Changes In Network Access Fees (NAF)
and Alaska Universal Service Funds (AUSF).


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.

Long Distance Revenues
Wireless Revenues
1999 4
2006 5
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.

                 3  February 5, 2010 Public Meeting, Special Public Meeting Handout Spreadsheet,, Staff Common Carrier Line (CCL) and Carrier of Last Resort (COLR) Cost Support Estimates PowerPoint Slide 7, Treuer.

                  4 1999 AUSF Annual Report. (The AUSF report refers to Interexchange Review).

                 5  2010 AUSF Annual Report. (The AUSF report refers to Interexchange Review).

 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