Telecom Regulatory Reporting

Transcription

1 Telecom Regulatory Reporting The material appearing in this presentation is for informational purposes only and is not legal or accounting advice. Communication of this information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountantclient relationship. Although these materials may have been prepared by professionals, they should not be used as a substitute for professional services. If legal, accounting, or other professional advice is required, the services of a professional should be sought. 2

2 Moss Adams Firm established in 1913 Serving telecom clients since 1957 The 11th largest accounting and consulting firm in the U.S. 1,800 staff and partners Organized by industry & service specialists Telecom personnel in Seattle, Spokane, Stockton, Kansas City and Portland offices 3 Course Outline FCC s Order on USF/ICC Reform New Reporting Requirements CPNI & Red Flags NECA Reporting (EC 1050) Line Counts 499 Reporting FCC Form 497 Truth-In-Billing USAC Audits Highlights of Other Reporting Forms 4

3 Housekeeping Class schedule Tuesday 8 4 / Wednesday 8 12 CPE forms Evaluation forms Regular breaks Facilities Restrooms Lunch Introductions 5

4 Summary of USF & ICC Reform Order & FNPRM CAF & ICC Reform Order & FNPRM Connect America Fund (CAF) and Intercarrier Compensation (ICC) Reform Order and FNPRM Approved October 27, 2011 Released November 18, 2011 Order primarily addresses interim ICC and USF reform Proposed effective dates beginning in 2012 FNPRM primarily addresses long term ICC and USF reform 7

5 CAF & ICC Reform Order & FNPRM Follow on Orders to clarify, review or reconsider certain issues Regression Order April 2012 Adopted calculation of cost limitations for HCLS Access Rate Clarification Order May 2012 Clarified the process for transitioning intrastate access rates Intrastate rate elements may be increased to accomplish revenue goal Intrastate rate elements must be raised to Interstate levels by July 1, CAF & ICC Reform Order & FNPRM Follow on Orders (cont.) 3 rd Order on Reconsideration May 2012 Reporting Requirements & Deadlines Document Retention Reporting End User Rates USF for Carriers in Alaska Revenue Baseline 9

6 CAF & ICC Reform Order & FNPRM Follow on Orders (cont.) 5 th Order on Reconsideration November 2012 Financial Reporting Requirements Waiver Standards 6 th Order on Reconsideration February 2013 Modifies calculation of limitations on costs for HCLS Dismisses several Applications for Review on other issues Establishes a progress reporting deadline of 11/18/13 for the WCB 10 CAF & ICC Reform Order & FNPRM Budget Up to $4.5B each year $1.8B for Price Cap carriers $500M Mobility Fund $100M Remote Areas Fund $2.0B for Rate of Return carriers Funding in a given year could be more or less Contribution will not exceed $4.5B + expenses 11

7 USF Reform Public Interest Obligations 4 Mbps downstream/1 Mbps upstream No 5 year requirement at 6/1.5 Mbps 100 millisecond latency, suitable for real time applications Deploy broadband upon receipt of a reasonable request for service, within a reasonable amount of time Annual reporting to the PUC and USAC Construction charges may be assessed pursuant to state requirements Additional requirements to be identified in FNPRM No further action at this point in time 12 USF Reform Limitations on CapEx and OpEx Implemented no later than 7/1/2012 Additional comment as part of FNPRM Regression analysis using publicly available cost, geographic and demographic data Comparison of costs to similarly situated companies Annual publication of capped costs that will be used in place of actual costs that exceed the cap Focused initially on HCLS, but FNPRM directs similar benchmarks for ICLS No action at this point in time 13

8 USF Reform Limitations on CapEx and OpEx Regression Order Implemented 2 separate regression based limitations CapEx Investments, reserve and depreciation OpEx All other expenses Phase in of limitations 25% in 2012 limited to 10% of total support 50% in % in 2014 and beyond Redistribution of support from limited carriers Calculation of 2 NACPLs (Capped & Uncapped) Annual updates performed by WCB 14 USF Reform Limitations on CapEx and OpEx 6 th Order on Reconsideration Combined CapEx and OpEx limitations 2013 simple addition of actual costs and limitations» Reduced # of impacted carriers from 159 to revised regression calculation 2013 impacts limited to 15% of total support Did not change any independent variables Provides WCB flexibility to change the regression annually or leave it constant for a period of time 15

9 USF Reform Corporate Operations Expense Cap on ICLS Effective 1/1/2012 Minor updates to the formula Loops 6,000 Loops monthly per loop expense = greater of $ ( * working loops) $63,000/working loops 6,000 Loops 17,887 monthly per loop expense = $ (117,990/working loops) Loops 17,887 monthly per loop expense = $9.56 Adjusted by GDP-CPI, beginning 1/1/ USF Reform Artificially Low Voice Rates 3 step phase in beginning 7/1/2012 7/1/2012 6/30/2013 = $ /1/2013 6/30/2014 = $14.00 Thereafter, determined by WCB annual survey Latest national average = $15.62 Includes state SLC, state USF fees and mandatory EAS Dollar for dollar reduction in HCLS Requires annual submission of rates and fees to USAC 17

10 USF Reform Safety Net Additive grandfathered or phased out Eligibility as a result of 14% increase in TPIS Support grandfathered for the remainder of eligibility period No new support for costs incurred after 2009 Eligibility as a result of loss of access lines Support phased out over 2 years 50% of calculated support in 2012 Support eliminated in USF Reform Eliminate LSS as a separate support mechanism effective 7/1/2012 Limited ongoing recovery through ICC recovery mechanism Support frozen at 2011 support levels for 1/1/2012 6/30/2012 Subject to true up based on actual 2011 operating costs 19

11 USF Reform Adjusted HCLS Cap for 2012 Elimination of HCLS for Price Cap carriers requires that the overall size of the fund be reduced Includes Rate of Return study areas affiliated with Price Cap carriers NECA required to submit revised cap within 30 days 20 USF Reform Study Area Waivers Eliminate 1% change in USF guideline New standards for approval State PUC approval Public interest Streamlined Process Public Notice with 30 day comment and 45 day reply comments Absent action by the WCB, waiver deemed granted 60 days after reply comments 21

12 USF Reform Revisions to Parent Trap Rule If actual costs would generate lesser support, LEC will receive the lesser Does not apply to price cap carriers and their rate of return affiliates (frozen support) Effective 1/1/ USF Reform Cap per line support at $250 a month Effective 7/1/2012 Applies to both ETCs and CETCs Applies to all High Cost Support, excluding CAF ICC 3 year phase in of cap 7/1/2012 6/30/2013 = $250/line + 2/3 of difference 7/1/2013 6/30/2014 = $250/line + 1/3 of difference 7/1/2014 = No more than $250/line Carriers may file a petition for waiver or adjustment 9 of 26 limited carriers have filed for a waiver 23

13 USF Reform Unsubsidized Competition Eliminates support where unsubsidized competitor(s) offer voice and broadband to 100% of the study area Incumbent support phased out over 3 years Support frozen at the lesser of 2010 support or $3,000/line Support reduced by 33% each year FNPRM seeks comment on process for determining support in study areas with less than 100% overlap Ongoing comment process 24 USF Reform Waivers Waiver process to seek relief from some or all USF reforms FCC does not expect to grant waivers routinely Subject to a total company earnings review Carrier must demonstrate that reduction in existing support would put voice & broadband service at risk Consideration given if reform would cause a provider to default on existing loans or become insolvent 25

14 Interstate Rate of Return Prescription Represcription to be addressed in the FNPRM Order waives certain procedural requirements to streamline the process Primarily related to the filing of paper copies and service Notice and comment process to be used No further action at this point in time 26 ICC Reform Rate of Return Carriers Transition terminating switched access to bill and keep Cap all interstate switched access rates Effective 12/29/11 Originating and terminating» End Office Access Service» Tandem Switched Transport Access Service» Dedicated Transport Access» Other interstate switched access rate elements Carrier Common Line, as applicable Information Surcharge 27

15 ICC Reform Rate of Return Carriers Transition terminating switched access to bill and keep Cap intrastate switched access rates Effective 12/29/11 Terminating only» End Office Access Service» Tandem Switched Transport Access Service Includes reciprocal compensation No adjustment required/allowed if intrastate is already lower than interstate 28 ICC Reform Rate of Return Carriers Transition terminating switched access and reciprocal compensation to bill and keep Step 1 (July 1, 2012) 50% transition to interstate May maintain intrastate switched access rate structure; or Apply interstate rate structure for intrastate rates» Immediately migrate to interstate rates» Apply a transitional rate equal to 50% of the difference Step 2 (July 1, 2013) 100% transition to interstate 29

16 ICC Reform Rate of Return Carriers Transition terminating switched access and reciprocal compensation to bill and keep Step 3 (July 1, 2014) 1/3 of difference between interstate and $0.005 Step 4 (July 1, 2015) 2/3 of difference between interstate and $0.005 Step 5 (July 1, 2016) $ ICC Reform Rate of Return Carriers Transition terminating switched access and reciprocal compensation to bill and keep Step 6 (July 1, 2017) 1/3 of difference to $ Step 7 (July 1, 2018) 2/3 of difference to $ Step 8 (July 1, 2019) terminating switched end office access $ Step 9 (July 1, 2020) bill and keep Tariff filings to remove charges for Terminating End Office Access Charges 31

17 ICC Reform Rate of Return Carriers Other Issues Reforms do not automatically replace existing contracts or interconnection agreements Left to change of law, renegotiation and termination clauses in agreements Originating Access left to FNPRM, beyond cap Transport (originating and terminating) left to FNPRM, beyond cap Other rate elements left to FNPRM, beyond cap 32 ICC Reform Rate of Return Carriers Eligible Recovery Rate of Return Baseline 2011 Interstate Switched Access Revenue Requirement* Intrastate Switched Access Revenues Net Reciprocal Compensation Revenues - 5% annual reduction o Recovered from 3 sources Intercarrier Compensation Revenues Access Recovery Charge (ARC) Connect America Fund (CAF) * Revenue requirement submitted to NECA for 2011 tariff filing 33

18 ICC Reform Rate of Return Carriers Access Recovery Charge (ARC) Residential & SLB = $0.50/year for up to 6 years for a max of $3.00 MLB = $1.00/year for up to 6 years for a max of $6.00 SLC + ARC may not exceed $12.20 Local Rate + SLC + EAS + Surcharges + ARC $30.00 Residential, no benchmark for SLB & MLB ARC is not mandatory, but will be imputed for CAF Carriers that forego recovery in 1 year may not recover in future years ARC may not be assessed on Lifeline customers ARC may be determined at the holding company level 34

19 FCC Reform Order Reporting Requirements New 5-Year Service Quality Improvement Plan (a)(1), (a) Due July 1, 2013 Proposed Improvements or Upgrades Improvement of service quality, coverage, capacity Projected start & completion date Amount of investment Geographic areas Population served Wire center or census block level Separately broken out for voice and broadband 36

20 New 5-Year Service Quality Improvement Plan (a)(1), (a) Include new broadband obligations Take reasonable steps to offer broadband Provide broadband upon reasonable request Criteria to determine reasonable request» Line Extension Tariff» Aid to Construction Requests for broadband service are met within a reasonable time Carrier must define what is reasonable 37 Progress Report on Service Quality Improvement Plan (a)(1) Due July 1, 2014 and annually thereafter Maps detailing progress USF received Details of how support improved service quality, coverage, capacity Explanation of unfulfilled improvement targets Wire center or census block level Separately broken out for voice and broadband 38

21 Progress Report on Service Quality Improvement Plan (a)(1) Additional filing requirements (f)(1)(i), (ii) Due July 1, 2014 and annually thereafter A letter certifying that: Reasonable steps are being taken to provide broadband service at actual speeds of at least 4 Mbps downstream/1 Mbps upstream Latency is suitable for real-time applications, including VoIP Usage capacity that is reasonably comparable to those in urban areas Requests for such service are met within a reasonable time The number, names, and addresses of community anchor institutions to which the ETC newly began providing access to broadband service in the preceding calendar year 39 Outage Reporting (a)(2) Due July 1, 2013 Detailed outage information for outages of at least 30 minutes; and At least 10% of the end users in the designated service area was affected; or A 911 special facility was affected Order requires outages to be separately reported for voice and broadband, however, FCC is not seeking PRA approval for broadband outage reporting at this time DA , footnote 46 40

22 Outage Reporting (a)(2) Report must include: Date and time the outage began Date and time the outage ended Brief description of the outage and resolution of the outage Particular services affected Geographic areas affected Steps taken to prevent a similar situation in the future Number of customers affected 41 Unfulfilled Service Requests (a)(3) Due July 1, 2013 and annually thereafter Voice Service Number of requests for voice service from potential customers that were unfulfilled Details of how the ETC attempted to provide service Broadband Service Number of requests for broadband service from potential customers that were unfulfilled Details of how the ETC attempted to provide service 42

23 Complaints Received (a)(4) Due July 1, 2013 and annually thereafter Voice Service Number of voice service complaints received per 1,000 connections Fixed Voice Telephony Service Mobile Voice Telephone Service Broadband Service Number of broadband service complaints received per 1,000 connections Fixed Broadband Service Mobile Broadband Service 43 Certification of Compliance with Service Quality Standards and Consumer Protection Rules (a)(5) Due July 1, 2013 and annually thereafter Separate certifications must be filed for both voice and broadband service 44

24 Certification of Ability to Function in Emergency Situations (a)(6) Due July 1, 2013 and annually thereafter Must certify ETC: Has reasonable amount of back-up power to function without an external power source Is able to reroute traffic around damaged facilities Is capable of managing traffic spikes caused by emergency situations Separate certifications must be filed for both voice and broadband service 45 Price Offerings (a)(7) Due July 1, 2013 and annually thereafter Pending OMB approval ETC s price offerings Voice Broadband - to include capacity range Format to be specified by the Wireline Competition Bureau 46

25 Additional Voice Rate Data (h) Due July 1, 2013 and annually thereafter Report rates for residential local service that are below local urban rate floor Residential local service rate State subscriber line charges State universal service fees Mandatory extended area service charges Report number of lines below local urban rate floor Report lines and rates in effect as of June 1 47 Additional Voice Rate Data (h) Due January 2 of each year Pending OMB approval Mid-year update Optional - to report increases to residential local rates or applicable state fees Mandatory - if residential local rates or applicable fees decrease after June 1 sampling date causing residential rate to fall below local urban rate floor Report rates and fees in effect as of December 1 48

26 Local Urban Rate Floor July 1, 2012 June 30, 2013 Local Urban Rate Floor = $10 July 1, 2013 June 30, 2014 Local Urban Rate Floor = $14 July 1, 2014 and thereafter Local Urban Rate Floor to be announced annually by Wireline Competition Bureau 49 Ownership Information (a)(8) Due July 1, 2013 and annually thereafter Pending OMB approval Report to include: Holding company Operating company Affiliates Branding ( dba or brand designation) Report relevant universal service identifiers for each such entity by Study Area Codes 50

27 Tribal Reporting (a)(9) Due July 1, 2013 and annually thereafter Pending OMB approval ETCs Serving Tribal Lands Information demonstrating that discussions with Tribal governments included (at a minimum): Needs assessment and deployment planning with a focus on Tribal community anchor institutions Feasibility and sustainability planning Marketing services in a culturally sensitive manner 51 Tribal Reporting (a)(9) Information demonstrating compliance with: Right-of-way processes Land use permitting requirements Facility siting rules Environmental review processes Cultural preservation review processes Tribal business and licensing requirements Certificate of Public Convenience and Necessity Tribal business license Master license Other related forms of Tribal government licensure 52

28 Additional Certifications (a)(10) Due July 1, 2013 and annually thereafter Pending OMB approval A letter certifying that the company s rate for voice services is no more than two standard deviations above the applicable national average urban rate for voice service The national average urban rate to be specified by the Wireline Competition Bureau and Wireless Telecommunications Bureau and released in a public notice 53 Network Performance Tests (a)(11) Pending OMB approval The results of network performance tests pursuant to the methodology and in the format determined by the Wireline Competition Bureau, Wireless Telecommunications Bureau, and Office of Engineering and Technology FCC DA clarifies ETCs are not required to file network performance results with the 2013 annual report 54

29 Financial Reporting (f)(2) Annual Report of the Company s Financial Condition and Operations Privately Held Rate of Return Carriers ONLY Pending OMB approval WCB to publish filing deadline 55 Financial Reporting (f)(2) Fifth Order on Reconsideration (FCC ), released 11/26/12 Carriers receiving RUS loans Submit 2011 RUS Operating Report Non-RUS borrowers that are audited Option 1 file audited 2011 financial statement Option 2 provide 2011 financial information in a form consistent with the RUS Operating Report Carriers that are not audited Option 1 file 2011 financial statement reviewed by a CPA Option 2 provide 2011 financial information in a form consistent with the RUS Operating Report Include officer certification that carrier is not audited in the ordinary course of business and reported data are accurate 56

30 Filing Deadlines (j) Annual reporting information must be filed no later than July 1 of each year in order to receive support for the following calendar year Reports filed after the July 1 deadline Filed no later than October 1 = support for the 2 nd, 3 rd, and 4 th quarters of the subsequent year Filed no later than January 1 = support for the 3 rd and 4 th quarters of the subsequent year Filed no later than April 1 = support for the 4 th quarter of the subsequent year 57 Certification of High-Cost Support Due October 1 receive support in succeeding year Certification in letter format Clearly referencing WC Docket No Filed with Office of the Secretary of the FCC and the Administrator of the high-cost fund 58

31 Certification of High-Cost Support Carriers Subject to State Jurisdiction State regulatory authority must file an annual certification identifying which carriers in the state are eligible to receive federal support Certify that all federal high-cost support provided to carriers within the state was used in the preceding calendar year and will be used in the coming calendar year only for the provision, maintenance, and upgrading of facilities and services for which the support is intended 59 Certification of High-Cost Support Carriers Not Subject to State Jurisdiction Carriers must file an a sworn affidavit executed by a corporate officer Certify that all federal high-cost support received was used in the preceding calendar year and will be used in the coming calendar year only for the provision, maintenance, and upgrading of facilities and services for which the support is intended 60

32 Certification of High-Cost Support Filing Deadlines Certifications Filed After October 1 Deadline Certifications filed on or before January 1 - receive support in the 2 nd, 3 rd, & 4 th quarters of that year Certifications filed on or before April 1 receive support in the 3 rd & 4 th quarters of that year Certifications filed on or before July 1 receive support in the 4 th quarter of that year Certifications filed after July 1 no support received in that year 61

33 FCC Study Area Boundary FCC Study Area Boundary FCC Report and Order, DA adopted & released November 6, 2012 Adopted data specifications for collecting study area boundaries FCC to issue Public Notice announcing deadline for submission Data will be used in: Quantile regression analyses to generate capex and opex limitations Determining whether unsubsidized competitors offer service within an ROR s study area 63

34 FCC Study Area Boundary Data submitted via web interface Data can be submitted by ILECS or state commissions ILECs must review and verify accuracy of data Company officer must certify Changes to study area boundaries must be submitted by March 15 of each year All ILECs must recertify study area boundary data every two years 64 Shapefile Data Specifications Must be submitted in esri shapefile format Each shapefile must represent a single study area Shapefile templates are available at Shapefile must: Contain one closed, non-overlapping polygon for each exchange in the study area that represents the area served from that exchange 65

35 Shapefile Data Specifications Shapefile must: Have associated with each exchange polygon the following identifying feature attributes: Operating Company Number Company name Exchange name Acquired exchange if applicable CLLI code(s) associated with exchange Study Area Code State FRN 66 Shapefile Data Specifications Shapefile must: Have an assigned projection with accompanying.prj file Use unprojected (geographic) WGS84 geographic coordinate system Have a minimum horizontal accuracy of +/- 40 feet or less, conforming to 1:24K national mapping standards Be submitted as a WinZip archive with a name containing the company name and study area code (e.g., CompanyName_ zip) 67

36 Cover Page Information Information to be submitted with shapefile(s): Contact person name Contact person address Contact person phone number Contact person address Date created/revised Methodology process steps to create the data Certifying official name Certifying official address Certifying official phone number Certifying official address 68

37 FCC Form 499 FCC Form 499 All telecommunications carriers providing telecommunications services, including interconnected VoIP providers, within the United States must file a 499 Very few exceptions/exemptions from filing 499A & 499Q available on USAC s website: 70

38 Form 499A Uses Calculate contributions to USF Based on interstate and international end user revenues 10% or more interstate traffic is interstate Telecommunications Relay Services (TRS) North American Numbering Plan (NANPA) Administration 71 Form 499A Uses Long-Term Number Portability (LNPA) Interstate Telecommunications Service Providers (ITSP) Regulatory Fee FCC Form 159-W assessment Satisfy obligation under Section 413 of the Act to designate a DC agent and FCC registration 72

39 Form 499Q Uses Forecast quarterly USF contributions Based on projected gross-billed end-user interstate and international revenues. Watch projected revenues so they end up matching Form 499-A end user interstate and international revenues. Non de minimis filers only 73 Form 499 Filing 499 is filed with USAC 5 times a year Form 499Qs due by: February 1st (4Q actual/2q projections) May 1st (1Q actual/3q projections) August 1st (2Q actual/4q projections) November 1st (3Q actual/1q projections) Form 499A is due by April 1 USAC s mailing address is on the form 74

40 Form 499 Revisions 499s must be revised if revenue data changes Form 499A revisions: Decreased contributions - filed by March 31st of the year following the original filing Additional contributions - accepted anytime. Form 499Qs 45 calendar days from original filing date 75 De Minimis Carriers Worksheet in 499 instructions estimates contribution less than $10,000. Watch instructions for changed contribution factor for de minimis test. Do not file 499Q Contribute to: NANPA LNPA TRS 76

41 De Minimis Carriers Carriers near $10K contribution should file a 499Q All carriers must file a 499A If 499A results in de minimis status, USAC will refund contribution Carriers that do not file a 499Q and go over $10K must pay contribution plus unadjusted contribution 77 A and Q Differences Form 499A reports actual annual revenues Form 499-Q reports actual quarterly and projected quarterly interstate and international end user revenue Quarterly revenues should equal annual revenues 78

42 Reporting Gross Revenue Report gross revenue from all sources. Gross revenues consist of total revenues billed to customers with no allowance for uncollectable, settlements, or out-of-period adjustments. Gross billed revenues maybe distinct from booked revenues. Deposits are not revenue. NECA pool companies report actual gross billed revenues not settlements. Surcharge treated as revenues included in revenue categories to which the surcharge applies Revenues on the customers bills to recover federal or state universal service support goes on line A Inputs Block 1 (lines ) Contributor Information Line 101, Filer 499 ID Line 102, Legal name of filer Line 103, IRS employer identification number Line 104, Name file is doing business as 80

43 FCC Form 499 Line 105, Telecommunications activities Select up to 5 boxes that apply (number in order of importance) Competitive Access Provider (CAP)/CLEC Cellular/PCS/SMR (wireless telephony included by resale) Interexchange Carrier (IXC) Coaxial Cable Incumbent LEC 81 FCC Form 499 Line 105, Telecommunications activities Interconnected VoIP Non-Interconnected VoIP Local Reseller Operator Service Provider (OSP) Paging & Messaging Payphone Service Provider Prepaid Card Private Service Provider 82

44 FCC Form 499 Line 105, Telecommunications activities Satellite Service Provider Shared-Tenant Service Provider/Building LEC Specialized Mobile (SMR) (dispatch) Audio Bridging Provider/ Teleconferencing Service Provider Toll Reseller Wireless Data Other Local (requires description) Other Mobile (requires description) Other Toll (requires description) 83 FCC Form 499 Interconnected VoIP 47 CFR Section 9.3 defines it as a service that: Enables real-time, two way voice communications Requires a broadband connection from user s location Requires Internet protocol-compatible CPE Permits users to receive calls that originate on the Public Switched Telephone Network (PSTN) and to terminate calls to the PSTN Vonage is; Skype isn t. When in doubt call USAC. Interconnected VoIP Non-Interconnected VoIP Difference from above is real-time that originates from or terminates not two way 84

45 FCC Form 499 Line 106.1, Holding company name Just added any entity that directly or indirectly owns or controls affiliated filers. Own means 10% equity interest Line 106.2, Holding company IRS employer identification number Line 107, FCC Registration Number (FRN) Line 108, Management company Line 109, Complete mailing address of reporting entity corporate headquarters 85 FCC Form 499 Line 110, Complete business address for customer inquiries and complaints Line 111, Telephone number for customer complaints and inquiries Toll-free number if available Line 112, Trade names used in the past 3 years in providing telecommunications known by customers 86

46 FCC Form 499 Block 2-A (lines ) Regulatory Contact Line 201, Filer 499 ID (repeat of Line 101) Line 202, Legal name of filer (repeat of Line 102) Line 203, Person who completed worksheet Line 204, Telephone number of this person Line 205, Fax number of this person 87 FCC Form 499 Line 206, of this person Required if available not for public release Line 207, Corporate office, attention name and mailing address for Telecommunications Reporting Worksheets Check if same name as Line 203 Check if same address as Line

47 FCC Form 499 Line 208, Billing address and billing contact person (bills for contribution will be sent to this address unless you attach a written request for alternative billing arrangements) Check if same name as Line Line 208.1, address where ITSP Regulatory Fee issues can be addressed 89 FCC Form 499 Block 2-B (lines ) Agent for Service of Process Line 209, D.C. Agent for Service of Process Line 210, Telephone number of D.C. agent Line 211, Fax number of D.C. agent Line 212, of D.C. agent Line 213, Complete business address of D.C. agent 90

48 FCC Form 499 Line 214, Local/alternate Agent for Service of Process (optional) Line 215, Telephone number of local/alternate agent Line 216, Fax number of local/alternate agent Line 217, of local/alternate agent Line 218, Complete business address of local/alternate agent 91 FCC Form 499 Block 2-C (lines ) FCC Registration & Contact Line 219, Filer 499 ID (repeat of Line 101) Line 220, Legal name of filer (repeat of Line 102) Line 221, Chief Executive Officer (or highest ranking company officer) 92

49 FCC Form 499 Line 222, Business address of individual named on Line 221 Check if same as Line 109 Line 223, Second ranking company officer, such as Chairman Line 224, Business address of individual on Line 223 Check if same as Line 109 Line 225, Third ranking company officer, such as President or Secretary (don t list same names as those on Lines 221 or 223) 93 FCC Form 499 Line 226, Business address of individual on Line 225 Check if same as Line 109 Line 227, Jurisdictions you provide service in the past 15 months and jurisdictions service is likely to be provided in next 12 months Line 228, Year and month filer first provided or expects to provide telecommunications in the U.S. Check if prior to 1/1/1999, otherwise provide year and month. 94

50 FCC Form 499 Block 3 (lines ) Carrier s Carrier Revenue What is a Carrier s carrier? Revenues from services provided for resale to other carriers that are contributors to FUSF Revenues from carriers billed for using your facilities Bill their own customers Report its revenues on their 499 in Block 4 Calendar year revenues Non-contributors must be treated as end user 95 FCC Form 499 Other requirements for Block 3 Latest update: lines 304,306, 307,308, and 309 excluded in this annual process. Lines 303, 305, must: Retain Filer ID and contact information for the associated carriers Verify each carrier is a direct contributor to FUSF for that calendar year Print and keep information on FCC website to validate reseller contributor status Have documented procedures 96

51 FCC Form 499 Other requirements for Block 3 Other requirements for Block 3 Verify that customer is purchasing service for resale as telecommunications Annual certification under penalty of perjury using text from instructions Keep records to support verification Non-compliance to these requirements may require additional universal service assessments if carrier reclassified as end user. 97 FCC Form 499 Line 301, Filer 499 ID (repeat of Line 101) Line 302, Legal name of filer (repeat of Line 102) Fixed Local Service Line 303.1, Provided as unbundled network elements (UNEs) Line 303.2, Provided under tariffs or other arrangements Use interconnected VoIP safe harbor 98

52 FCC Form 499 Fixed Local Service Monthly service Local calling Connection charges Vertical features Other local exchange service» Subscriber Line Charge (SLC or EUCL)» Primary Interexchange Carrier Charge (PICC) charges to IXCs Local directory assistance LNP surcharges (considered interstate revenues) 99 FCC Form 499 Per-minute charges for originating or terminating calls Include originating or terminating VoIP-PSTN traffic Line 304.1, Provided under state or federal access tariff Carrier Access Switched Billing (CABs) NECA EC-1050 switched earned interstate revenues reported on Line 14 or AS1000 Line 17 Line 304.2, Provided as UNE or under other arrangements Reciprocal compensation (do not deduct compensation paid to wireless carrier) 100

53 FCC Form 499 Local private line and special access service Line 305.1, Provided to other contributors for resale as telecommunications Carrier Special Access Billing (CABs) billed to carrier s not end users NECA EC-1050 SP earned interstate carrier revenues reported on Line 22 A) or AS1000 Line 20 A) for carriers not ISP Line 305.2, Local private line special access service provided to other contributors for resale as interconnected VoIP 101 FCC Form 499 Line 306, Payphone compensation from toll carriers Compensation from Atlantax Systems National Payphone Clearinghouse Billing Concepts Use ratio of interstate toll billings to intrastate toll or access revenues to split out estimated interstate compensation for a good faith estimate of interstate revenues. 102

54 FCC Form 499 Line 307, Other local telecommunications service revenues. Include collocation revenues pursuant to 47 U.S.C. 251 (c) (6) Line 308, Universal service support revenues received from federal or state sources. Exclude NECA settlements. Interstate universal service support includes High Cost Loop (on NECA Disbursement Notification or USAC Correspondence) Safety Net Additive (on NECA Disbursement Notification or USAC Correspondence) 103 FCC Form 499 Interstate universal service support includes: (cont.) Safety Valve Support (NECA Disbursement Notification or USAC Correspondence) CAF Support (EC-3060-L Page 1 of 3 or AS3060-L Page 1 of 6 or EC1205). CAF is state and interstate Interstate Common Line Support (EC-3060-L Page 1 of 3 or AS3060-L Page 1 of 6 or EC1205) Lifeline and Link Up Charges (Form 497). All reported as interstate revenues on this line Exclude charges or credits for subsidized services to schools, libraries, and rural health care providers. These are end user revenues. Intrastate universal service support and/or lifeline support 104

55 FCC Form 499 Mobile services (including wireless telephone, paging & messaging, and other mobile services) Line 309, Monthly, activation, and message charges except toll services Use safe harbor percentage or submitted traffic study for all line 309 Toll services Line 310, Operator and toll calls with alternative billing arrangements Credit card Collect International call-back 105 FCC Form 499 Line 311, Ordinary long distance Direct dialed MTS Customer toll-free service calls Associated monthly account maintenance PICC pass-through Other switched services not reported above 106

56 FCC Form 499 Line 312, Long distance private line services Line 313, Satellite services Line 314, All other long distance services Line 315, Total revenues provided for resale (Lines ) The total of the 300 lines are line 115 for the Form 499-Q 107 FCC Form 499 Many companies use payable accounts to record NECA reported revenues, instead of revenue accounts Payable to NECA pool You will need to separate the settlements from what is reported if this is booked to the same account Need to know what the support dollars are buried in settlements-can use EC3060 or AS

57 FCC Form 499 Block 4A (lines ) End User & Non- Telecom Revenue End users are customers that use the services provided by your company. ISP is considered end user for any transmission carrying internet Non-telecom revenues are other than U.S. telecommunications revenues Voice mail Inside wire revenues Published directory revenues Internet revenues Dark Fiber 109 FCC Form 499 Non-telecom revenues (cont.) Billing and collection revenues Late payment charges Pole rental Returned check charges Phones and accessories Line 401, Filer 499 ID (repeat of Line 101) Line 402, Legal name of filer (repeat of Line 102) 110

58 FCC Form 499 Line 403, Surcharges or other amounts on bills identified as recovering state or federal universal service contributions For NECA companies revenue on EC-1050, Line 3.C).2. or AS1000, Line 5 B) For all other companies this could be the revenue collected from the end users called USF charges. There are rules to follow if you do this Do not apply safe harbor percentages State universal service program payments recovered by passthrough charges itemized on customer bills ISPs that bill USF Cost Recovery report on this line unless it is labeled Federal Cost Recovery then it goes with revenues assessed on 111 FCC Form 499 Fixed Local Services for Lines thru Monthly service Local calling Connection charges Vertical features (custom calling features) Other local exchange service except for subscriber line and PICC charges Local directory assistance LNP surcharges (considered interstate revenues) 112

59 FCC Form 499 Fixed local services - Traditional circuit switched Line 404.1, Provided at a flat rate including interstate toll service local portion Line 404.2, Provided at a flat rate including interstate toll service toll portion Lines & bundled local service with interstate toll as part of that monthly rate Line 404.3, Monthly local services provided without interstate toll included 113 FCC Form 499 Fixed local services - Interconnected VoIP Line 404.4, Offered in conjunction with a broadband connection Line 404.5, Offered independent of a broadband connection Use interconnected VoIP safe harbor with lines and If you do not use safe harbor for bundled interstate or international toll calling then determine appropriate portion of revenues 114

60 FCC Form 499 Line 405, Tariffed subscriber lines charges, Access Recovery Charges, and PICC charges levied by a local exchange carrier to an end user CLECs that do not have a tariff or price list for these revenues, not reselling such tariffed charges, or do not separately state charges; report nothing NECA EC-1050 SLC revenue on Line 6 or AS1000 Line 8 NECA EC-1050 PIC revenues reported on Line 14 or AS1000 Line 17 or state PIC revenues if you have a Tariff» These Lines also include switched revenues NECA EC-1050 Line Port Charges for ISDN & DS1 revenues on Line 3.C).3 or AS1000 Line 5 C) NECA EC-1050 ARC lines 15 thru 17 or lines 18 thru 20 for AS FCC Form 499 Line 406, Local private line, DSL, & special access service, includes the transmission portion of wireline broadband internet access provided on a common carrier basis (Title II) billed to end user or ISP Common carriers are ILECs and CLECs whether you provide DSL or other transmission under tariff or price list NECA EC-1050 DSL end user and ISP revenues reported on Line 22 B) or AS1000 Line 20 B Ethernet & Multi-Protocol Label Switching go on this line Due diligence to assure special access is or is not interstate Line 407, Payphone coin revenue (local and LD, do not reduce by commissions) Line 408, Other local telecommunications service revenues 116

61 FCC Form 499 Mobile services (including wireless telephony, prepaid wireless, paging & messaging, and other mobile services) Line 409, Monthly, activation charges, and service order charges Line 410, Message charges including roaming, local directory assistance, and air time charges for toll calls Exclude separately stated toll charges 117 FCC Form 499 Revenues on lines 409 and 410 must have a submitted traffic study or use safe harbor. A different traffic study can be used for each of these lines Work with USAC to see if traffic study is acceptable. Safe harbor currently = 37.1% 118

62 FCC Form 499 Toll services (outside of local exchange calling areas) Line 411, Prepaid calling card (card sales to end users, distributors, and/or retail establishments) Report at face value of cards Prepaid card revenues recognized when end user purchases card Includes prepaid service where customer uses the service provider s switching platform and personal identification number Line 412, International calls that both originate and terminate in foreign points 119 FCC Form 499 Line 413, Operator and toll calls with alternative billing arrangements other than revenues reported on Line 412 Credit card Collect International call back Long distance directory assistance Include calls placed from coin, coinless, prison telephones 120

63 FCC Form 499 Line 414.1, All, other than interconnected VoIP, including, but not limited to itemized toll on wireline and wireless bills No safe harbor or traffic studies Line 414.2, All interconnected VoIP long distance, including, but not limited to, itemized toll Use safe harbor 121 FCC Form 499 Lines and include toll calls placed for a fee, flat monthly charges, and monthly minimums. Report toll bundles and split bundles based on minutes behind bundles.» Intrastate» Interstate» International Toll bundles packaged with basic service goes on lines

64 FCC Form 499 Line 415, Long distance private line services for services extending beyond basic service area, frame relay using dedicated services Line 416, Satellite services Line 417, All other long distance services like toll teleconferencing, frame relay using the toll network Lines , are Line 116 on Form 499- Q 123 FCC Form 499 Line 418, Revenues other than U.S. telecommunications revenues, including: Information services Inside wiring maintenance and installation Billing and collection Customer premises equipment (cell phones) Published directory Pole attachment Late payment charges Returned check charges Voice Mail 124

65 FCC Form 499 Dark fiber not part of a UNE or telecommunications service Internet access Cable TV program transmission Foreign carrier operations Non-telecommunications revenues Non-Common Carrier wireline broadband internet access and cable modem service (provided cable modem service is being provided by an entity already filing an FCC Form 499-A). Price cap carriers (Title 1) offering DSL under contract 125 FCC Form 499 Line 418.1, Bundled with circuit switched local exchange service Line 418.2, Bundled with interconnected VoIP local exchange service Line 418.3, Other revenues not bundled Line 418.4, Non-interconnected VoIP revenues not included in any other category Line 418 is Line 117 on Form 499-Q 126

66 FCC Form 499 Bundle Safe Harbors Two safe harbor methods for allocating bundle packages with telecommunications and CPE/enhanced services:» Report revenues based on all unbundled service offering prices & no discount allocated to telecommunications» Treat all bundled revenues as telecommunications revenues and nothing reported in line FCC Form 499 Source of Revenues for Class B carriers using USOA Basic area revenues on line 404 = Account 5001 Miscellaneous revenues for the incidental revenues on lines 403, 404, 406, 408 & 418 = Account 5200 Local network service revenues and local private line = Account 5000 End user special access line 406 = Account 5084 Tariffed SLC & PIC on line 405 = Account 5081 & 5082 These can be the same Part 32 account numbers for some 300 lines 128

67 FCC Form 499 Source of Revenues for Class B carriers using USOA Monthly mobile and message charges on lines 409 or 410 = Accounts 5000 and/or 5004 Toll services on lines 411 thru 417 = Account 5100 Directory revenues = Account 5200 Uncollectible revenues on lines 421 & 422 = Accounts 5300 and/or 5301 Payphone coin revenues on line 407 = Accounts 5280 and/or 7990 These can be the same Part 32 account numbers for some 300 lines 129 FCC Form 499 Companies use varying sub-accounts for further breakdown for Form 499 reporting by carrier or end user NECA companies can use payable accounts to record revenues reported to NECA and revenue accounts to record NECA settlements Ensures that NECA settlements are not reported to USAC 130

68 FCC Form 499 Block 4B (lines ) Total Revenue & Uncollectible Line 419, Gross billed revenues from all sources including reseller and non-telecom Lines 303 thru 314 plus Lines 403 through 418 Line 419 is line 118 on the Form 499-Q Line 420, Gross universal service contribution base amounts Lines 403 thru 411, Lines 413 thru FCC Form 499 Line 421, Uncollectible revenue/bad debt expense associated with gross billed revenue amounts shown on Line 419 Line 422, Uncollectible revenue/bad debt expense associated with universal service contribution base amounts shown on Line 420 Lines 421 and 422 include collected written off uncollectible and write-off recoveries Line 423, Net universal service contribution base revenues Line 420 minus Line 422 Line 423 are lines 119 & 120 of the Form 499-Q 132

69 FCC Form 499 Block 5 (lines ) Additional Revenue Breakouts Line 501, Filer 499 ID (repeat of Line 101) Line 502, Legal name of filer (repeat of Line 102) Lines 503 thru 510, Percent of revenues by each region of the country for Block 3, Carrier s Carrier and Block 4, End-User Telecom Customer billing addresses may be used to calculate or estimate» Line 510 must add to 100% 133 FCC Form 499 Line 511, Include revenue from resellers that do not contribute to Universal Service support mechanisms reported in Block 4-B, Line 420. Keep records of each customer with revenues reported on Line 511 Line 512, Gross TRS contribution base amounts (lines 403 thru 417 plus less line 511) Line 513, Uncollectible revenue associated with TRS base amounts on line 512 Line 514, Net TRS Contribution base revenues (line 512 less line 513) 134

70 FCC Form 499 Block 6 (lines Certification) Line 601, Filer 499 ID (repeat of Line 101) Line 602, Legal name of filer (repeat of Line 102) Line 603, Mark the box for Universal Service, TRS, NANPA, LNPA Administration if entity is exempt from contributing to those funds Line 604, Indicate whether the exempt entity is state or local government entity or Internal Revenue Code (I.R.C.) 501 Tax Exempt 135 FCC Form 499 Line 605, Certify that revenue data is privileged and confidential and that public disclosure would likely cause substantial harm to the competitive position of the company Those that certify will have to support this position in the case of a Freedom of Information Act request Line 606, Signature of officer Line 607, Printed name of officer Electronic signature is the equivalent to a handwritten signature. Line 608, Position with reporting entity Line 609, Business telephone number of officer 136

71 FCC Form 499 Line 610, of officer (required if available) If a general address, officer may not be able to go online and certify Line 611, Date filed Line 612, Check applicable box Original April 1st filing New filer registration Revised filing with updated registration Revised filing with updated revenue data 137 FCC Form 499 Common Errors/Omissions If you do not provide the information requested on every line, the Commission may consider you in violation of Commission rules Make sure there is an officer signature in ink on mailed form Enter 0 on the lines that you did not have revenues Do not report negative revenues 138

72 FCC Form 499 Report whole dollars Recover USF contributions in excess of amounts permitted Revise the Form 499 when out-of-period adjustments affect a reported amount by more than 10% Do not report NECA settlement revenues Uncollectibles need to tie back to year end Trial Balance 139 FCC Form 499 Do not send check with the Form 499 Line 403 column (d) / Line 423 column (d) should = average of the last four quarters contribution factors Revise Form 499-A if changes are made to contributor identification, DC agent, FCC registration information, error in revenue, and/or you are no longer in business or start a new entity within one week Use circuit self-certification when Access Service Order is not used for end user. Have them certify it does not have 10% interstate traffic or carries internet 140

73 FCC Form 499 Traffic Studies & Safe Harbor Traffic studies and safe harbors apply when there is a need to split revenues between state and interstate services Include Filer ID, Name, Holding Company (if applicable) at the top of each page Use same methodology for Form 499-A that was used in Form 499-Q Line 309, 409 & 410 mobile services Lines 303.2, 404.4, & interconnected VoIP 141 FCC Form 499 Safe harbor percentages vary by service; currently: 37.1% for cellular & broadband PCS revenues 12% for paging revenue 1% for analog SMR dispatch revenues 64.9% for interconnected VoIP telecommunications revenues 142

74 FCC Form 499 Reporting carrier makes an election to use a traffic study or safe harbor with each filing 499A must include revenues as reported in 499Qs Traffic study, if used, must be submitted with each 499Q No support is required at the time of filing Sent to FCC and USAC Subject to FCC OIG audit» Maintain all supporting documentation & data 143 FCC Form 499 Traffic study documentation Explanation of sampling and estimation methods used Explanation of why the study is an unbiased estimate of the interstate and international (if applicable) traffic Wireless traffic studies should include all types of minutes used to provision the wireless plan 144