May 22, 2013
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FCC 499 FILINGS

THE UNIVERSAL SERVICE FUND
The Universal Service Fund (USF) was established by the FCC to provide communities across the United States with affordable telecommunications services. The USF is a mechanism by which providers of telecommunications services help subsidize the deployment of telecommunications primarily to rural areas. The USF fund is managed by the Universal Service Administration Company (USAC). Telecommunications companies file quarterly and annual traffic and financial disclosures on FCC form 499. 

USF CONTRIBUTORS
Most telecommunications providers who offer interstate and international services are required to contribute to this fund. The term “telecommunications” has legal significance and it is defined as the transmission of information between points specified by the user without changing the form or content of the information. Based on this definition, the FCC has made declaratory rulings dictating what services do or do not constitute “telecommunications."
 
Although, VoIP telephony has not been declared to be a "telecommunications" service, interconnected VoIP providers have nonetheless been declared by the FCC as being subject to the USF mandate. Prepaid calling card providers, whether facilities-based or resellers, are also required to contribute to USF.
 
EXEMPT COMPANIES 
Telecommunications providers that are exempt from making USF contributions to USAC, but are still required to make the annual 499 filings are:  
  • De Minimus. Telecommunications service providers with an annual USF liability less than $10,000.
  •  International Only.  Service providers with no domestic telecommunications revenues, where 100% of the telecommunications revenue is derived from international services.
  • Other telecommunications providers are exempt from making USF contributions to USAC, but are not required to make the annual 499 filings:
  •  Government Services.  Providers that offer services exclusively to the government or to public safety entities.
  • System Integrators.  System integrators that derive less than 5% of their systems integration revenues from the resale of telecommunications services.
Although providers that fall in any of the above four categories are not required to make USF contributions directly to USAC, these providers may nonetheless be assessed USF charges by their underlying carriers. 
 
MIXED REVENUES AND THE 88% RULE
Telecommunications service providers who offer a mix of interstate and international services are required to make the annual and quarterly 499 filings.  The specific mix of revenues will determine the amount of USF fees to be paid.
 
Providers whose international revenue is equal or greater than 88 percent of total telecommunications revenue pay USF only on the interstate portion.  Conversely, providers with international revenue less than 88% of total telecommunications revenue pay USF on both the interstate and international revenues.  
Find Out Who Contributes to USF?
What is the USF Contribution Factor this Quarter?