Rate Floor Benchmark Deadline Approaches for HCLS Recipients

Clients Should Begin Preparing for the
Next Benchmark Increase

Clients that receive High Cost Loop Support (HCLS) are reminded that they must have their local residential rates plus state-regulated fees (state SLCs, state USF, and mandatory EAS charges) at or above the local rate floor benchmark before the following upcoming deadlines to avoid a reduction in Universal Service Funding (USF).

$16 Benchmark: January 2, 2015–July 1, 2016
Companies that did not initially meet the $16 benchmark but subsequently raised their rates can take advantage of mid-year filings so that they no longer receive reduced USF. The last mid-year filing was in June and the next filing will be in December. Accordingly, if your company was below the $16 benchmark as of June 1, 2015, but subsequently raised its rates, your company should file with NECA in December to reflect the higher rates and updated line counts in order to avoid further reductions in HCLS from January–June 2016. The new rates must be in effect by December 1, 2015.

JSI reminds clients that they should follow relevant state requirements for notifying customers of any rate increases associated with the FCC’s universal service and intercarrier compensation (USF/ICC) reforms, including updating their tariffs. If the rate increase goes into effect December 1, generally, you will notify customers in the November bill. Even if your state does not have notification requirements, JSI recommends that you still notify customers of rate changes as a good business practice.

$18 Benchmark: July 1, 2016–June 30, 2017
JSI also reminds clients that the benchmark increases to $18 on July 1, 2016. In order to meet this benchmark, local residential rates plus state-regulated fees (state SLCs, state USF, and mandatory EAS charges) must be at or above $18 by June 1, 2016.  Accordingly, we recommend that any companies below the $18 benchmark should begin preparing for necessary rate increases to ensure that they are in place by the June 1 deadline.

JSI Assistance   
JSI provides a full suite of solutions to help companies communicate these rate increases to customers, including bill messages, website text and scripts for customer service representatives. JSI can also assist clients that are looking at extending their local calling scope and/or bundling of features in order to improve their service value in light of these ongoing rate hikes.

If you have any questions regarding the local rate floor benchmark or would like assistance with communicating the rate increases to your customers, please contact John Kuykendall in JSI's Maryland office at 301-459-7590. If you would like assistance with increasing your local service value, please contact Tanea Foglia also in JSI's Maryland office at 301-459-7590. 



As a continuation of the FCC’s Special Access inquiries, the FCC has opened an investigation of certain large ILEC tariffs governing special access. The FCC is requesting data from AT&T, Verizon, CenturyLink, and Frontier concerning their tariff provisions that lock customers into term and volume commitments. It is important to note that effective November 18, 2015, all ILECs must conform with the IP pricing rules in the Copper Retirement Order (discontinuance, reduction or impairment of TDM service in a transition to IP requires wholesale access rates, terms and conditions comparable to the TDM service previously provided) until the special access rules are determined.
 
The FCC’s preliminary review of the results of the Commission’s special access data collection shows that, as of 2013, ILECs received roughly three-quarters of the approximately $20 billion in annual revenues from the sales of DS1 and DS3 channel terminations, and received close to two-thirds of all revenue from TDM sales. CLECs and other carriers have complained that certain pricing plans have locked customers into TDM volume commitments that prevent them from migrating to other carriers or to Ethernet from TDM. The FCC is investigating whether the large ILECs’ tariff provisions are just and reasonable or anti-competitive.  Specifically, the FCC has required the large ILECs to make a direct case on why the following practices are just and reasonable:

• Use of Shortfall Fees – Penalties if a customer does not meet its volume commitment
• Upper Percentage Thresholds – A certain percentage of all circuits must be contracted to the large ILEC
• Overage Penalties – Penalties if a customer exceeds its volume commitment
• Certain Long-Term Commitments – Long-term commitments can lock customers into TDM service for long periods of time
• Early Termination Fees – Penalty payments for the remainder of the term commitment
• Special Access Commercial Agreements Contain Provisions That Affect Tariffed Special Access Charges – Can contracts remain between two carriers or do all provisions have to be included in a tariff?

The large ILECs must make a direct case that their tariffs are just and reasonable by December 18, 2015. No ILEC or CLEC other than the named large ILECs are required to file a response. However, if any company wants to file in opposition to the large ILEC practices, that filing deadline is January 21, 2016. The large ILECs then have until February 22, 2016, to file their rebuttals to any oppositions. JSI will provide additional information once the large ILECs have filed their cases.

Please contact Valerie Wimer at 301-459-7590 if you are interested in filing opposition or would like more information about the FCC’s investigation of the large ILEC tariffs.

 

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