USF Contribution Rate Could Top 18 Percent for First Time, Gregg Says

The 1Q USF contribution rate for carriers could for the first time top 18 percent of interstate and international telecom revenue, said industry consultant Billy Jack Gregg in an update Tuesday. The USF contribution rate could jump from its current 16.7 percent to 18.1 percent if the industry revenue base is the same as for the current quarter, Gregg said. He said interstate/international telecom revenue is expected to be $15 billion for 4Q and $60.5 billion for all of 2015, which he said would be the lowest quarterly and annual amounts in the program's history. “If the trend of declining quarterly revenues continues, the USF assessment factor for the first quarter will be higher than 18.1%,” he said. Gregg said the Universal Service Administrative Company will project 1Q revenue at the end of November, which will allow him "to accurately calculate" the new contribution rate. He said projected 1Q demand for USF support is $2.28 billion, up $155.2 million from 4Q, led by a Lifeline support increase of $74.4 million and a high-cost support increase of $49.5 million. Much of the hike was due to “out of period adjustments,” he said.