only allow high-cost loop support (HCLS) and Connect America Fund – Broadband Loop Support (CAF-BLS) to be funded at 84.48% of forecasted demand.  Specifically, USAC calculated a total forecasted cost of $1,464,271,152 whereas the allotted budgeted amount to cover those costs will amount to only $1,237,000,221. USAC applies the FCC Budget Control Mechanism methodology, adopted in the 2016 Rate-of-Return Order, to reduce support for carriers subject to HCLS (including SNA and SVS), and/or CAF BLS support.  In its calculations, which lead to a $227 million shortfall for the upcoming year, USAC notes that those numbers “are projections and are subject to change.”  USAC’s report compelled FCC Chairman Ajit Pai to issue a statement lamenting the fact that “universal service support for small, rural carriers” will be cut by 15.52% over the course of calculation period.  He also noted that for the period of 2017-2018, the FCC had to allocate an additional $180 million to eligible carriers “as a stop-gap measure to avert budget cuts for the current funding year.”  Chairman Pai reminded impacted parties that the Commission adopted a Notice of Proposed Rulemaking earlier this year and urged interested parties to submit comments.  Chairman Pai also urged his colleagues to “support my efforts to take action in the coming months” to fix what he sees as a broken process.

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