The Front Lines - June 15, 2005

formatting link
formatting link
Advancing The Cause of Competition in the Telecommunications Industry


The Wireline Competition Bureau of the FCC announced that the Universal Service Fund contribution factor for the Third Quarter of

2005 will be 10.2%, nearly a full percentage decrease from the prior quarterly factor of 11.1%. The 10.2% contribution factor will become effective unless the FCC takes action in response to the proposed increase, which is not anticipated.

Contributors are reminded that they may not mark up federal universal service line-item amounts above the contribution factor. Thus, contributors may not, during the third quarter of 2005, recover from end users through a federal universal service line item an amount that exceeds the interstate telecommunications charges on a customer's bill times 10.2%.


On June 14, 2005, the Federal Communications Commission launched a broad inquiry into the management, administration and oversight of the Universal Service Fund. The FCC's goals are to improve the operation of the program for its beneficiaries and contributors and to enhance program integrity. Since 1997, the Universal Service Administrative Company ("USAC"), which administers the USF Program, has disbursed approximately $30.3 billion from the fund. The Notice of Proposed Rulemaking proceeding will provide an opportunity for the FCC to work with all USF stakeholders to learn from the experience of the past eight years and find new, constructive ways to both meet the needs of those who depend on the USF and protect the integrity of the program.

In particular, the FCC is seeking comment in the following areas:

  • Managing the Program: The FCC is exploring ways to simplify and streamline the management of the program. In particular, the FCC tentatively concludes that a multi-year application process for telecommunications services for the E-rate and Rural Healthcare programs would simplify the process in a way that still guards against potential abuse. The FCC also seeks comment on, among other things, reducing or consolidating application forms and adopting deadlines and other criteria to provide certainty to program applicants.

  • Improving Oversight: The FCC seeks comment on the effectiveness of existing efforts to protect the fund against potential misuse. The FCC tentatively concludes that more aggressive debarment procedures are necessary to safeguard the fund and seeks comment on ways to improve the debarment rules. In addition, the FCC seeks comment on establishing independent audits for certain USF beneficiaries and contributors and seeks comment on what rules would help ensure that any audits are effective and fair. The FCC is also seeking comment on establishing rules for recovering USF monies that were not used in accordance with program rules.

  • Administrative Structure: The FCC is examining the effectiveness of the existing administrative structure and seeks comment on whether any rule changes are needed to ensure the USF is administered in an effective, competitively neutral way.

  • Performance Measures: The FCC is seeking comment on establishing performance measures to assess the effectiveness of the program

Through the rulemaking process, the FCC will determine whether it needs to change any rules in order to manage and administer the USF more effectively while deterring waste, fraud and abuse.

The Front Lines is a free publication of The Helein Law Group, LLLP, providing clients and interested parties with valuable information, news, and updates regarding regulatory and legal developments primarily impacting companies engaged in the competitive telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it establish a lawyer-client relationship with the reader. If you have questions about a particular article, general concerns, or wish to seek legal counsel regarding a specific regulatory or legal matter affecting your company, please contact our firm at 703-714-1313 or visit our website.

The Helein Law Group, LLLP

8180 Greensboro Drive, Suite 700 McLean, Virginia 22102
Reply to
Jonathan Marashlian
Loading thread data ... Forums website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.