PUBLIC NOTICE
Federal Communications Commission
445 12
th
St., S.W.
Washington, D.C. 20554
News Media Information 202 / 418-0500
Internet: https://www.fcc.gov
TTY: 1-888-835-5322
DA 16-1367
Released: December 9, 2016
PROPOSED FIRST QUARTER 2017 UNIVERSAL SERVICE CONTRIBUTION FACTOR
CC Docket No. 96-45
In this Public Notice, the Office of Managing Director (OMD) announces that the proposed universal
service contribution factor for the first quarter of 2017 will be 0.167 or 16.7 percent.
1
Rules for Calculating the Contribution Factor
Contributions to the federal universal service support mechanisms are determined using a
quarterly contribution factor calculated by the Federal Communications Commission (Commission).
2

The Commission calculates the quarterly contribution factor based on the ratio of total projected quarterly
costs of the universal service support mechanisms to contributors?total projected collected end -user
interstate and international telecommunications revenues, net of projected contributions.
3

USAC Projections of Demand and Administrative Expenses
Pursuant to section 54.709(a)(3) of the Commission뭩 rules,
4
the Universal Service
Administrative Company (USAC) submitted projections of demand and administrative expenses for the
first quarter of 2017.
5
Accordingly, the projected demand and expenses are as follows:

1
See 47 C.F.R. ?54.709(a).
2
See id.
3
See 47 C.F.R. ?54.709(a)(2).
4
See 47 C.F.R. ?54.709(a)(3).
5
See Federal Universal Service Support Mechanisms Fund Size Projections for the First Quarter 2017, available at
<http://www.universalservice.org/about/tools/fcc/filings/default.aspx> (filed November 2, 2016) (USAC Filing for
First Quarter 2017 Projections). See also Federal Universal Service Support Mechanisms Quarterly Contribution
Base for the First Quarter 2017, available at <http://www.universalservice.org/about/tools/fcc/filings/default.aspx>
(filed November 2, 2016) (USAC Filing for First Quarter 2017 Contribution Base).
2(Dollars in millions)
USF Programs
Projected
Program
Support
Administrative
Expenses
Application
Of Interest
Income
Application of
True-Ups &
Adjustments
Total Program
Collections
(Revenue
Requirement)
Schools and Libraries 380.03 41.50 (10.08) (10.58) 400.87
Rural Health Care 89.80 3.35 (0.70) (1.41) 91.04
High-Cost 1,125.00 11.61 (4.14) (9.85) 1,122.62
Lifeline 381.23 7.36 (0.15) (26.13) 362.31
TOTAL 1,976.06 63.82 (15.07) (47.97) 1,976.84
USAC Projections of Industry Revenues
USAC submitted projected collected end-user telecommunications revenues for January through
March 2017 based on information contained in the First Quarter 2017 Telecommunications Reporting
Worksheet (FCC Form 499-Q).
6
The amount is as follows:
Total Projected Collected Interstate and International End-User Telecommunications
Revenues for First Quarter 2017: $13.971514 billion.
Adjusted Contribution Base
To determine the quarterly contribution base, we decrease the first quarter 2017 estimate of
projected collected interstate and international end-user telecommunications revenues by the projected
revenue requirement to account for circularity, and decrease the result by one percent to account for
uncollectible contributions. Accordingly, the quarterly contribution base for the first quarter of 2017 is as
follows:
Adjusted Quarterly Contribution Base for Universal Service Support Mechanism
First Quarter 2017 Revenues ?Projected Revenue Requirement - 1%
($13.971514 billion ?$1.976840 billion) * 0.99
$11.874727 billion.
Unadjusted Contribution Factor
Using the above-described adjusted contribution base and the total program collection (revenue
requirement) from the table above, the proposed unadjusted contribution factor for the first quarter of
2017 is as follows:

6
USAC Filing for First Quarter 2017 Contribution Base at page 4.
3Contribution Factor for Universal Service Support Mechanisms
Total Program Collection / Adjusted Quarterly Contribution Base
$1.976840 billion / $11.874727 billion
0.166475
Unadjusted Circularity Factor
USAC will reduce each provider뭩 contribution obligation by a circularity discount
approximating the provider뭩 contributions in the upcoming quarter. Accordingly, the proposed
unadjusted circularity factor for the first quarter of 2017 is as follows:
Unadjusted Circularity Factor for Universal Service Support Mechanisms
1 - ((First Quarter 2017 Revenues ?Total Program Collection) / First Quarter 2017 Revenues)
1 ?(($13.971514 billion - $1.976840 billion) / $13.971514 billion)
0.141491
Proposed Contribution Factor
The Commission has directed OMD to announce the contribution factor as a percentage rounded
up to the nearest tenth of one percent.
7
Accordingly, the proposed contribution factor for the first quarter
of 2017 is as follows:
16.7
Proposed Circularity Discount Factor
The Commission also has directed OMD to account for contribution factor rounding when
calculating the circularity discount factor.
8
Accordingly, the proposed circularity factor for the first
quarter 2017 is as follows:
0.144192
9
Conclusion
If the Commission takes no action regarding the projections of demand and administrative
expenses and the proposed contribution factor within the 14-day period following release of this Public

7
See Federal-State Joint Board on Universal Service, 1998 Biennial Regulatory Review ?Streamlined Contributor
Reporting Requirements Associated with Administration of Telecommunications Relay Service, North American
Numbering Plan, Local Number Portability, and Universal Service Support Mechanisms, Telecommunications
Services for Individuals with Hearing and Speech Disabilities, and the Americans with Disabilities Act of 1990,
Administration of the North American Numbering Plan and North American Numbering Plan Cost Recovery
Contribution Factor and Fund Size, Number Resource Optimization, Telephone Number Portability, Truth-in-
Billing and Billing Format, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170, Order and
Second Order on Reconsideration, 18 FCC Rcd 4818, 4826, para. 22 (2003) (Second Order on Reconsideration).
8
Id.
9
The proposed circularity discount factor = 1 + [(unadjusted circularity discount factor ?1) * (unadjusted
contribution factor / proposed contribution factor)]. The proposed circularity discount factor is calculated in a
spreadsheet program, which means that internal calculations are made with more than 15 decimal places.
4Notice, they shall be deemed approved by the Commission.
10
USAC shall use the contribution factor to
calculate universal service contributions for the first quarter 2017. USAC will reduce each provider뭩
contribution obligation by a circularity discount approximating the provider뭩 contributions in the
upcoming quarter.
11
USAC includes contribution obligations less the circularity discount in invoices sent
to contributors. Contribution payments are due on the dates shown on the invoice. Contributors will pay
interest for each day for which the payments are late. Contributors failing to pay contributions in a timely
fashion may be subject to the enforcement provisions of the Communications Act of 1934, as amended,
and any other applicable law. In addition, contributors may be billed by USAC for reasonable costs of
collecting overdue contributions.
12
We also emphasize that carriers may not markup federal universal service line-item amounts
above the contribution factor.
13
Thus, carriers may not, during the first quarter 2017, recover through a
federal universal service line item an amount that exceeds 16.7 percent of the interstate
telecommunications charges on a customer뭩 bill.
In addition, under the limited international revenues exception (LIRE) in section 54.706(c) of the
Commission뭩 rules, a contributor to the universal service fund whose projected collected interstate end-
user telecommunications revenues comprise less than 12 percent of its combined projected collected
interstate and international end-user telecommunications revenues shall contribute based only on
projected collected interstate end-user telecommunications revenues, net of projected contributions.
14
The
rule is intended to exclude from the contribution base the international end-user telecommunications
revenues of any entity whose annual contribution, based on the provider뭩 interstate and international end-
user telecommunications revenues, would exceed the amount of its interstate end-user revenues.
15
The
proposed contribution factor exceeds 12 percent, which we recognize could result in a contributor being
required to contribute to the universal service fund an amount that exceeds its interstate end-user
telecommunications revenue. Should a contributor face this situation, the contributor may petition the
Commission for waiver of the LIRE threshold.
16

10
See 47 C.F.R. ?54.709(a)(3).
11
USAC will calculate each individual contributor뭩 contribution in the following manner: (proposed contribution
factor * contributor뭩 projected collected revenues) ?(proposed circularity discount factor * proposed contribution
factor * contributor뭩 projected collected revenues).
12
See 47 C.F.R. ?54.713.
13
See 47 C.F.R. ?54.712.
14
See 47 C.F.R. ?54.706.
15
See Federal-State Joint Board on Universal Service, Sixteenth Order on Reconsideration, CC Docket No. 96-45,
Eighth Report and Order, CC Docket No. 96-45, Sixth Report and Order, Docket No. 96-262, 15 FCC Rcd 1679,
1687-1692, paras. 17-29 (1999) (Fifth Circuit Remand Order).
16
Generally, the Commission뭩 rules may be waived for good cause shown. 47 C.F.R. ?1.3. The Commission may
exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the public
interest. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast Cellular). In
addition, the Commission may take into account considerations of hardship, equity, or more effective
implementation of overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir.
(continued?)
5For further information, contact Jae Seong in Financial Operations, Office of Managing Director,
at (202) 418-1834, TTY (888) 835-5322.
- FCC -
(Continued from previous page)
1969); Northeast Cellular, 897 F.2d at 1166. Waiver of the Commission뭩 rules is therefore appropriate only if
special circumstances warrant a deviation from the general rule, and such deviation will serve the public interest.
Northeast Cellular, 897 F.2d at 1166; 47 C.F.R. ?54.802(a).