FCC Seeks Comment on the Future of USF

2021-12-20T12:37:45-05:00December 20, 2021|e-Lerts|

Clients Encouraged to Provide Input and/or File Company-Specific Comments

The FCC is inviting public comment on the future of federal Universal Service Fund (USF) programs. The FCC plans to use these comments for a report it must submit to Congress by August 12, 2022, on its options “for improving its effectiveness in achieving the universal service goals for broadband” as part of the broadband provisions in the Infrastructure Investment and Jobs Act (IIJA). Last week’s Notice of Inquiry (NOI) set deadlines of January 18, 2022, for comments and January 31, 2022, for reply comments.

JSI plans to file comments in response to the NOI, with particular focus on the High-Cost program (Legacy Rate-of-Return, A-CAM I and II, and reverse auction support including the Rural Digital Opportunities Fund (RDOF) Phase II support). We seek client input on the topics outlined below, as well as any others specified in the NOI. For example, the NOI seeks comments on how best to integrate USF with ReConnect and the new funding programs established by the IIJA. We would like to hear from clients with multiple funding sources whether streamlining and aligning reporting and other compliance requirements with these programs and USF could be beneficial or whether such alignment could add additional burdens and requirements to some funding mechanisms.

We also encourage clients to file company-specific comments in which they can provide the FCC with their own proposals for the future of USF. Given that the NOI seeks data on potential changes to all programs, clients should consider filing comments not only on potential changes to the High-Cost program, but also changes to other USF programs. For example, several clients have expressed frustration with the requirements imposed by Lifeline’s Representative Accountability Database (RAD) process. Others are concerned with overbuilding that takes place through the E-rate program. Because the NOI seeks comment on potential comprehensive reform to all of these programs, now is the time to raise any concerns along with viable alternatives. JSI’s seasoned advocacy experts are ready to provide strategic advice and assist in drafting company-specific comments. Due to the FCC’s tight deadlines for commenting in this proceeding, we ask that clients interested in JSI’s help contact us no later than January 7, 2022.

High-Cost USF
A major concern among our ILEC Rate-of-Return clients is the continuation of USF to support both the deployment and maintenance of fiber networks in rural America. The NOI highlights the billions of dollars that will be available in coming years to deploy broadband in unserved and underserved locations through the programs initiated by the IIJA. Here, the NOI seeks comment more broadly on what changes should be made to the High-Cost program considering the influx of newly authorized federal funding. The NOI asks for comment on the role the High-Cost program should have in the future given the evolving level of universal service, the type of data to collect from program recipients, and how to collect that data.

Next, the NOI discusses the newly authorized Broadband Equity, Access, and Deployment (BEAD) program to be run by the National Telecommunications & Information Administration that will allocate $42.45 billion to states for broadband infrastructure grants and asks the following questions:

  • Should the FCC modify the High-Cost program to further support ongoing operating and maintenance costs of recently constructed broadband facilities funded by BEAD to ensure that rates remain reasonably comparable?
  • Should the Commission coordinate with the BEAD program to ensure that newly constructed networks have ongoing support?
  • At what point would USF support be necessary, if at all?
  • How should the FCC approach next steps for the RDOF program or any successor program?
  • In light of the 100/20 Mbps service standard required in BEAD, should the FCC reconsider its service requirements for future High-Cost support?

The NOI also asks for input regarding the best way to allocate funding in the future, including the potential use of reverse auctions, and whether there are “other incentive-based, competitive methods for allocating funding that would be effective and efficient.”

Additionally, the NOI asks what other congressional action could help the FCC accomplish its universal service goals. Specifically, the NOI asks:

If the High-Cost program were to place additional emphasis on supporting operating costs in light of the influx of funding for capital expenditures, are the existing programs a sufficient vehicle to distribute that support? If not, are there statutory changes that would help the Commission shift additional support to operating and maintenance costs for deployed networks? Likewise, if the focus of the BEAD Program funding is on fixed broadband deployment, would congressional action be necessary to shift the focus of the High-Cost program, for example, to support mobile broadband? Should Congress provide additional authority regarding the use of auctions, or price models, to allocate funding for operating costs?

These questions certainly raise the possibility that the FCC will not maintain the status quo for High-Cost USF. Accordingly, it is up to each rural broadband provider – and us collectively – to engage in a robust advocacy effort to ensure that any changes made to the USF continue to allow for sufficient and predicable funding for the provision, maintenance, and expansion of fiber-based networks in the rural communities in which these companies serve.

Other Programs and Contribution Factor
For Lifeline, the NOI seeks comment on whether any changes in the program should be made to best coordinate it with the Affordable Connectivity Program (ACP), including any data that should be collected. Similar questions are raised regarding E-rate and Rural Health Care programs.

The NOI also observes the up and down nature of the quarterly USF contribution factor and seeks comment on ways to increase the stability of the factor. It also requests “general comment” as to the FCC’s USF priorities.

Please contact Guy Benson or John Kuykendall in our Maryland office at 301-459-7590 with any input you may have for JSI’s comments, if you would like assistance in filing individual comments, or if you have any questions about the NOI.

JSI’s 2021 Financial Seminars

2021-11-02T13:08:35-04:00July 15, 2021|Archived Events|

2021 Financial Seminars

JSI’s Part 32 & Part 64 Accounting Seminar provides a detailed review and explanation of the FCC’s Part 32 and Part 64 accounting principles and applications. JSI staff discuss specific issues of the FCC’s accounting procedures, including the “allowable” expenses for USF and NECA purposes, as well as increased regulatory scrutiny of the Part 64 allocation mechanisms. This seminar also covers the ongoing USAC and NECA audits and reviews. And new for 2021, we also covered how to account for broadband grants and COVID-19 relief efforts your company may have received.

Topics:

  • Part 32/64 Introduction
  • Part 64 and elements of the Cost Allocation Manual (CAM)
  • NECA & USAC audits
  • Rate base
  • Operating revenues
  • Expenses
  • Taxes
  • Accounting for FCC and other grants
  • Accounting issues related to the Federal PPP program
  • Changes to Part 32 Accounting to conform to GAAP accounting

Learning Objectives: At the end of the seminar, attendees are be able to:

  • Understand concepts and principles of the FCC Part 32 accounting rules
  • Determine sources and drivers of primary regulated revenue streams, including USF and NECA Settlements
  • Understand the hierarchy of Cost Allocations contained within Part 64 of the FCC’s rules
  • Compare and contrast valuation of transactions between affiliated entities and non-affiliated entities
  • List the primary areas of focus of USAC OIG and other audit processes

Attendees receive electronic copies of the seminar materials and JSI’s Accounting Manual for the Independent Telephone Company. The seminar includes lecture, group discussion, and sample accounting problems. Everyone is encouraged to participate.

This is a basic level course for accountants, bookkeepers, and auditors, as well as telco staff looking to gain a better understanding of telecommunications and FCC accounting requirements. Attendees are eligible for 8 hours of CPE credit (see below for more information).

CPE Information

CPE Credits & Information: This course offers 8 hours of Accounting CPE credit. For those interested in earning CPE credits, you will be required to respond to a series of engagement activities throughout the seminar sessions. The number of credits you receive will be based on the engagement activities you complete, as well as the amount of time spent in the meeting. The Accounting Seminar is considered an “Overview” program through NASBA classification. No prerequisites or advanced preparation is required for this course.

Delivery Method: All JSI seminars are “group-live” sessions as defined by NASBA.

CPE Sponsorship Information: JSI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

Questions?

For questions or complaints about the seminar, registration, or program cancellation policies, please contact Leah Yoakum, Seminar Administrator, at 301-459-7590.

The FCC’s never-ending changes to the universal service and access charge regimes continue to add levels of complexity to the cost settlement system and significantly threaten your settlements and revenue streams. Understanding the allocation of costs and maximizing cost recovery, especially with the current pressures on your revenue streams, is critical to continued success. JSI’s Separations & Access Seminar focuses on responding to today’s broadband network and services, in addition to its usual assessment of cost settlements, regulated and non-regulated allocations, jurisdictional categorizations, access procedures, and intercarrier compensation. The 2021 seminar included the continued reform of Universal Service funding mechanisms; data reporting and compliance for A-CAM electors; special access/BDS issues; using operational and financial data to manage for success; and federal and state grants and loans issues and opportunities.

Topics:

  1. Separations concepts and principles
  2. Settlements and compensation
  3. Accounts affecting the separations process:
    • Part 32, USoA
    • Part 64
    • Regulated / non-regulated allocations
  4. NECA cost issues
  5. NECA & USAC audits
  6. A review of the cost study and cost allocation process, including the analysis of the telephone network, operating expenses and other inputs
  7. Broadband
    • Potential policy shifts
    • Current and proposed settlements
  8. Part 69 – Access Charges and the Recovery of Interstate Costs
  9. Federal Universal Service Funding
    • Overview of the categories
    • Current and proposed policy shifts
  10. Emerging trends and issues
  11. Projecting future revenue streams associated with Universal Service and FCC access charges

Learning objectives:
At the end of the seminar, attendees will be able to:

  • Understand how changes in FCC rules impact separations and settlements
  • Compare and contrast the FCC Part 36 Separations rules for various Part 32 Accounting groups
  • Understand the FCC’s High Cost Support Mechanisms, including A-CAM and Legacy programs and potential future changes
  • Identify the primary drivers of Federal High Cost Loop and other USF mechanisms
  • Define the steps involved in determining the Interstate Revenue Requirement
  • Analyze regulated revenue sources for purposes of budgeting and forecasting of future results

This is a basic level course for separations, settlement, and access personnel new to this area or company, or with responsibility for financial or operational issues. Other management, financial, and regulatory staff who rely on or make use of separations and access data will also benefit from this seminar. Attendees are eligible for 20 hours of CPE credit (see below for more information).

CPE Information

CPE Credits & Information: This course offers 20 hours of Specialized Knowledge CPE credit. For those interested in earning CPE credits, you will be required to respond to a series of engagement activities throughout the seminar sessions. The number of credits you receive will be based on the engagement activities you complete, as well as the amount of time spent in the meeting. The Accounting Seminar is considered an “Overview” program through NASBA classification. No prerequisites or advanced preparation is required for this course.

Delivery Method: All JSI seminars are “group-live” sessions as defined by NASBA.

CPE Sponsorship Information: JSI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

Questions?

For questions or complaints about the seminar, registration, or program cancellation policies, please contact Leah Yoakum, Seminar Administrator, at 301-459-7590.

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