USF Contribution Factor Could Drop Due to Lower Demand, Offset, Gregg Says
The USF carrier contribution factor could fall in Q4 from 17.9 percent to 16.9 percent of interstate and international telecom revenue, said industry consultant Billy Jack Gregg in an email update Tuesday. He said the Universal Service Administrative Co. (USAC)…
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projected USF demand for Q4 would be $2.08 billion, down $100 million from Q3. Demand in three USF mechanisms -- supporting Lifeline, high-cost and rural-healthcare telecom service -- is expected to increase, but demand for school and library fund (SLF) E-rate discounts is expected to decrease by $215 million in Q4 to $403 million, he said. "This dramatic reduction in demand for the SLF is driven by the FCC’s June 8, 2016, authorization to USAC to use $1.9 billion of unused funds from prior years to offset 2016 SLF demand, and USAC’s projection that only $3.6 billion will be needed to satisfy overall 2016 SLF demand, $300 million less than the overall cap of $3.9 billion." If projected Q4 long-distance telecom revenue holds steady, the contribution factor will drop to 16.9 percent, he said, but if the projected revenue continues its trend lower, the contribution factor likely will be higher than that. USAC's Q4 revenue projection is expected in late August, he said.