Telcos Snagged More Than $970M in USF Overpayments

As the FCC contemplates Universal Service Fund (USF) reform alongside an intercarrier compensation overhaul, the agency’s Office of Inspector General (OIG) now finds that phone companies received $970.3 million more in subsidies than they should have from mid-2006 to mid-2007.

The overpayment rate totaled more than 23 percent, and puts the high-cost fund at risk, OIG said.

The overpayments didn’t necessarily result from fraud or corruption, OIG said. Instead, they stemmed from inadequate documentation and auditing processes, weak internal controls, disregard of FCC rules and poor monitoring or reporting systems. OIG deemed the Universal Service Administrative Co., which oversees the USF, as responsible for just .1 percent of the erroneous disbursements.

The government likely won’t be able to recover the money, the report noted.

OIG now is auditing subsidy payments from July 2007 through June 2008.

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