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FCC Increases 2014 Voice Rate Floor to $20.46

The FCC has set a new rate floor of $20.46 for eligible telecommunications carriers (ETCs).

The Wireline Competition Bureau announced the change March 20, after completing a survey initiated on December 16, 2013.

The Bureau is also seeking comment on a petition to extend the deadline for compliance with the new rate floor. Several rural associations filed a petition to extend the deadline from July 1, 2014 to January 2, 2015.

Oppositions are due March 21; replies due March 31.

Rural carriers are complying with an FCC mandated three-step rate floor, in order to continue receiving high-cost loop support.  Local residential calling rates increased to $10 in July 2012 and $14 In July 2013.

The national urban average at the time of the first rate increase was $15.47.

Along with the 2014 rate floor, the FCC set the reasonable comparability benchmark for voice services at $46.96.

Read the Public Notice here.


Rural Carriers Expand Local Calling Areas

October 1, 2013

Researchers at Tele-Tech Services report that several Rural Incumbent Local Exchange Carriers (RLECS) in Texas, South Dakota and Kentucky are expanding their local calling areas. In some cases, providers are extending the local area by as much as two LATAs.

Thacker-Grigsby Telephone Company’s April 2013 tariff filing reveals why. The Kentucky RLEC is attempting to offset its higher local calling prices, by offering local rates to areas that, in the past, would have been considered long distance. Thacker-Grigsby serves four counties in eastern Kentucky.

Rural carriers are complying with an FCC mandated three-step rate floor, in order to continue receiving high-cost loop support.  Local residential calling rates increased to $10 in July 2012. This past July, the rate went up to $14. The Wireline Competition Bureau will set rates in 2014 and after.

These changes are part of the 2011 Universal Service Fund and Intercarrier Compensation Reform Order. The rate-of-return reform portion aims to reduce what Commissioners believe is an over-dependence on high-cost support, which keeps rural rates artificially low. The national urban average is $15.47.

Here are some of the updates we’ve made to our local data since June 2013:

  • TX – Nortex Communications increased the local calling scope for all of its exchanges to include toll free calling to all exchanges in the Dallas LATA (552) and the Wichita Falls LATA (548) under Project 41519.
  • TX – Southwest Texas Telephone Company enlarged local calling areas from its exchanges to exchanges in LATA 566, where 210 and 830 are the primary NPAs under Project 41457.
  • TX – Peoples Telephone Cooperative enlarged local calling areas by allowing toll free one way local calling scope within all exchanges owned by company under Project 41374.
  • TX – Cap Rock Telephone Cooperative enlarged the local calling area with a toll-free calling scope within the entire Lubbock LATA 544 under Project 41340.
  • TX – Alenco Communications enlarged the local calling areas slightly by removing an optional EAS and replaced with a mandatory toll free local calling scope (ELCS) to allow local calls to Laredo and calls to Mexia and Grossbeak from Donie.
  • SD, NE, WY – Golden West Telephone Cooperative is a large company that contains many smaller rural companies: Kadoka Telephone, Vivian Telephone, Sioux Valley Telephone all D/B/A Golden West Telephone.  The expanded local calling is described as “Golden West is expanding your local calling area”.  The new expanded local calling areas are located on each side of the Missouri River with toll free calling to all Golden West areas on each side of the Missouri River; basically two way toll free calling within all exchanges owned by Golden West.
  • KY – Thacker-Grigsby  Communications offered their customers a new Limited Extended Area Calling plan.  Residential  customers have 1,000 free minutes per month, business customers have 1,500 free minutes per month to call the seven surrounding counties, including over 30 additional exchanges.

By expanding local calling areas, do you think RLECs can retain their customers?  What consequences might this have on intercarrier billing? We want to hear your opinion. Leave comments below.


Intercarrier Compensation Reform: Cause and Effect

Monday, July 1, 2013

Implementation of the FCC’s Universal Service Fund and Intercarrier Compensation reform is revealing winners and losers in the process. Continue reading


Winners Announced in FCC Mobility Fund Auction

Thursday, October 4, 2012

The FCC’s Mobility Fund Phase I Auction ended with 33 carriers winning bids, making them eligible to share $300 million in one-time support.

Within 3 years, it’s expected that millions of subscribers will have access to 3G or 4G networks. Buildout will begin immediately covering 83,000 miles in 31 states.  Click here to view a map showing buildout locations.

An additional $50 million in one-time support will be given to Tribal Lands. Phase II of the Mobility Fund provides $500 million in annual support.

The Commission created the Mobility Fund through the USF/ICC Transformation Order, which aims to expand broadband access.

Bid winners are listed below:

  1. Allied Wireless Communications Corporation, $45,853,493.28
  2. Carolina West Wireless, Inc., $20,799,100.00
  3. Central Louisiana Cellular, LLC, $3,356,350.03
  4. Commnet Four Corners, LLC, $649,992.39
  5. Commnet of Nevada, LLC, $21,060,477.75
  6. Cross Wireless, LLC, $1,220,172.74
  7. Eagle Telephone System, Inc., $123,081.40
  8. East Kentucky Network, $4,405,669.35
  9. GCI Communication Corp., $3,242,066.52
  10. Georgia RSA 8 Partnership, $1,236,530.90
  11. Hardy Cellular Telephone Company, $5,611,075.20
  12. Leaco Rural Telephone Cooperative, Inc., $6,735,151.02
  13. NE Colorado Cellular, Inc., $40,206,273.04
  14. NEP Cellcorp, Inc., $6,732,006.10
  15. Oklahoma Western Telephone Company, $903,058.02
  16. Pine Belt Cellular, Inc., $10,237,374.56
  17. Pine Cellular Phones, Inc., $5,098,190.00
  18. Pinpoint Wireless, Inc., $584,936.91
  19. Plateau Telecommunications, Incorporated, $9,320,009.63
  20. Powertel/Memphis, Inc., $4,422,918.06
  21. PTI Pacifica Inc., $1,264,939.08
  22. Sagebrush Cellular, Inc., $3,685,265.22
  23. Standing Rock Telecommunications, Inc., $3,320,527.21
  24. Texas 10, LLC, $6,601,433.12
  25. TexNet 4G, LLC, $5,161,170.28
  26. T-Mobile Northeast LLC, $3,706,899.52
  27. T-Mobile West LLC, $19,311,168.40
  28. Union Telephone Company, $22,831,980.00
  29. United States Cellular Corporation, $30,917,185.31
  30. USCOC of Central Illinois, LLC, $3,581,760.70
  31. VTel Wireless, Inc., $2,055,840.18
  32. West Virginia PCS Alliance, L.C., $5,000,086.72
  33. Wichita Online, Inc., $762,449.61

FCC Ends Access Recovery Charge Investigation for Some Carriers

Monday, August 6, 2012

The FCC on August 1 terminated an investigation into tariffs filed by 16 price cap ILECs. Last month, the Commission suspended for one day Access Recovery Charge (ARC) rates submitted in the 2012 annual access charge tariff filings and ordered an investigation into those carriers’ calculation of Eligible Recovery.

New rules allow carriers to impose an ARC on subscribers in order to offset declining intercarrier compensation revenue.

Further review by the FCC determined that “certain carriers either correctly calculated their FY 2011 revenues and their Eligible Recovery amounts in their initial tariff filings or corrected such calculations in subsequent amendments to their tariff filings.”

Read a copy of the August 1 Order on Reconsideration here.


FCC Investigates Access Recovery Charge Rates

Tuesday, July 10, 2012

Almost all carriers who filed Access Recovery Charge (ARC) rates in their 2012 access tariff filing will be under increased scrutiny this next year. The USF/ICC Transformation Order allows carriers to impose an ARC on subscribers, as a way to offset declining access charge revenue during the transition to a bill-and-keep regime.

On July 2, the FCC suspended ARC rates for one day and ordered an investigation into carriers’ calculation of Eligible Recovery. The FCC on its own motion initiated the investigation, because it questions whether the filed tariffs comply with the Transformation Order.

While the ARC rates suspended by the FCC have since gone into effect, carriers have been ordered to keep accurate account of all revenue received that is associated with the rates being investigated.

In a statement to members, the National Exchange Carrier Association (NECA) said its revised End User Common Line, Federal Universal Service Charge and various special access rates are not subject to the investigation and accounting order.

We wrote in our July newsletter that compliance questions remain despite the Commission’s numerous clarifications and corrections. This latest Order simply reinforces the wide-spread complaint of a lack of clear direction from the FCC on how to calculate new and revised charges as required by the Transformation Order.


Frontier, Windstream Successfully Petition for VoIP-ICC Rule Changes

Thursday, May 3, 2012

Local exchange carriers (LECs) will now be allowed to tariff a higher transitional default rate for originating intrastate toll VoIP traffic until June 30, 2014.

The USF/ICC Transformation Order originally required LECs to transition down the default rate for intrastate VoIP traffic to interstate levels.

Frontier and Windstream, along with the Rural Associations, petitioned against the new rule back in December 2011. One of the requests, was that the Commission clarify the Order does not apply to intrastate originating access rates for calls originating on the PSTN and terminating VoIP.

While the Commission rejected the group’s interpretation of the Order, it did modify the rules so that originating intrastate VoIP traffic could be assessed at the intrastate, rather than interstate level.

The FCC adopted the changes April 24. Read a copy of the Reconsideration Order here.


FCC Seeks Comments on USF Contribution Reform

Monday, April 30, 2012

The FCC adopted a Further Notice of Proposed Rulemaking on Universal Service Fund (USF) Contribution Reform at its April 27 Open Meeting.

The Notice seeks comments on what services and service providers should contribute to the fund, how contributions should be assessed, how to reduce costs and promote transparency, and limitations on how providers recover their USF costs.

Carriers pay a percentage of their interstate and international revenue into the USF. The contribution factor, currently at 17.4 percent, has been steadily increasing for the last several quarters.

The FCC acknowledges that the USF contribution system, with its increasing costs and complex compliance rules, is an inefficient program that creates unfair advantages for some providers. The Cellular Telecommunications Industry Association (CTIA) released a statement shortly after the Open Meeting saying, “roughly 44 percent of the contribution burden falls on wireless providers and their customers.”

As a result, many carriers are taking a closer look at how they report their revenue. Knowing how much of the traffic on your network is interstate and international is the best way to ensure you’re paying only what you should into the USF. And the best way to accurately calculate that number is through a detailed traffic study.

Contact Kim Russo at krusso@telecomdb.com to learn more.


Notes from COMPTEL PLUS Spring 2012 Convention – PART 2

Wednesday, April 18, 2012

A perspective from Kim Russo, Co-President

I heard a comment in one of Tuesday’s seminars that was right on the money. The FCC in its ICC/USF Reform Order spends 60 pages saying, we’re not classifying VoIP as a telecom service, but we’re not saying it isn’t a telecom service either.

That’s just one example of why there’s so much dispute over how to implement last year’s reforms. But one thing is admittedly clear. In spite of all the quarrels and questions, reform is moving forward.

In continuing with my earlier post, here’s a recap from Tuesday.

Implementing ICC/USF Reform – The Next Steps in the States
Moderated by Joe Gillan of Gillan Associates, speakers included John Burke, Vermont Public Service Board and Telecommunications Committee Chair at NARUC; Sarah DeYoung, Executive Director of CALTEL; Roy Lathrop, Senior Director at NCTA and Pamela Hollick, VP of Regulatory at tw telecom.

This seminar looked at how states are implementing the ICC/USF Reform Order as well as the effects on CLECs, cable providers and state regulators.

From cable’s perspective, Roy Lathrop (NCTA) said it’s good the USF now has a budget. Companies are also pleased that the Connect America Fund (CAF) is limited to areas where there is no unsubsidized competitor offering service. Overall, cable providers like the reform but want states to be careful with implementation.

John Burke (NARUC) said he understands cable’s concerns. Burke believes cable companies will now be less secretive about where their systems are. For states, the big issue is intrastate access. Eliminating that revenue makes it more difficult for state programs to serve at-risk customers.

Pam Hollick (tw) pointed out that state statutes have provisions allowing providers to ask for supplemental USF funding if federal support wanes. The question is, are states required to provide that stop gap funding? A number of states are currently looking at how to reconcile that with the Reform Order.

Wrapping it Up
For me, this spring’s COMPTEL PLUS was an invigorating experience. More than 2,000 attendees talked about issues and solutions to move the industry forward. There’s been a sort of stalemate over the last few years as we watched the FCC craft its reform plans and then finally adopt the official Order. I think most of us are done digesting the pieces. Now, it’s time to plan and execute a profitable strategy for the future.


Notes from COMPTEL PLUS Spring 2012 Convention

Tuesday, April 17, 2012

A perspective from Kim Russo, Co-President

COMPTEL CEO Jerry James didn’t mince words in his opening remarks Monday when he called Intercarrier Compensation reform “a disaster”. The FCC’s historic overhaul of the Universal Service Fund and Intercarrier Compensation system faces numerous reconsideration petitions, along with legal challenges, since its adoption last year.

Those working in the telecom industry are now trying to figure out what’s next. According to James, critical issues in this post-ICC reform era are IP to IP interconnection, special access, last mile access, Cyber security, privacy, spectrum and ILEC forbearance.

I’ve had a great time so far being able to discuss the current industry situation and share challenges and success stories with peers at the COMPTEL PLUS Spring 2012 Convention & Expo in San Francisco. On Monday, I also had the opportunity to attend two very informative seminars.

ICC Reform: What’s the Bottom Line Impact?    
A lot of people are looking for that answer, which is why this seminar was packed! The topic:  “bill and keep” and the internal cost and process changes involved.

The event was moderated by Carey Roesel, VP of Technologies Management Inc. (TMI), with speakers Michael Beach, Co-Founder of HighTide Partners; Paul Florack, VP of Product Management at Transaction Network Services, Inc. and attorney James Lister of Birch Horton Bittner and Cherot.

For starters, they all agree that the reform process will take several years, which means company leaders will need to manage the transition. The challenge in managing this transition is that some major provisions are still in dispute. According to Michael Beach, we’ll continue to see appeals, reconsiderations and NPRMs.

One of the key provisions in the reform is that switched access and reciprocal compensation goes to zero. This process will lead to winners and losers, and Beach outlined the following process to manage the change.

  1. Understand impacts and timeliness, quantify them.
  2. Determine tactical move, billing changes, tariffs.
  3. Modify plan with changes.
  4. Support customers.

IP Interconnection: What is the Optimal Regulatory Framework for the Industry?
This is a question that has yet to be answered at the federal level, although there is a pending FCC rulemaking process covering interconnection arrangements for the exchange of voice in IP format.

The seminar explored regulatory issues surrounding such interconnection, with insight coming from the CLEC, ILEC and cable and edge provider’s perspectives. Judging from comments made in this hour-long discussion, it’s possible to imagine how daunting a task this must be for the FCC to tackle.

Moderated by Thomas Jones of Willkie Farr & Gallagher, speakers included Joe Gillan of Gillan Associates; Hank Hultquist, VP of Federal Regulatory at AT&T and Richard S. Whitt, Director and Managing Counsel for Telecom and Media Policy at Google.

Hank Hultquist (AT&T) called the transition to IP networks “messy”. Not only is it complicated, it’s also wrapped up in regulation; and he proposes that the FCC identify and remove obstacles. One of the biggest challenges is that the Commission has not set a date for a full transition from TDM. The industry also needs to define what IP to IP interconnection means.

Richard Whitt (Google) agreed that the transition is fraught with too much regulation. He advocated for a process in which the industry reaches agreements organically, involving the FCC only when necessary. Whitt also pointed out that the Telecommunications Act requires carriers to interconnect in a good faith effort. He sees a future with possibly two Points of Interconnection in the country for big service providers, and medium and small companies would be asked to bring traffic to those points.

Coming from the CLEC perspective, Joe Gillan said the legal framework, which currently applies to the PSTN, should remain intact even with technology changes. He singled out AT&T, stating the carrier wants statutory protections to go away with technology changes when those statutes should stay in place. He accused larger networks of not treating smaller networks as equals. He suggested AT&T work with these smaller networks and state commissions to resolve their disagreements.

I couldn’t help but notice, as an observer, that the conversation soon became an argument pitting the “big guys” versus the “little guys”.

Gillan said section 251 of the Act was put there to even things out between small guys and big guys and needs to remain.

Hultquist countered that the applicable part of the Act is section 251e, which establishes FCC authority for numbering resources. He cited a need to share routing information for IP interconnection and believes the first thing we need is a date mandated by the FCC for companies who have IP end points to share routing information.

Gillan added that in the end, it will not be the FCC that decides these issues, but the courts.

The bottom line: there is no easy answer. When the FCC finally issues an NPRM on IP interconnection, it’s likely to receive much rancorous debate.