Support Reductions Coming to Rate-of-Return Carriers in September 2016

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The FCC’s Wireline Competition Bureau has announced that rate-of-return carriers will see reductions to their universal service support starting September 2016 as a result of the initial implementation of the rate-of-return budget control mechanism.  In the Rate-of-Return Reform Order, the FCC adopted a budget control mechanism to enforce the $2 billion budget for rate-of-return carriers in the event total support is forecasted to exceed the budget in a given year.  The mechanism will identify “target amounts” for high cost loop support (HCLS) and Connect America Fund Broadband Loop Support (CAF BLS) once per year prior to the annual filing of the tariffs.  Then, when necessary, the budget control mechanism will make per-line and pro rata reductions on a study area basis.  It was not possible to calculate target amounts prior to the tariff deadline this year, so the Bureau has directed USAC to implement the initial budget control mechanism in September 2016.  A spreadsheet showing the projected reductions for each rate-of-return carrier is available on USAC’s budget control mechanism website.

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