USAC Initiates Support Reductions; FCC Also Requires New Quarterly Performance Testing

USAC Initiates Support Reductions Associated with 2023 Annual Performance Testing Certifications; FCC Also Requires New Quarterly Performance Testing 

Support Reductions Related to the 2023 Annual Certification Process

Some Universal Service Fund (USF) recipients have experienced unexpected reductions in support disbursements related to broadband performance testing certification requirements. Based on conversations within the industry, it is our understanding that approximately 80 companies across 93 study areas may be affected by certification-related issues for the broadband testing reporting period ending July 1, 2024, which covered the four quarters of 2023.

In addition to conducting the quarterly tests, USF recipients must also upload test data and complete a separate certification. According to the Universal Service Administrative Company (USAC), while many affected companies successfully uploaded their testing data, these companies missed completing one or more of the 2023 quarterly certifications by July 1, 2024, filing deadline for various reasons. Some companies report confusion about the certification process itself, while others believe certification occurred in tandem with test data uploads. Additionally, the certification interface in the USAC portal may have created challenges for some users, such as technical errors that prevented certification.

All of the clients that have contacted us report discovering these support reductions only after receiving reduced disbursements, with no prior notification of potential compliance issues. The penalties for missing certification deadlines are assessed on a pro-rata basis against a company’s high-cost USF support. Several carriers have reported significant financial impacts, with some experiencing reductions equivalent to multiple months of support. JSI is engaging with both the Federal Communications Commission (FCC) and USAC to address these certification process challenges and notification procedures on behalf of affected clients.

We recommend all clients review their certification status for previous reporting periods through the USAC portal as soon as possible. If you believe your company has been incorrectly penalized or have questions about your certification status, please contact JSI immediately so we can assist with filing a waiver petition and addressing these concerns through advocacy initiatives.

New Quarterly Performance Testing Requirements

Evidently, the FCC found that annually certifying quarterly broadband testing results created confusion for USF recipients as it modified the certification rule in an order released in October 2023. The modified rule, however, had to undergo approval by the Office of Management and Budget (OMB). Last week, the FCC announced that OMB has approved the information collection requirements associated with the FCC’s October 2023 ruling. These requirements, which establish quarterly network performance testing and reporting obligations for high-cost Universal Service Fund recipients, are now effective as of February 24, 2025.

New Quarterly Reporting Schedule

Under the newly effective rules, High-Cost Universal Service Fund recipients must submit and certify their network performance testing results according to the following quarterly schedule:

• April 15: Results for first quarter testing
• July 15: Results for second quarter testing
• October 15: Results for third quarter testing
• January 15: Results for fourth quarter testing

The rules also extend the reporting window from one week to two weeks after the end of each quarter, providing additional time for carriers to prepare their submissions.

Significant Financial Impact on Reporting Carriers

The amendments maintain the July 1 deadline for the annual Form 481 reporting requirements but introduce significant changes to the quarterly broadband testing filing requirements.

Under the new penalty structure, the FCC will calculate reductions in support based on the average number of days late across all four quarters. The new penalty structure also removes the grace period previously provided for quarterly performance test filings. For companies that file their reports even one to seven days late, the FCC will reduce their support by an amount equivalent to seven days of support. For filings that are eight days late or more, the FCC will calculate the reduction on a pro-rata basis equivalent to the total average number of days late plus the minimum seven-day reduction.

These penalties underline the importance of timely filings, as they directly impact a carrier’s ability to receive support for the following calendar year and potentially affect their eligible telecommunications carrier designation. The FCC has made it clear that no grace period will be provided for these quarterly submissions.

Client Recommendations

JSI recommends that clients familiarize themselves with these new requirements immediately and implement procedures to ensure timely quarterly performance test results are submitted and certified. The first quarterly filing and certification under these new rules will be due April 15, 2025, for the first quarter of 2025.

JSI can assist clients with understanding these testing requirements and establishing processes for gathering, analyzing, and submitting the required information. We can also help interpret the specific testing methodologies and metrics that must be reported.

For assistance with these quarterly performance testing requirements or to discuss strategies for compliance, please contact John Kuykendall, Lans Chase, or Paul Nesenson.