Back for its 10th year, our most popular webinar offers an in-depth discussion on the federal Universal Service Fund for participants in USF programs and for contributors to the Fund. This webinar will address major developments in the four support funds and discuss the pressures on the USF contribution system in an era of 20% contribution rates. In addition, as usual, we will offer tips and insights into managing audits and investigations in these highly scrutinized programs.

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We attended the Audit Committee meeting at USAC’s quarterly business meeting this morning.  While much of the discussion concerned internal controls USAC has in place to oversee its functions, the business update portion of the meeting gave us a snapshot into contributor and beneficiary audit activity at USAC.  The presentation gave us some insight into a likely increased amount of activity over the next few months.

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On September 12, 2017, the Federal Communications Commission’s (Commission) Office of the Managing Director (OMD) released a Public Notice proposing a universal service fund (USF) contribution factor of 18.8% for fourth quarter 2017.  This proposed contribution factor would be the highest rate since the USF program’s inception and likely reflects the impact of the declining USF contribution base.
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Federal Communications Commission (FCC or Commission) Chairman Ajit Pai sent a letter this week to Chris Henderson, CEO of the Universal Service Administrative Company (USAC) expressing concern about flaws in USAC’s administration of the E-Rate Productivity Center (EPC), the online application and account portal. In the letter, Chairman Pai noted his support for E-Rate as

By an Order issued late last week, the Wireline Competition Bureau (Bureau) provided important insight regarding determining the jurisdictional classification of private line revenues.  In ruling on long-pending petitions for reconsideration of Universal Service Administrative Company (USAC) audit findings regarding the classification of private line revenues, the Bureau explained that the longstanding Ten Percent Rule does not establish any presumption that a private line is jurisdictionally either intrastate or interstate.  Instead, the Bureau clarified that it is the jurisdictional nature of the traffic carried over private lines, not the existence (or nonexistence) of a customer certification, that determines the appropriate jurisdictional classification.  Moreover, carriers must conduct a good faith inquiry into the nature of the traffic carried on the private line when determining the jurisdiction of those line revenues.  Carriers that provide private line services should be sure to review the Order to ensure their private line jurisdictional classification methods will withstand any Bureau or USAC scrutiny.

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It’s a new year and the FCC has just released its annual update to the FCC Form 499A.  Telecommunications providers must use the 2016 Form 499A to report calendar year 2015 revenues for purposes of calculating contributions to the federal Universal Service Fund and other revenue-based contribution requirements including TRS, LNP, NANP and annual

iStock_000008141839LargeToday, the Federal Communications Commission released a Policy Statement announcing a “treble damages” methodology to assess forfeitures for failure to make payment to a series of federal programs, a move which the agency anticipates will allow it to begin “significantly more investigations.”    The new policy appears to allow the FCC to impose significantly larger fines than in similar investigations in the past, but may implicate the FCC’s statutory maximum forfeiture authority in some cases.
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With the e-rate program pressing against its cap in funding, the FCC seems to be clamping down on its competitive bidding procedures.  For the fifth time this month, the FCC’s Wireline Competition Bureau denied a school’s e-rate appeal because it failed to comply with the competitive bidding procedures.

In this case, the applicant,

Shortly after I posted an entry noting the FCC’s denial of e-rate appeals for competitive bidding violations, the Wireline Competition Bureau issued another decision along the same lines.  In this case, however, the focus was on the conduct of the service provider during the bidding process. 

This case involves a Missouri service provider, Synergetics

Earlier this month, the FCC’s Wireline Competition Bureau denied three appeals by school districts seeking funding under the Schools and Libraries Program of the Universal Service Fund.  In all three decisions, the Bureau found that the school had failed to follow the Commission’s competitive bidding rules for such requests, and therefore, the USAC had properly denied funding of the request.

The decisions highlight three elements of the competitive bidding rules:  (1) that the selection of vendors be based on the bid process itself, (2) that all information be disclosed to all potential bidders and (3) that price be the primary factor in selecting vendors. 

Collectively, the cases serve as a reminder to schools and service providers alike that the bid process must be fair and open in order to receive funding from the program.  Both school districts and service providers need to be vigilant to avoid inadvertent violations of the e-rate program’s competitive bidding rules.


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