USF Contribution Factor May Drop in Q3, if Revenue Flat, Demand Not Adjusted, Gregg Says
The USF contribution factor could drop in Q3 from 18.4 percent to 17.3 percent of carriers' U.S. interstate and international (long-distance) telecom end user revenue, if revenue holds steady and there aren't demand adjustments, said industry consultant Billy Jack Gregg's…
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quarterly email update Thursday. He based his estimate on the Universal Service Administrative Co.'s projection that Q3 USF demand would be $1.86 billion, $103.3 million less than in Q2, and $31.4 million less than in Q3 2017. If the industry revenue base stays constant, that will produce a contribution factor of 17.3 percent, he said, but that base has been trending down and a new decline would produce a higher factor. Projected revenue in Q2 was $12.81 billion, the lowest ever, and USAC's Q3 projected revenue is due out by month's end, he said. In addition, if projected Q3 high-cost fund demand is subsequently adjusted upward by $125 million to comply with an FCC budgeting mandate in a March rural telco support order, the USF contribution factor will be 1.1 percent higher than currently projected, he said.