The FCC recently announced that the proposed Federal Universal Service Fund (“USF”) contribution factor for the Second Quarter of 2014 will be 0.166 or 16.6%. This amount is an slight increase from the First Quarter 2014 contribution factor of 16.4%.
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, 2014 – June 30, 2014.
Detailed information about the methodology the FCC used to set the new contribution factor, along with notices of past contribution factors, can be found on the FCC’s website at:
https://www.fcc.gov/omd/contribution-factor.html
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 Chris Canter at cac@commpliancegroup.com or Jonathan Marashlian at jsm@commlawgroup.com.
