FCC Announces 2016 Rate Floor Benchmark

Affected Clients Reminded to Have Rates in Effect by June 1

In early April, the FCC’s Wireline Competition Bureau announced the 2016 local rate floor for rate-of-return carriers that receive High Cost Loop Support (HCLS). Based on the most recent urban rate survey, the 2016 rate floor for voice services is $21.93, up from $21.22 in 2015.

Under the FCC’s rules, all recipients of HCLS must report the number of residential voice lines with monthly local rates plus state fees (specifically, state subscriber line charges (SLCs), state universal service, and mandatory extended area service charges) as of June 1 that fall below the $21.93 local rate floor. The filing must be made by July 1 with NECA, which then files this information with the FCC and USAC. Carriers also must file the data with their respective state commission.

Because the rate floor is being phased in (see the schedule below), companies will only face a reduction of HCLS on a dollar-for-dollar basis to the extent that a carrier’s local rates plus state fees are below $18.00. The current phase-in schedule for the rate floor is:

July 1, 2016 – June 30, 2017 (rates must be in effect by June 1, 2016) – support reductions for rates below $18

July 1, 2017 – June 30, 2018 (rates must be in effect by June 1, 2017) – support reductions for rates below $20 (or the rate floor established by the 2017 survey, whichever is lower)

July 1, 2018 – Beyond – annual support reductions for lines with rates below the national urban average local rate as determined by the FCC’s annual survey

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 making any necessary updates to your company’s tariff. Generally, you will need to notify your customers of the impending rate increase 30 days in advance. If your state does not have notification requirements, JSI recommends that you still provide notice since proactively notifying your customers of rate changes is always a good business practice. A full suite of solutions to assist companies communicate these rate increases to customers-including bill messages, website text and scripts for customer service representatives-is available from JSI.

If you have any questions regarding the rate floor or would like assistance in communicating rate increases with your customers, please contact John Kuykendall at 301-459-7590.

Source: JSI e-Lert