FCC Revises USF High Cost Loop Support Methodology

By Marty Stern and J. Bradford Currier

Rural carriers will soon experience changes to their high-cost loop support (“HCLS”) through the Universal Service Fund (“USF”) under a revised methodology recently announced by the FCC’s Wireline Competition Bureau. HCLS provides close to $800 million annually to offset the capital and operating costs of carriers serving rural populations. The Bureau Order finalizes the so-called “Quantile Regression Analysis” methodology proposed in the FCC’s USF/ICC Reform Order, which imposed limits on carriers’ support by first comparing spending among “similarly situated” companies in order to set benchmarks and then reducing the carriers’ support levels if they exceed such benchmarks. The USF/ICC Reform Order sparked heated debate and reaction, and numerous USF stakeholders filed comments with the FCC challenging aspects of the HCLS methodology and implementation of the support reductions.

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