USF Contribution Factor Could Fall to 17.6 Percent, if Revenue Holds Steady, Gregg Says

The USF contribution factor for carriers could drop in Q2 to 17.6 percent of interstate and international telecom revenue, but it could be higher if industry revenue declines continue, said industry consultant Billy Jack Gregg in an email update Monday. The Q1 factor is 18.2 percent (see 1512110040), which Gregg accurately estimated once Universal Service Administrative Co. came out with revenue projections (see 1512040003). USAC Monday projected USF demand for Q2 would be $2.211 billion, down $65.5 million, Gregg said. "Out of period adjustments ... accounted for almost all" of the demand decrease, he said. Revenue in the contribution base last year totaled $60.5 billion, "the lowest annual revenues" in USF history, and Q1 revenue was $14.929 billion, "the lowest quarterly revenues" in USF history, he said. "If revenues for the second quarter of 2016 are the same as revenues for the first quarter, the USF assessment factor will decrease to 17.6%. However, if the trend of declining quarterly revenues continues, the USF assessment factor for the second quarter will be higher than 17.6%." He said USAC revenue projections for Q2 are due in early March.