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Pai Preparing to Expand USF High-Cost Fund

Randy Sukow Aug 1, 2018

FCC Chairman Ajit Pai told telecom newsletter Communications Daily that he intends to circulate a draft order to his colleagues that would increase spending for the Universal Service High-Cost Fund (HCF). The draft order will aim to make up for shortfalls in recent years after the Commission’s 2016 USF reform order. CommDaily quoted Pai as saying that the FCC “must take a close look at expanding access to and funding for our small-carrier cost model and that we must end the unpredictable cuts to carriers not on the model.”

In March, the FCC adopted a Notice of Proposed Rulemaking to consider expansion of the HCF budget for both price cap and rate-of-return carriers. The current HCF budget is $4.5 billion annually. “The Commission has not revised the budget since 2011, and as a result, has not accounted for the effects of inflation on the budget. Had we accounted for inflation, the rate-of-return budget would have increased from $2 billion in the 2012 budget year to $2.193 billion in the 2018 budget year,” the Commission said in the NPRM.

The NPRM also notes that consumer broadband expectations have increased since 2011. In the last seven years, the FCC has increased the benchmark speed defining broadband from 4 Mbps downstream/1 Mbps upstream to 25 Mbps/3 Mbps. “A budget designed to speed the deployment of 4 Mbps/1 Mbps broadband to rural America may be insufficient to encourage the deployment of the high-speed broadband networks that residents of rural America need,” the NPRM said.

Members of the House and Senate have been vocal over the last two years, favoring FCC action to increase the budget. Most recently, 130 House members signed a May 15 letter to the FCC, saying, “This persistent insufficiency is affecting the ability of smaller rural broadband providers to effectively deliver broadband services in the most rural areas of America.” The Congressmen urge the FCC “to act as soon as possible pursuant to the [NPRM] to provide support that is both sufficient and predictable on a longer-term basis.”

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