Funding the Future Network: A Report from USAC

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Funding the Future NetworkA Report from USAC

• Pamela Gallant
• Director of the Low Income Program
• USAC High Cost and Low Income Division
• Missouri Telecommunications Industry Association
• Annual Conference August 6-9, 2006
• Lake Ozark, Missouri

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USF USAC

• The Universal Service Fund (USF) is one fund with
  four programs
• USAC is a not-for-profit corporation selected as
  the permanent administrator of the federal USF
• In 2006, USAC estimates it will disburse
  approximately 7.3 billion in universal service
  support
• USAC administers support programs for
• High cost companies serving remote and rural
  areas
• Low-income consumers
• Schools libraries
• Rural health care providers
• Through USAC, the USF provides communities across
  the country with affordable telecommunications
  services

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USACs Role

• USACs functions and responsibilities include
• Administering each of the universal service
  programs
• Billing contributors, collecting contributions,
  and disbursing universal service support
• Reporting quarterly to the FCC on disbursement of
  universal service support
• USAC may not
• Make policy
• Interpret unclear provisions of the statute or
  rules
• Interpret the intent of Congress
• Advocate policy positions before the FCC or its
  staff, but may advocate positions on
  administrative issues relating to the programs

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One Fund Four Programs

• High Cost support provides assistance to rural,
  non-rural, and competitive carriers that are
  designated as eligible telecommunications
  carriers (ETCs) by a State (or the FCC)
• Low Income support provides discounts that make
  basic, local telephone service affordable for
  more than 7 million Americans
• Rural Health Care support provides reduced rates
  to rural health care providers for
  telecommunications and Internet services so they
  pay no more than their urban counterparts for the
  same or similar telecommunications services
• Schools and Libraries support provides affordable
  telecommunications and Internet access services
  to connect classrooms and libraries to the
  Internet

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One Fund Four Programs

• Calendar Year 2005 Disbursements by
  Program(Unaudited and in thousands)

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• Estimated 2006 Support
• 7.3 billion
• High Cost
• 4.2 billion
• Low Income
• 820 million
• Rural Health Care
• 45 million (Funding Year 2006)
• Schools Libraries
• 2.25 billion (Funding Year 2006)

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Rural Health CareProgram

• The Rural Health Care Program provides reduced
  rates to rural health care providers for
  telecommunications and Internet services
  necessary for the provision of health care.
• Support is available for telecommunications
  services and monthly Internet access charges used
  for the provision of health care.
• Support for telecom services is the difference
  between rural and urban rates. Internet access
  services are discounted at 25.

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Rural Health CareCommitments

• Fund Year 2006 Commitments 47 million
  (projected)

Projected Commitments
A Funding Year runs from July 1 to June 30.
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School and LibrariesProgram

• The Schools Libraries Program provides
  discounts to help schools (K-12) and libraries in
  every U.S. state and territory receive affordable
  telecommunications and Internet access.
• Priority One Support
• Telecommunications Services
• Internet Access
• Priority Two Support
• Internal Connections
• Basic Maintenance of Internal Connections

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School and LibrariesProgram

• Discounts range from 20 to 90 of the cost of
  eligible services
• Eligible schools, school districts, and libraries
  may apply individually or as part of a consortium
• Discounts are based on the percentage of students
  eligible for the national school lunch program
• Schools and libraries must
• Have an approved technology plan
• Competitively bid for services
• Show they have the resources to use the supported
  services
• Apply for discounts every year

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High Cost Program

• The High Cost Program ensures that consumers in
  rural areas have access to and pay rates for
  telecommunications services that are reasonably
  comparable to those services provided and rates
  paid in urban areas.

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High CostComponents

• High Cost Loop Support
• Support for the "last mile" of connection for
  rural companies in service areas where the cost
  to provide this service exceeds 115 of the
  national average cost per line
• Safety Net Additive Support
• Support "above the cap" for carriers that make
  significant investment in rural infrastructure in
  years when HCL support is capped
• Safety Valve Support
• Additional support, above the HCL cap, that is
  available to rural carriers that acquire high
  cost exchanges and make substantial
  post-transaction investments to enhance network
  infrastructure

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High CostComponents

• Local Switching Support
• Provides interstate assistance and is designed to
  help carriers recoup some of the high fixed
  switching costs of providing service to fewer
  customers. LSS helps keep rural customers rates
  comparable to rates in more densely populated
  urban areas
• Interstate Common Line Support
• Helps to offset interstate access charges and is
  designed to permit rate-of-return carriers to
  recover their common line revenue requirement,
  while ensuring that subscriber line charges
  (SLCs) remain affordable to customers
• Long Term Support was merged into ICLS, effective
  July 1, 2004

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High CostComponents

• High Cost Model Support
• Keeps the cost for telephone service comparable
  in all areas (urban and rural) of a state. HCM
  support is distributed at the wire center level
  and is targeted to carriers serving wire centers
  with forward-looking costs that exceed the
  national benchmark
• Interstate Access Support
• Helps to offset interstate access charges to
  reduce long distance charges for customers

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High CostDisbursements(unaudited)

• 2005 3.82 billion
• 1998-2005 21.85 billion

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High Cost2005 Disbursements by
Component(Unaudited in thousands)
Total 3.82 billion
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High Cost Information Available On USACs Web Site
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High Cost Information Available On USACs Web Site
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High Cost Support for Missouri ETCs

• High Cost Loop support 18,809,370
• SNA 155,118
• Interstate Access support 5,977,257
• ICLS 13,710,222
• LSS 2,876,346
• From January through June 2006

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Low Income Program

• The Low Income Program, commonly known as
  Lifeline and Link Up, provides discounts that
  make basic, local telephone service affordable to
  help over 7 million low-income consumers stay
  connected.

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Low Income Components

• Lifeline
• Reduces eligible consumers' monthly charges for
  basic telephone service
• Link Up
• Reduces the cost of initiating new telephone
  service
• Toll Limitation Service
• Allows eligible consumers to subscribe to toll
  blocking or toll control at no cost

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Low Income Disbursements(unaudited)

• 2005 808.57 million
• 1998-2005 5 billion

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2005 Low IncomeDisbursements by
Component(Unaudited in thousands)
Total 808.57 million
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Lifeline ParticipationRates by State
Notes Due to the intricacy and range of criteria
that are used to determine eligibility for the
Lifeline program and the limitations of the data
used, the methodology employed to create this map
involves several estimates, assumptions,
simplifications, and omissions. Therefore, the
rates generated on this map should be treated as
estimates only. District of Columbia 10 - 20.
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Promoting Lifeline and Link Up

• FCCs Advertising Guidelines
• Develop outreach materials for households without
  telephone service
• Develop outreach materials that will reach
  sizeable non-English speaking populations
• Coordinate with State agencies that administer
  government assistance programs
• Use USAC as a resource for example,
  www.lifelinesupport.org

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Low Income Information Available On USACs Web
Site
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Low Income Support for Missouri ETCs

• Lifeline 3,694,646
• Link Up 93,405
• TLS 83,009
• From January through June 2006

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Audits

• USAC is authorized under FCC regulations to
  perform audits of all USF programs and
  beneficiaries. (47 C.F.R Section 54.705 )
• USACs Board of Directors has a fiduciary
  obligation to the USF to do so as well.
• Why Audit?
• To confirm that the USF is used as Congress
  intended
• To ensure compliance with FCC rules and
  regulations
• To provide USAC with a level of quality assurance
• To proactively be a part of the control
  environment
• To identify and recommend process improvement
  opportunities that USAC can implement to improve
  program administration

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Outreach and Communications

• Website Revitalization
• Newsletters
• USACs Schools Libraries News Brief
• Webinars
• Training
• Speaking Participation at Industry Events

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Outreach and Communications

• Website Revitalization

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Outreach and Communications

• Newsletters

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Outreach and Communications

• USAC offers remote training opportunities
  (webinars and Webex)
• Low Income Training Session for Missouri
  companies to be held August 24
• Focus on outreach and participation
• See USACs web site or contact me for more
  information

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Outreach and Communications

• Hurricane Katrina USF Relief
• October 14, 2005 - FCC Order made available
  approximately 211 million from the USF for
  reconstruction and remediation relating to the
  restoration of telecommunications services
  affected by Hurricane Katrina
• USAC created a special website launched on
  October 20, 2005 to assist eligible entities in
  applying for this special relief located at
• http//katrina-usf.org/katrina/

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Training and Outreach

• ABCs of the Schools Libraries Training Sessions
• 6 in 2006
• Washington, DC, September 7-8
• Boston, September 13-14
• Seattle, September 20-21
• St. Louis, September 27-28
• Atlanta, October 3-4
• Houston, October 11-12
• Monthly Conference Calls
• Participation at industry events
• Speaking engagements
• Exhibits

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2005 Annual Report

• Annual Report
• March 31, 2006
• 2005 Calendar Year
• Commitments
• Disbursements
• 2005 Funding Year Data
• New financial sections

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Site Visits

• Site Visits
• Schools Libraries Site Visits
• Education and Outreach
• Compliance
• High Cost Site Visits
• Education and Outreach

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Thank You

• Visit us on the web at www.usac.org
• Or call us at 202-776-0200
• Pamela Gallant
• Director Low Income Program
• High Cost Low Income Division
• USAC
• 2000 L St., NW, Suite 200
• Washington, DC 20036