FCC Reporting Requirements for Eligible Telecommunications Carriers Receiving High Cost Support
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1 FCC Reporting Requirements for Eligible Telecommunications Carriers Receiving High Cost Support CHR Solutions. All Rights Reserved. June 26, 2014
2 Table of Contents Executive Summary... 3 Five-Year Service Quality Improvement Plan... 4 Subsequent Improvement Plan Progress Reports... 4 Business Compliance Reports... 5 Service Outage Reports... 5 Unfulfilled Service Requests... 5 Complaints... 5 Certifications... 5 Voice Price Offerings... 6 Broadband Price Offerings... 6 Operating Company and Affiliates... 6 Tribal Engagement... 6 Network Performance Tests... 7 Financial Reporting... 7 No Terrestrial Backhaul... 7 Voice Rate Floor Data... 7 Lifeline Plans Terms and Conditions... 8 Begin Your Planning Process... 8 Planning Strategies... 9 Conclusion... 9 CHR Solutions. All Rights Reserved. Page 2
3 Executive Summary The FCC has adopted reporting requirements for eligible telecommunications carriers (ETCs) receiving high cost support and/or Lifeline support from the recently reformed federal Universal Service Fund (USF). These reforms are intended to modernize the USF High Cost program from a voice-centric program to one that expressly supports broadband-capable networks. CHR Solutions provides this whitepaper to summarize the reporting requirements for rate-of-return incumbent local exchange carriers (ILECs) which have been codified in 47 CFR (High Cost program) and (Low Income program). The required data is reported on FCC Form 481 the Carrier Annual Reporting Data Collection Form. For compliance purposes, the Universal Service Administrative Company s (USAC) FCC Form 481 Instructions and Online User Guide, as well as the actual rules and related FCC orders should be referenced. The annual reporting requirement for high cost support recipients has two components: Five-Year Service Quality Improvement Plan Business Compliance Reporting In order to receive full support throughout the next calendar year, FCC Form 481 must be filed annually with USAC, the FCC, your state public service commission, and/or a designated tribal authority (if applicable) by July 1 of each year. If FCC Form 481 is filed late, the ETC will lose support, based on the following schedule. If filed: by October 1, support is received for the second, third and fourth quarters of the subsequent year only. by January 1 of the subsequent year, support is received for the third and fourth quarters of the subsequent year only. by April 1 of the subsequent year, support is received for the fourth quarter of the subsequent year only. The Five-Year Service Quality Improvement Plan and Business Compliance Reporting requirements are summarized in the remainder of this whitepaper. CHR Solutions. All Rights Reserved. Page 3
4 Five-Year Service Quality Improvement Plan In 2014, ILEC ETCs must file a new five-year service quality improvement plan. The initial plan must describe the specific proposed improvements or upgrades to the company s network. It must also provide an estimate of the area and population that will be served as a result of the improvements. To the extent no improvements are planned, the five-year plan should indicate this. The five-year plan should focus on efforts to achieve, maintain, and/or improve upon the FCC s minimum broadband service requirements. These requirements currently include the capability to provide broadband speeds of at least 4 Mbps downstream and 1 Mbps upstream (4/1) and with sufficient quality to provide voice over Internet protocol (VoIP). Rate-of-return ILECs must offer 4/1 service upon their customers reasonable request. CHR Solutions recommends the five-year service quality improvement plan include: 1) a baseline network description that indicates current capabilities and outlines exchanges or census blocks that are 4/1 broadband capable, and 2) a five-year projected investment schedule that includes a narrative description of the specific investments that are planned each year by wire center or census block, and the estimated costs. Subsequent Improvement Plan Progress Reports Beginning in 2015, ILEC ETCs must include a progress report on their five-year service quality improvement plan. This progress report must include: Milestone Certification The ETC must certify that it is taking reasonable steps to provide upon reasonable request 4/1 broadband service with latency suitable for real-time applications (including VoIP), and usage capacity that is reasonably comparable to offerings in urban areas, and that requests are met within a reasonable amount of time. Data on Community Anchor Institutions The number, names, and addresses of community anchor institutions to which the ETC began offering broadband service in the prior calendar year. Maps Progress reports must contain maps that detail progress toward meeting the initial plan s targets at the wire center or census block level. USF Support Outline A detailed report explaining how much USF support was received and how it was used to improve service quality, coverage, or capacity. This outline should include: The total amount of USF received in the previous year, broken out separately by the amount spent on capital expenses and operating expenses. A report by wire center outlining how much USF was used to improve service quality, service coverage, and service capacity. If previously defined network improvement targets were not met in the prior year, an explanation as to why must be included. CHR Solutions. All Rights Reserved. Page 4
5 Business Compliance Reports In addition to the five-year service quality improvement plan, all ETCs receiving support from the High Cost program must submit other detailed information as summarized below: Service Outage Reports ETCs must outline any outage of voice service in the prior calendar year of at least 30 minutes in duration that potentially affected: At least ten percent of the end users served in the designated service area, or A 911 special facility. The outage report must detail: 1. The Network Outage Reporting System (NORS) reference number. 2. The outage start date and start time. 3. The outage end date and end time. 4. The number of customers affected by the outage and the total number of customers in the outage area. 5. Whether the outage impacted 911 facilities functionality. 6. The particular services affected. 7. A description of processes used to resolve the outage. 8. A description of procedures implemented to avoid future similar outages. Unfulfilled Service Requests ETCs must separately report the number of unfulfilled requests for voice service and broadband service from potential customers within the designated service area during the prior calendar year. You must also detail how you attempted to provide service to these potential customers. Complaints ETCs must separately report the number of complaints per 1,000 connections in the prior calendar year for: (1) fixed voice service, (2) mobile voice service, (3) fixed broadband service, and (4) mobile broadband service. USAC defines a customer complaint as any formal complaints filed with state regulatory commissions or the FCC. Certifications There are three separate certifications that ETCs must provide: Certification that the ETC is complying with applicable service quality standards and consumer protection rules for voice and broadband service. Certification that the ETC is able to function in emergency situations for voice and broadband service. This includes: CHR Solutions. All Rights Reserved. Page 5
6 o Having a reasonable amount of back-up power to ensure functionality without an external power source. o The ability to reroute traffic around damaged facilities. o The capability to manage traffic spikes resulting from emergency situations. Certification that the pricing of the company s voice services is no more than two standard deviations above the applicable national average urban rate for voice service, as specified in the most recent public notice by the Wireline Competition Bureau. Voice Price Offerings ETCs must report their voice telephone service price offerings. This includes local service rates and state fees in effect as of January 1 of the reporting year. Broadband Price Offerings ILEC ETCs must report each of their broadband service offerings that meet or exceed the high-cost speed requirements (currently 4/1) and usage allowance requirements (if any), along with the corresponding rates, as of January 1 of the reporting year. If the ETC provides retail broadband through a separate ISP affiliate, the ETC is required to provide information concerning the retail service offerings of the ISP. Operating Company and Affiliates ETCs must report their operating company name, holding company, and all affiliates that are either (1) designated ETCs themselves, or (2) provide retail broadband Internet access to end-user customers. ETCs must also report the study area codes associated with any affiliates that are ETCs and any branding (i.e., a dba, doing-business-as company, or brand designation) associated with any of the affiliates. Tribal Engagement ETCs serving Tribal lands must provide a document that delineates the company s contacts with Tribal government officials and explains the company s processes for complying with Tribal government regulation. At a minimum, Tribal engagement discussions should include the following and be conducted by company principals (not sales and marketing staff): A needs assessment and deployment planning with a focus on Tribal community anchor institutions. Feasibility and sustainability planning. Marketing services in a culturally sensitive manner. Compliance with rights of way processes, land use permitting requirements, facilities sitting rules, environmental review processes, cultural preservation review processes, and Tribal business and licensing requirements. CHR Solutions. All Rights Reserved. Page 6
7 These discussions should be documented and retained. All efforts to engage with Tribal leadership should be documented as well. Network Performance Tests ETCs must provide 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. 1 Financial Reporting Privately held rate-of-return carriers must file a full and complete annual report of the company s financial condition and operations as of the end of the preceding fiscal year. Privately held rate-of-return ETCs that are Rural Utilities Service (RUS) borrowers may file a copy of the prior year s RUS Operating Report for Telecommunications Borrowers in lieu of a traditional financial statement. Privately held rate-of-return ETCs whose financial statements are independently audited in the ordinary course of business must provide either (1) a copy of their audited financial statement, or (2) a financial report in a format comparable to RUS Operating Report for Telecommunications Borrowers, accompanied by a management letter issued by the independent CPA that performed the financial audit. Privately held rate-of-return ETCs whose financial statements are not audited in the ordinary course of business must provide either (1) a copy of their financial statement which has been subjected to review by an independent CPA, or (2) a financial report in a format comparable to RUS Operating Report for Telecommunications Borrowers, with the underlying information subjected to review by an independent CPA. Either document must be accompanied by an officer certification that: (a) the carrier was not audited in the ordinary course of business for the preceding fiscal year, and (b) the reported data are accurate. No Terrestrial Backhaul ETCs that lack terrestrial backhaul capability and rely on satellite backhaul exclusively in their study area must certify annually that (1) no terrestrial backhaul options exist, and (2) broadband is offered at actual speeds of at least 1 Mbps downstream/256 kbps upstream within the area served by satellite middle-mile facilities. Voice Rate Floor Data ILEC ETCs must report all of their rates for residential local voice service and certain state fees to the extent the sum of those rates and fees are below the FCC s most recently established rate floor. The number of lines for each rate must also be specified. This reporting requirement is not part of FCC Form 481 but it is also due on July 1 each year. 1 At the time of this whitepaper s publishing, ETCs are not required to submit any information pursuant to this requirement. CHR Solutions. All Rights Reserved. Page 7
8 On March 20, 2014, the FCC announced a local rate floor of $20.46 based on the results of an urban rate survey for fixed voice services. However, on April 23, 2014, the FCC adopted an Order that delays and phases in associated reductions in universal service support related to that rate floor. The phase-in operates as follows: For lines reported on July 1, 2014, there will be no reduction in high-cost universal service support for lines with a rate of $14 or greater. Between January 2, 2015 through June 30, 2016, support reductions will apply to lines with rates below $16. Between July 1, 2016 and June 30, 2017, support reductions will apply to lines with rates below $18 or the rate floor established by the 2016 urban rate survey, whichever is lower. Between July 1, 2017 and June 30, 2018, support reductions will apply to lines with rates below $20 or the rate floor established by the 2017 urban rate survey, whichever is lower. Lifeline Plans Terms and Conditions Section (b)(5) requires that ETCs provide information describing the terms and conditions of any voice telephony service plans offered to Lifeline Program subscribers. The information must include details on the number of minutes provided as part of all Lifeline plans offered, any additional charges for toll calls, and the rates for each plan. The reporting requirements may be met by providing an address to a website containing the required information, or by providing documentation. Begin Your Planning Process CHR Solutions urges all clients to begin preparing for the FCC Form 481 reporting requirements well in advance of the July 1 filing deadline. There are severe penalties for not complying which may impact your ability to serve customers with affordable and comparable broadband services. Even if your company already meets the 4/1 standard for broadband, continued receipt of high-cost USF support still requires that you to submit a five-year service quality improvement plan, along with the other business compliance data required by FCC Form 481. You should build your five-year plan around achieving and maintaining the 4/1 standard, as well as upgrading to higher capabilities, as the FCC intends to periodically review their broadband performance requirements. This process can help facilitate a thorough strategic review of your broadband strategy, which CHR Solutions encourages. A comprehensive migration from narrowband time-division multiplexing (TDM) to broadband IP networks requires a comprehensive plan. Key factors to consider during this planning process include: Anticipate future usage - Longer hold times, reduction in oversubscription at peak usage times. CHR Solutions. All Rights Reserved. Page 8
9 We re moving into an unstable investment recovery environment, yet significant investment is required to achieve the IP transition. Base your plan on sound engineering, with financial prudence, yet be flexible and prepared for changes to the plan. While a financial pro forma is not required, CHR recommends a strategic internal review of financial implications before a plan is provided to the FCC using updated assumptions. Planning Strategies Here are a few strategies to begin your planning process: Ascertain and Document Your Current Situation Identify your current capabilities to understand where you currently offer broadband services that meet the 4/1 requirement. Determine your current mapping capabilities and identify the resources necessary to develop maps of your broadband service territory. Identify High Cost Areas Take a comprehensive inventory of all of your high cost areas and ensure they can be easily plotted on your maps. Identify Financially Feasible Territories Take a comprehensive inventory of all of your territories in which it is currently financially feasible to achieve the 4/1 requirement. Conclusion These reporting requirements create an immediate call to action. CHR Solutions can work with you to create a comprehensive action plan to successfully meet these requirements and provide you with complete support to ensure ongoing compliance. CHR Solutions. All Rights Reserved. Page 9
FCC Reporting Requirements for Eligible Telecommunications Carriers Receiving High Cost Support
FCC Reporting Requirements for Eligible Telecommunications Carriers Receiving High Cost Support CHR Solutions. All Rights Reserved. September 19, 2012 Table of Contents Executive Summary... 3 Five Year
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