NECA has just filed its proposed 2018 Modification of the Average Schedule Universal Service High Cost Loop Support Formula, which increases interstate USF settlements for some of the nation’s smallest RLECs. If approved, the revised formula will be effective January 1, 2018 through December 31, 2018.
Even with limitation on Operating Expenses (Opex) and the phase down of the interstate Rate of Return, the proposed HCL formula will pay $6.45 million in USF support to 99 small, rural average schedule study areas. This is up about 7% from the $6.03 million in 2017 HCL support. This amount, as noted by NECA, is subject to reduction through USAC adjustments for rate floor, the $3000 support limit, and the overall budget control mechanism.
In fact, the FCC’s arbitrary budget control mechanism has been applied to the initial HCL calculations, in accordance with its rule that payments to average schedule companies must simulate payments received by representative cost companies. HCL payments would have totaled $8.1 million, rather than the proposed $6.45 million, absent the overall capping of support caused by imposition of the budget control mechanism.
The nation’s smallest RLECs could certainly use that extra $1.65 million to help build their broadband facilities, and based on several proposals before it, we expect the FCC to increase or eliminate its cap on total USF support.
It will then be incumbent on NECA to rightfully revise its HCL formula upward for average schedule RLECs.