Report Slams Universal Service Fund Cap Methodology

In a study titled “An Economic Analysis of the FCC’s Modifications to the High-Cost Local Loop Support Mechanism,” University of Southern California professor and former Federal Communications Commission Chief Economist Simon Wilke finds that US carrier investment in broadband infrastructure has decreased as a result of caps imposed on high-cost Universal Service support.

The methodology employed by the FCC cannot be predicted in advance, making it difficult for an individual company to determine whether it is in danger of exceeding the cap. As a result, carriers are delaying or canceling planned network upgrades, Wilke said. As an alternative to the current methodology, Wilke and representatives of the three telecom association research sponsors recommended that the FCC use caps as a trigger for a further review. The research was commissioned by rural broadband association NTCA, U.S. Telecom Association and the Western Telecommunications Alliance.