Safety Valve Support (SVS) is a sub-component of High Cost Loop (HCL) support, which is available to rural price-cap and rate-of-return incumbent carriers and competitive carriers providing service in the areas of these rural companies, which must be designated as eligible telecommunications carriers (ETCs) by their state commissions or the Federal Communications Commission (FCC).
SVS is additional support above the HCL cap that is available to rural carriers that acquire high-cost exchanges and make substantial post-transaction investments to enhance network infrastructure.
The index year is defined in one of two ways:
It is important to note that the establishment of a rural carrier's index year depends on when that carrier submits cost data to NECA under Part 36 of the FCC's rules. Specifically:
SVS is based on the difference between an acquiring carrier's expense adjustment at the end of its index year and subsequent year expense adjustments. Specifically, SVS is 50 percent of the difference between the index year HCL support amount and the HCL support amount in subsequent years. SVS is subject to an overall cap of no more than five percent of the rural HCL fund in any given year.
Limitations on Amounts of SVS:
Under no circumstances will a rural carrier's acquired exchanges receive more through the transfer of support and the safety valve mechanism than it would receive in uncapped HCL support. That is, a study area's SVS loop cost expense adjustment cannot exceed the difference between the acquired exchanges' uncapped annual study area loop cost expense adjustment calculated pursuant to Section 36.631 of the FCC's rules and transferred support amounts available under Part 54, Section 54.305(a) of the FCC's rules.
When making their annual cost, investment, expense, and line count data submissions each July 31, rural carriers acquiring exchanges and incorporating them into existing study areas must exclude the costs associated with the acquired exchanges from the costs associated with the pre-acquisition study areas. That is, acquiring rural carriers must separately provide the cost data for both acquired and existing exchanges, as if these two categories of exchanges constituted separate study areas.
Once relevant regulatory approvals are obtained and the transaction is closed, rural carriers must provide written notice to USAC that they have acquired lines that may be eligible for support. Rural carriers must also provide written notice to USAC of when their index year has been established for purposes of determining eligibility.
Mail to:Universal Service Administrative Co.