In 1997, after the Legislature created the NUSF, the Commission opened an investigation and began its quest to meet the universal service obligations of the new environment. Results from the 2000 U.S. Census, indicate over 84% of Nebraska’s households reside in an area of less than 730 square miles, less than 1% of the landmass of the entire state. Nearly 16% of Nebraska’s households are spread over more than 74,000 square miles. Providing service to households in the rural, sparsely populated areas of Nebraska has a significant cost.
In 1999, based on the findings of its investigation, the Commission implemented a multi-year transitional mechanism to reform intercarrier compensation and establish funding from NUSF. The Commission entered an order in 2001 seeking comment on a method to determine permanent funding from NUSF Nebraska ETCs, while accomplishing the policy goals of universal service. In 2002, the Commission adopted goals for the NUSF long-term support mechanism.
The Commission in June 2004 released the NUSF Support Allocation Methodology (SAM), a permanent, long-term, universal service funding mechanism to address the costs of Nebraska’s universal service obligations and meet the needs of providing service in high-cost areas. The SAM is an efficient, fair, independently verifiable methodology, utilized by the Commission to allocate the limited amount of universal service support available and direct that support to the highest-cost areas, fulfilling the universal service obligations of Nebraska. The methodology utilizes regression techniques to link forward-looking costs to household density. Once this relationship is determined, results are used to calculate relative need for universal service support. Available universal service support amounts are then allocated to high-cost areas, based on the determination of relative need.
The mechanism is funded via a surcharge applied to revenues derived from retail end user intrastate telecommunication services. The NUSF surcharge is a flat 6.95 percent assessment on all in-state services. The Commission developed the surcharge rate after extensive research and analysis and determined the surcharge should be applied to all in-state services, including local telephone service, local calling features, in-state long distance service, wireless service, and paging service. The surcharge provides the funds necessary to support high-cost areas throughout the State of Nebraska and ensure service remains affordable.