The Commission released a Public Notice reminding all eligible telecommunications carriers (ETCs) that receive support from the Universal Service Fund’s high-cost mechanisms (whether legacy high-cost program support or Connect America Fund support) of their obligations to use such support only for its intended purposes of maintaining and extending communications service to rural, high-cost areas of the nation.  Expenditure of support for any other purpose is misuse and may subject the recipient to recovery of funding, suspension or funding, enforcement action by the Enforcement Bureau pursuant to the Communications Act of 1934 or the FCC rules, and/or prosecution under the False Claims Act.

Under federal law, high-cost support provided to an ETC must be used “only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.”  Pursuant to Commission rule, an annual certification to that effect must be filed, and support shall be provided in the subsequent year only to the extent the required certification has been filed.  While costs relating to corporate operations are eligible to be covered, those expenses must fall within the scope of the statutory requirement.  Additionally, the Commission reminds rate-of-return carriers that section 65.450 of the Commission’s rules prohibits them from including expenses in their revenue requirements unless such expenses are “recognized by the Commission as necessary to the provision” of interstate telecommunications services.

The following is a non-exhaustive list of expenditures that are not necessary to the provision of supported services and therefore may not be recovered through universal service support:

  • Personal travel
  • Entertainment
  • Alcohol
  • Food, including but not limited to meals to celebrate personal events, such as weddings, births, or retirements
  • Political contributions
  • Charitable donations
  • Scholarships
  • Penalties or fines for statutory or regulatory violations
  • Penalties or fees for any late payments on debt, loans or other payments
  • Membership fees and dues in clubs and organizations
  • Sponsorship of conference or community events
  • Gifts to employees; and
  • Personal expenses of employees, board members, family members of employees and board members, contractors, or any other individuals affiliated with the ETC, including but not limited to personal expenses for housing, such as rent or mortgages

Feel free to contact us with any questions.