FCC Proposes Model-Based CAF for Rate-of-Return Carriers

The Federal Communications Commission wants rate-of-return (ROR) telecommunications companies to transition to model-based support as the current voice-focused high-cost Universal Service Fund (USF) is phased out and converted to a broadband-focused Connect America Fund program.

Small rural ROR companies now receive USF support based on how their actual costs compare to nationwide averages, but critics argue that today’s system does not provide an incentive for telecommunications companies to deploy network infrastructure in the most efficient manner. The CAF program for larger price cap carriers is already slated to use a cost model to calculate support levels.