FCC Order USF/ICC Reform Order

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1 CONTACT FCC Order USF/ICC Reform Order REGULATORY DUE DATES SUMMARY Date Filing Submit to Notes December 29, 2011 Billing of Access for VoIP-PSTN Traffic May 23, 2012 CAF Support Projection NECA annually by 3/31 July 2, year Build-Out Plan & Service Quality Reporting - FCC Reporting Carriers Only FCC for all carriers Pricing Information, Ownership and Tribal Engagement Reporting FCC July 1, 2013 Pending OMB Approval Report on Financial Conditions & Operations (Audit) FCC April 2, 2012 Low Income Program changes effective FCC June 30, 2012 Final ICLS Certification Due FCC Price Cap and ROR Carriers: Establish Eligible CAF NECA/ June 30, 2012 ICC Funding FCC/PUC Residential Rate Floors Begin ($10/$14/National July 1, 2012 Average) Begin 6-Year Transition to $3.00 ARC for Residential July 1, 2012 and Single-Line Business Begin 7-Year Transition to $6.00 ARC for Multi-Line July 1, 2012 Business (3-year if SLC is $9.20) Begin 9-Year Transition to Bill and Keep for Reciprocal Compensation to CLECs for Rate of July 1, 2012 Return Begin 7-Year Transition to Bill and Keep for July 1, 2012 Reciprocal Compensation to CLECs for Price Cap Cap All Interstate and Terminating Intrastate Switched December 29, 2011 Access Rates Begin 9-Year Transition to Bill and Keep for ROR July 1, 2012 Carriers Begin 6-Year Transition to Bill and Keep for Price Cap July 1, 2012 Carriers annually by March 31 Fiscal years beginning July 1 October 1, 2012 State PUC Certification of ETCs FCC annually by 10/1 Mobility Fund Applicant Certification of 3G/4G December 31, 2012 Deployment FCC MARCH Data Reporting & True-Up Procedures March 31, 2012 and annually Each rate of return carrier shall submit to the Administrator projected data necessary to calculate the carrier s prospective CAF Support for each of its study areas in the upcoming funding year Updated 5/331/12

2 APRIL Annual Reporting Requirements for High-cost Recipients 5-Year Build-Out Plan April ETCs that receive high-cost support will file the information required by new section with the Commission, USAC, and the relevant state commission, relevant authority in a U.S. Territory, or Tribal government, as appropriate. o April 1, 2012 ETCs designated by FCC, still required to file progress report on existing plan o April 1, 2012 ETCs designated by state commission still comply with state but nothing filed with FCC o July1, 2013 and annually All ETCs designated by FCC and state must file plans with new broadband obligations and copies to relevant state commissions It requires that an officer of the company certify to the accuracy of the information provided and make the certifications required by new section , with all certifications subject to the penalties for false statements imposed under 18 U.S.C Outage Reporting, Unfulfilled Service Requests, Certification of Compliance with Applicable Service Quality Standards & Consumer Protection Rules, Certification of Ability to Function in Emergency Situations, and Complaints July 2, 2012 ETCs designated by FCC, still under filing rules for outages of at least 30 minutes July 2, 2012 ETCs designated by state commission: o If similar report not required by state then no filing required o If similar report required by state then file relevant data with FCC. July 1, 2013 & annually All ETCs approved by FCC or state must file data broken out by voice and broadband. Price Offerings, Ownership Information, Additional Certifications & Additional Voice Rate Data, and Tribal Reporting (if you serve tribal land) July 1, 2013 (pending OMB approval) and annually all ETCs receiving High- Cost Support, report information broken out by voice and broadband Full and Complete Annual Report of Financial Conditions and Operations Pending OMB Approval, July 1, 2013 annually for privately held-rate of return carriers only. FCC Order 12-11, Low Income Program Changes April 2, 2012 New FCC Form 497 will be posted when available

3 April 2, 2012 ETC s non-tribal support will equal $9.25 per month and Link Up support is gone after March 2012 April 2, 2012 No More Tiers 1-3 April 2, 2012 ETC s tribal support up to an additional $25 for tribal land residents and Link Up covers 100% of the customary charges up to $100. April 2, 2012 Toll Limitation Service incremental cost study support is capped at the lesser of $3 per lifeline subscriber or actual cost. JUNE Final Certification June 30, 2012 Carriers will file a final certification under section covering the program year Administration of Connect America Fund June 30, 2012 Price cap carriers seeking CAF ICC support pursuant to shall file data with the Administrator, the Commission, and the relevant state commissions for the first year, and no later than March 31, in subsequent years, establishing the amount of the price cap carrier s eligible CAF ICC funding during the upcoming funding period pursuant to June 30, 2012 Rate-of-return carriers seeking CAF ICC support shall file data with the Administrator, the Commission, and the relevant state commissions no later than June 30, 2012 for the first year, and no later than March 31, in subsequent years, establishing the rate-of-return carrier s projected eligibility for CAF ICC funding during the upcoming funding period pursuant to The projected amount shall include any true-ups, pursuant to associated with an earlier funding period. JULY Read on Local Urban Rate Floor Start looking at this now. Rate floors begin. Initial rate floor of $10 for the period July 1, 2012 through June 30, 2013 and $14 for the period July 1, 2013 through June 30, Beginning July 1, 2014, and in each subsequent calendar year, the rate floor will be established after the Wireline Competition Bureau completes an updated annual survey of voice rates. Under this approach, the Commission will reduce, on a dollar-for-dollar basis, HCLS and CAF Phase I support to the extent that a carrier s local rates (plus state regulated fees) do not meet the urban rate floor. This may require dialog with the state commissions to address how the residential rates can be increased to keep the high cost supports. High cost support includes all federal supports. To determine if you need to increase your residential rate to the rate floor; add the residential rate, mandatory extended area service (EAS), state

4 subscriber line charges, and state universal service fees. Do not include federal subscriber line charges in this test Revenue Recovery for Rate-of-Return Carriers, Item (6) on the ARC The FCC set up a transitional recovery mechanism to mitigate the effect of reduced intercarrier revenues on carriers. If you elect to receive CAF support; the Access Recovery Charge (ARC) may apply. This will be tariffed by NECA. The FCC allowed the ILECs to recover a limited portion of their Eligible Recovery from their end users through a monthly fixed charge called an ARC. It is not billed to a lifeline customer. For administrative and billing efficiencies carriers may combine the charges as a single line item on a bill. We will see what USAC says about reporting this on the Form 499. There is a Residential Rate Ceiling that prohibits imposing an ARC on any consumer paying an inclusive local monthly phone rate of $30 or more. To minimize the burden on multi-line businesses, LECs are not allowed to charge a multi-line business ARC where the SLC plus ARC would exceed $12.20 per line. This limits the ARC for multi-line businesses for entities at the current $9.20 cap to $3.00. Rate Ceiling Component Charges consists of the federal end user common line charge and the Access Recovery Charge; the flat rate for residential local service, mandatory extended area service charges, and state subscriber line charges; per-line state high cost and/or state access replacement universal service contributions, state E911 charges, and state TRS charges. The ARC for single line business & residence (excluding lifeline) i. July 1, 2012, a maximum of $0.50 per month for each line; ii. July 1, 2013, a maximum of $1.00 per month for each line; iii. July 1, 2014, a maximum of $1.50 per month for each line; iv. July 1, 2015, a maximum of $2.00 per month for each line; v. July 1, 2016, a maximum of $2.50 per month for each line; and vi. July 1, 2017, a maximum of $3.00 per month for each line. For each multi-line business: i. July 1, 2012, a maximum of $1.00 per month; ii. July 1, 2013, a maximum of $2.00 per month; iii. July 1, 2014, a maximum of $3.00 per month; iv. July 1, 2015, a maximum of $4.00 per month; v. July 1, 2016, a maximum of $5.00 per month; and vi. July 1, 2017, a maximum of $6.00 per month LEC Rates for Transport and Termination Effective July 1, 2012 Telecommunications carrier s Non-Access Reciprocal Compensation rates in effect shall be reduce its reciprocal compensation rate by one half of the difference between the Non-Access Reciprocal Compensation rate and the corresponding functionally equivalent interstate access rate.

5 Effective July 1, 2013 No telecommunications carrier s Non-Access Reciprocal Compensation rates shall exceed that carrier s tariffed interstate access rate in effect in the same state on January 1 of that same year, for equivalent functionality. After July 1, 2018 All Price-Cap Local Exchange Carrier s Non-Access Reciprocal Compensation rates and all non-incumbent LECs that benchmark access rates to Price Cap Carrier shall be set pursuant to Bill-and-Keep arrangements for Non-Access Reciprocal Compensation as defined in this subpart. After July 1, 2020 All Rate-of-Return Local Exchange Carrier s Non-Access Reciprocal Compensation rates and all non-incumbent LECs that benchmark access rates to Rate-of- Return Carriers shall be set pursuant to Bill-and-Keep arrangements for Non-Access Reciprocal Compensation as defined in this subpart & Transition of Carrier Access Charges Cap the rates for all rate elements for services contained in the definitions of End Office Access Service, Tandem Switched Transport Access Service, and Dedicated Transport Access Service, as well as all other interstate switched access rate elements, in its interstate switched access tariffs at the rate that was in effect on the December 29, Cap, in accordance with (b)(2), the rates for all rate elements in its intrastate switched access tariffs associated with the provision of terminating End Office Access Service and terminating Tandem-Switched Transport Access Service at the rates that were in effect. This will require State and Interstate Tariff Changes INTERCARRIER COMPENSATION REFORM TIMELINE Effective Date July 1, 2012 For Price Cap Carriers and CLECs that benchmark access rates to price cap carriers All intercarrier switched access rate elements, including interstate and intrastate originating and terminating rates and capped. and transport rates, originating and terminating dedicated transport, and reciprocal compensation rates, if above the carrier s interstate access rate, are reduced by 50 percent of the differential between the rate and the carrier s interstate access rate. For Rate-of-Return Carriers and CLECs that benchmark access rates to rate-of-return carriers All interstate switched access rate elements, including all originating and terminating rates and reciprocal compensation rates are capped. Intrastate terminating rates are also capped. and transport rates, originating and terminating dedicated transport, and reciprocal compensation rates, if above the carrier s interstate access rate, are reduced by 50 percent of the differential between the rate and the carrier s interstate access rate.

6 INTERCARRIER COMPENSATION REFORM TIMELINE July 1, 2013 July 1, 2014 July 1, 2015 July 1, 2016 July 1, 2017 July 1, 2018 July 1, 2019 July 1, 2020 and transport rates and reciprocal compensation, if above the carrier s interstate access rate, are reduced to parity with interstate access rate. reduced by one-third of the differential between end office rates and $ * reduced by an additional one-third of the original differential to $ * reduced to $ * reduced to bill-and-keep. Terminating switched end office and transport are reduced to $ for all terminating traffic within the tandem serving area when the terminating carrier owns the serving tandem switch. transport are reduced to bill-and-keep for all terminating traffic within the tandem serving area when the terminating carrier owns the serving tandem switch. and transport rates and reciprocal compensation, if above the carrier s interstate access rate, are reduced to parity with interstate access rate. reduced by one-third of the differential between end office rates and $ Nothing in this Step shall affect Tandem Switched Transport access rates or Dedicated transport. reduced by an additional one-third of the original differential to $ * reduced to $ * Terminating end office and reciprocal compensation rates are reduced by onethird of the differential between its end office rates ($0.005) and $ * reduced by an additional one-third of the differential between its end office rates as of July 1, 2016 and $ * reduced to $ * reduced to bill-and-keep. * Transport rates remain unchanged from the previous step. CLECs must follow benchmark rules. Carrier common line rate elements are included in the new definition of End Office Access Service -- see rule (d) in Appendix A. The CCL charge in 2013 must be no greater than the CCL charge in a carrier's interstate tariff, which in some cases may be greater than zero. Those charges are then transitioned as end office access services.

7 OCTOBER Certification of support for eligible telecommunications carriers On or before October 1 annually States that desire eligible telecommunications carriers to receive support pursuant to the high-cost program must file an annual certification with the Administrator and the Commission stating that all federal high-cost support provided to such carriers within that 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. High-cost support shall only be provided to the extent that the State has filed the requisite certification pursuant to this section. DECEMBER December 31, 2012 Applicant for Mobility Fund Phase I support must certify that it will not seek support for any areas in which it has made a public commitment to deploy 3G or better wireless service. For mobile providers; projected revenues and expenses, on cell-site basis, for 5 years, with and without the waiver it seeks. In developing revenue and expense projections, petitioner should assume that it is required to serve those areas in which it is the sole provider for the entire five years and that it is required to fulfill all of its obligations as an ETC through December Transition for VoIP-PSTN Traffic Effective December 29, 2011 Interstate Access Tariff should address VoIP-PSTN toll traffic. State Access Tariff should address VoIP-PSTN toll traffic that are not covered by an agreement and refer to the interstate access rates if the state rates are higher than the interstate rates. Companies are filing this in January 2012.

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