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FCC USF Fee Factor Decreases to 18.8% for Q2 2019

The FCC Managing Director issued a Public Notice on March 13, 2019, announcing the proposed universal service contribution factor for the second quarter of 2019 will be 18.8 percent, down from the current 20.0 percent.

Unless otherwise notified by our firm, clients may presume the FCC approved the new rate, and that the new rate will be in effect from April 1, 2019 – June 30, 2019.

CLIENT ACTION ITEMS:

All contribution-eligible telecommunications carriers and interconnected VoIP providers must apply the new factor to all interstate telecommunications revenue received during the effective reporting period and contribute to the USF accordingly by filing FCC Form 499-Q. Clients who file FCC Form 499-Q with the FCC will receive invoices from the fund administrator, the Universal Service Administrative Company (“USAC”), that applies this factor to retail interstate telecommunications revenue.

Contributing telecommunications carriers are permitted to pass-through the USF contribution fee to end-users through the use of a Federal USF line-item on bills. However, under the FCC’s Truth-in-Billing rules, contributing telecommunications carriers may not mark up the Federal USF line-item amounts above the current contribution factor.  Thus, clients may not, through a Federal USF line-item, recover an amount in excess of the proposed USF contribution factor from the interstate telecommunications charge on a customer’s bill.

LIRE-eligible Contributors May Petition the FCC for Waiver

Since the proposed contribution factor exceeds 12 percent (the threshold for the FCC’s limited international revenue exemption (“LIRE”), international telecommunications providers who are LIRE-eligible may face contribution obligations in excess of interstate end-user telecommunications revenue. Clients who face this situation should petition the FCC for waiver of the LIRE threshold.

All LIRE-eligible contributing clients should contact Jonathan Marashlian at The Commlaw Group directly at jsm@commlawgroup.com.

Late Payment Penalties

Clients are reminded that USF contribution payments must be made promptly by the due date listed on monthly contribution invoices, or else they may face interest and penalties from both USAC and the FCC. Failure to make timely payments automatically subjects contributors to substantial interest and monetary penalties. In addition, USAC may bill clients for the cost of collecting overdue contributions and refer the matter to the FCC’s Enforcement Bureau for further sanctions.

Clients who would like assistance instituting the new contribution factor for purposes of contributing to the USF, or have FCC regulatory compliance questions in general, should contact Jonathan Marashlian at  jsm@commlawgroup.com.

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