Our analysis of unmet needs in the USF program greatly exceeds prior estimates, totaling nearly $1.5 billion per annum. In light of the fact that the USF program now maintains over $8 billion in reserves, we urge the FCC to take steps to utilize these reserves to reduce collections from end-users and address the annual shortfall in USF support for the small Rate of Return (RoR) carriers.

The first three rounds of USAC audits have cost some $250 million, yet in 2016, only $8 million of questionable funding was recovered.  Many RoR carriers across the country have been subjected to audits where the cost of the audit surely exceeded the recovery of any questionable USF payments.   Combined, these factors lead us to conclude that the USAC audit process must be significantly reformed, including focusing on demonstrably problematic programs and bad actors, and the utilization of the “materiality” threshold in accordance with generally accepted auditing standards.

We laud the FCC’s July 7, 2017 action eliminating several unnecessary and duplicative reporting requirements, and believe more can be done in this area.  SCC members have assessed the resources necessary to comply with FCC reporting requirements, especially as they have grown since the issuance of the FCC’s USF/ICC Transformation Order in November of 2011.  Currently, the hours necessary for complying with reporting requirements alone amount to over 900 hours per year — or 23 weeks (5 months!) of full time labor per year. Such demands represent an outsized (and unnecessary) burden on small operations like those of our member companies.