Changes In Network Access Fees (NAF)
and Alaska Universal Service Funds (AUSF).
Overview
Alaskans familiar with the high per-minute rates to call long-distance (1+ call or
intrastate long distance) often wondered why Kotzebue consumers pay more to
call Bethel, Alaska than to call Miami, Florida. The cause rests in Alaskan
Access Charge rules which required Long Distance Carriers to pay for 20 percent
of the cost of each Local Exchange Carrier’s local loop network.
1
Access
charges were a widely accepted national practice for compensating Local
Exchange Carriers for the use of their telephone networks when
telecommunications consisted only of a local exchange network and a long
distance network.
2
Long Distance Carriers embedded the cost of access charges
in their long distance rates.
In 2001, the federal government changed the access charge system for interstate
calling, removing the charges from Long Distance Carriers and funding them
instead with a subscriber line charge and universal service funds, but in Alaska,
the intrastate access system continued. That is why a long-distance call from
Kotzebue to Miami costs so little when compared to the cost of a call from
Kotzebue to Bethel. The instate call may incur 18 cents-per-minute of Alaskan
access charges.
As Alaskans transitioned from traditional telephone to wireless networks, Long
Distance Carriers experienced a decrease in intrastate long-distance revenue.
Even while long-distance revenues sharply declined, the Long Distance Carriers
still were required to pay approximately $27 million in CCL access charges.
3
This
fixed cost does not decline as total market minutes decline and it was
increasingly difficult for Long Distance Carriers to pay this fixed cost while the
minutes of usage decreased.
Additionally, certain types of Voice Over Internet Protocol (VOIP) based providers
do not pay any intrastate access charges, because the Federal Communications
Commission (FCC) has preempted state regulation of these services. The
availability of alternative technologies has reduced the number of customers that
subscribe to traditional long distance services but has not reduced the costs
these long distance companies must pay.
|
Year
|
Long Distance Revenues
|
Wireless Revenues
|
|
1999
4
|
$64,155,289
|
$29,991,581
|
|
2006
5
|
$29,728,228
|
$200,925,503
|
On May 19, 2011, the Regulatory Commission of Alaska (RCA) adopted
regulations modifying Alaska’s access charge policies and the Alaska Universal
Service Fund (AUSF).
6
The adopted regulations were the product of more than
two years of intense study and effort and an unprecedented collaborative effort
by the Alaska telecommunications industry, the Attorney General and the RCA.
The adopted regulations include the following key features:
Ø
State Carrier Common Line Charge.
Long Distance Carriers will no longer pay the access charge rate
element called “State Carrier Common Line (CCL) charge.” The State
CCL access fee rate element will be paid through a new Alaska
Universal Service Fund program (CCL Support) and through phased-in
increases to the Network Access Fee (NAF) on local telephone bills.
Ø
The Alaska Universal Service Fund Surcharge.
The Alaska Universal Service Fund (AUSF) is a program designed to
help keep telephone rates affordable to all Alaskans. Historically, the
AUSF surcharge has been 1.32 percent of a customer’s total bill
charged on a monthly basis. Effective August 1, 2011, the new access
charge regulations will increase the AUSF surcharge to 9.5 percent per
month. It is anticipated that the AUSF surcharge may decrease over
time.
Ø
The Introduction of Carrier of Last Resort (COLR) Support.
In addition to reforming State access charge policies, as discussed
above, the regulations adopted by the RCA will allow Local Exchange
Carriers to be designated as a Carrier of Last Resort (COLR) and
receive support funding from the AUSF. On July 22, 2011, the
Commission designated one COLR for each study area of the State,
with the exception of Anchorage.
A carrier that is designated as a COLR must provide and maintain
adequate, efficient and safe facilities-based essential retail and carrier
to carrier telecommunication services of similar quality throughout a
COLR area. The COLR support will be funded through the AUSF
surcharge and is intended to ensure that Local Exchange Carriers are
able to continue to offer quality and reliable service to customers in
even the most expensive and difficult areas to serve in the State.
Ø
The Network Access Fee.
The Commission first adopted the Network Access Fee (NAF) rate
element in 2004. The NAF that local exchange customers see on their
bill will increase from its current level of $3.00 per line per month to a
maximum of $5.75 per line per month, over approximately four years.
The phased-in NAF increases will help reduce the required level of
CCL Support needed and the associated burden placed on the AUSF.
The NAF in some of Alaska’s larger communities may be capped at a
lower level.
Intrastate Long Distance Rate Reductions.
The RCA’s decision to adopt new regulations that revised the current access
charge system and eliminated CCL access charges was strongly influenced by
commitments made by AT&T Alaska and GCI Communications Corporation to
reduce their intrastate long distance rates to the same level as their interstate
long distance rates. In July, the RCA received filings from a number of Long
Distance Carriers proposing reductions to their intrastate long distance rates.
The Long Distance Carriers that have submitted proposed rate reductions to the
RCA include: AT&T Alaska, ACS Long Distance, Inc., Copper Valley Long
Distance, Inc., GCI Communications Corporation, Matanuska Long Distance and
OTZ Long Distance. The RCA anticipates that in August the vast majority of
these intrastate long distance rate reductions will be enjoyed by Alaskan end
users.
__________________________
1
The Carrier Common Line (CCL) charge also known as the local loop is composed of the cable and
wire facilities that connect a local customer to his or her local exchange central office. The
CCL is generally the
largest component of a Local Exchange Carrier’s local network. Twenty percent of an incumbent
Local Exchange
Carrier’s CCL costs are allocated to the intrastate jurisdiction. Intrastate CCL costs are
recovered through two rate
elements: the Network Access Fee (NAF) and the CCL rate element. State-wide the NAF (currently
$3.75 per line
per month) recovers about one-third of intrastate CCL costs and the CCL about two-thirds, although these
percentages vary widely on a company by company basis. Total intrastate revenues from both the
NAF and the
CCL rate element are roughly $40 million per year.
2
Long distance calls begin and end on the local exchange carrier networks and Long Distance Carriers
pay to “access” that local network.
6
See Orders R-08-003(9)/R-09-003(5). Access charges are the rates that long distances companies
pay to local exchange companies for access to the local network when completing in-state long distance
calls
between end-users.
Date Issued: 8/16/2011