UNIVERSAL SERVICE MONITORING REPORT CC DOCKET NO. 98-202 2012 (Data Received Through October 2012) Prepared by Federal and State Staff for the Federal-State Joint Board on Universal Service in CC Docket No. 96-45 This report is available for reference in the FCC's Reference Information Center, Courtyard Level, 445 12th Street, SW, Washington, DC. Copies may be purchased by contacting Best Copy and Printing, Inc., 445 12th Street, SW, Room CY-B402, Washington, DC 20554, telephone (800) 378-3160, or via their website at www.bcpiweb.com. The report can also be downloaded from the Wireline Competition Bureau Statistical Reports Internet site at www.fcc.gov/wcb/iatd/stats.html. 1 Table of Contents Introduction and Summary ......................................................................................................... 5 to 7 Service List .......................................................................................................................... 8 to 12 2012 Monitoring Report Supplementary Material .............................................................. 13 1. Industry Revenues and Contributions .................................................................................. 1-1 to 1-20 2. Program Review .................................................................................................................... 2-1 to 2-36 Low-Income ......................................................................................................................... 2-1 to 2-11 High-Cost.............................................................................................................................. 2-12 to 2-25 Schools and Libraries ........................................................................................................... 2-26 to 2-30 Rural Health Care ................................................................................................................. 2-31 to 2-36 3. Subscribership and Penetration ............................................................................................ 3-1 to 3-12 4. Price Indices ........................................................................................................................... 4-1 to 4-4 5. Network Usage ...................................................................................................................... 5-1 to 5-4 2 Report Tables Table 1.1 Overview of Telecommunications Industry Revenues .......................................... 1-6 Table 1.2 Industry Revenues by Service Type: 2000-2010 ................................................... 1-8 Table 1.3 2010 Industry Revenues by Service Type: Top 5 Affiliated Entities vs. Other Companies .................................................................................................. 1-10 Table 1.4 Estimated Retail (End-User) Telecommunications and Interconnected VoIP Service Revenues by Region: 2010 ..................................................................... 1-11 Table 1.5 Contribution Base Revenues by Program: 2010 ................................................... 1-12 Table 1.6 Billed Interstate and International Retail Revenues by Top 5 Affiliated Entities vs. Other Companies ............................................................................................ 1-13 Table 1.7 Carrier Telecommunications Revenue Reported on FCC Form 499-Q: 2010-2012 ............................................................................................................. 1-14 Table 1.8 End-User Telecommunications Revenues by State: 2010.................................... 1-15 Table 1.9 Universal Service Program Requirements and Contribution Factors for 2012................................................................................................................. 1-16 Table 1.10 Total Universal Service Contributions Divided by Number of Households Monthly Inflation Adjusted (2012 Dollars) ......................................................... 1-17 Table 1.11 Universal Service Fund Contribution Factor ....................................................... 1-18 Table 1.12 Universal Service Disbursements 2001 - 2011 .................................................... 1-19 Table 1.13 Universal Service Support Mechanisms by State: 2011 ..................................... 1-20 Table 2.1 Lifeline Subscribers and Link Up Beneficiaries .................................................... 2-4 Table 2.2 Low-Income Claims ............................................................................................... 2-5 Table 2.3 Average Lifeline Monthly Claims for ILECs by State (December 2011) ............ 2-6 Table 2.4 Federal Lifeline Average Claims by State: 2011 ................................................... 2-7 Table 2.5 Link Up Average Claims by State: 2011 ............................................................... 2-8 Table 2.6 Low-Income Support Claims by State: 2011 ......................................................... 2-9 Table 2.7 Low-Income Claims Received by ILECs and CETCs.......................................... 2-10 Table 2.8 Low-Income Claims by Affiliated Entities: 2011 ................................................. 2-11 Table 2.9 Low-Income Claims by Program and by Affiliated Entities: 2011 ...................................................................................................................... 2-11 Table 2.10 High-Cost Support Fund Disbursement History ................................................. 2-16 Table 2.11 High-Cost Support Fund Disbursement History - ILECs and CETCs ............... 2-17 Table 2.12 High-Cost Support Fund Disbursements - by Mechanism and State: 2011 ...... 2-18 Table 2.13 High-Cost Support Fund Disbursements by Year-End Holding Company Structure: 2009 - 2011 .......................................................................................... 2-20 Table 2.14 High-Cost Support Fund Disbursements by Holding Company: 2011 ............. 2-21 Table 2.15 Study Areas that Received $250 Per Month or More in Per-Line High-Cost Support: 2011 ....................................................................................................... 2-22 Table 2.16 High-Cost Support Fund Claim History ............................................................. 2-23 Table 2.17 High-Cost Support Fund Claim History - ILECs and CETCs ........................... 2-24 Table 2.18 High-Cost Support Fund Claims - by Mechanism and State: 2011 ................... 2-25 Table 2.19 Schools and Libraries Funding Commitments and Disbursements by Applicant Type and Service Type ....................................................................... 2-27 Table 2.20 Schools and Libraries Funding Commitments and Disbursements by State and by Type of Applicant ..................................................................................... 2-28 Table 2.21 Rural Health Care Funding Disbursements by Funding Year ............................ 2-33 Table 2.22 Rural Health Care Funding Commitments and Disbursements by State ........... 2-34 3 Table 3.1 Household Telephone Subscribership in the United States .................................. 3-4 Table 3.2 Household Telephone Penetration by Income, 1997-2012 ................................... 3-7 Table 3.3 Nominal Dollar Equivalents by Year ..................................................................... 3-7 Table 3.4 Historical Telephone Penetration Estimates .......................................................... 3-8 Table 3.5 Telephone Penetration by Selected Demographic Characteristics (Percentage of Households with Telephone Service) .......................................... 3-9 Table 3.6 Telephone Penetration by State, 2006-2011 (Percentage of Occupied Housing Units with Telephone Service) .................... 3-10 Table 3.7 Telephone Penetration by State, Selected Years (Percentage of Households with a Telephone in Unit) ....................................... 3-11 Table 3.8 Household Penetration by State and Income, 2012 .............................................. 3-12 Table 4.1 Long-Term Changes for Various Price Indices ..................................................... 4-2 Table 4.2 Annual Changes in CPI Telephone Service and All Items Indices ....................... 4-3 Table 4.3 Monthly Consumer Price Indices ........................................................................... 4-4 Table 5.1 Interstate Switched Access Minutes of Use - Incumbent Local Exchange Carriers by Tier .................................................................................................................... 5-3 Table 5.2 ILEC Interstate Switched Access Minutes of Use by State .................................. 5-4 4 Report Charts Chart 1.1 Interstate and International Retail Revenues by Top 5 Affiliated Entities vs. Other Companies ............................................................................................ 1-13 Chart 1.2 Distribution of Universal Service Payments: 2011 .............................................. 1-19 Chart 2.1 Lifeline Subscribers and Link Up Beneficiaries .................................................... 2-5 Chart 2.2 Percent of Low-Income Claims Received by CETCs ........................................... 2-10 Chart 2.3 Total High-Cost Support Fund Disbursements and Reserve ................................ 2-16 Chart 2.4 Total High-Cost Support Fund Disbursements (ILECs and CETCs) and CETC Reserve ...................................................................................................... 2-17 Chart 2.5 Total High-Cost Support Fund Disbursements - by State: 2011 .......................... 2-19 Chart 2.6 Total High-Cost Support Fund Claims and Reserve............................................. 2-23 Chart 2.7 Total High-Cost Support Fund Claims (ILECs and CETCs) and CETC Reserve ...................................................................................................... 2-24 Chart 3.1 Household Telephone Penetration by Income, 1997-2012 .................................... 3-5 Chart 3.2 Telephone Penetration for Single-Family Households at or below Multiples of the Federal Poverty Guidelines (FPG), 1996-2012 .......................................... 3-6 Chart 4.1 CPI All Goods and Services and CPI Telephone Services, 1961-2011 ................ 4-2 Chart 4.2 Annual Changes in CPI All Goods and Services and CPI Telephone Services .... 4-3 Chart 5.1 Interstate Switched Access Minutes for Incumbent Local Exchange Carriers ..... 5-2 5 Universal Service Monitoring Report CC Docket No. 98-202 2012 Introduction and Summary This is the fifteenth report in a series of reports prepared by federal and state staff members for the Federal-State Joint Board on Universal Service in CC Docket No. 96-45 (Universal Service Joint Board).1 This report is based on information available to us as of October 2012. These reports contain information designed to monitor the impact of various universal service support mechanisms, and the methods used to finance them. These reports are part of a monitoring program created by the Federal Communications Commission in 1997 to replace a similar program in CC Docket No. 87-339 that resulted in a series of nineteen Monitoring Reports. 2 To enhance our monitoring ability, we have created an open docket,3 which allows data, materials, comments, and studies to be submitted by any interested party at any time. The monitoring program has proven to be valuable, not only as a report on the effects of the Commission’s regulatory policies, but also as a complete census of all incumbent local exchange carriers (ILECs). For completeness, the Monitoring Report incorporates data from several sources, including the National Exchange Carrier Association (NECA) and Universal Service Administrative Company (USAC). USAC collects information from all eligible local exchange carriers (including competitive eligible telecommunications carriers, or CETCs) to administer the universal service support mechanisms. NECA, at the direction of the Commission, collects information in order to administer the access charge pools and also provides information to USAC that is utilized in administering the Universal Service Fund. The Monitoring Report, therefore, is the most comprehensive presentation of data on incumbent local exchange carriers, including data on such matters as the number of telephone lines, calling volumes, and certain types of costs. This report presents data for the five subject categories selected for monitoring. The first section provides information on the contributions to the universal service support mechanisms and industry revenues, on which those contributions are based. The next section provides information on the various support mechanisms: low-income support; high-cost support; schools and libraries support; and rural health care support. The remaining three sections provide information on matters that might be affected by the support mechanisms: subscribership and penetration; price indices and access charge rates; and network usage and growth. The Monitoring Report is published once a year. The following is the organization of this report: Section 1 provides an update on industry revenues and the universal service program requirements and contribution factors. Section 2 includes the latest data on the low-income, high-cost, schools and libraries, and rural health care support mechanisms. Section 3 includes the most recent Census data on subscribership from the Current Population Survey and the American Community Survey. It also includes data on telephone penetration by income by state and a discussion of the impact of Lifeline programs on penetration. Section 4 includes updated Consumer Price 1 The last report was released in December 2011. Universal Service Monitoring Report, CC Docket No. 98- 202, 2011 (Data Received Through October 2011), prepared by the Federal and State Staff for the Federal- State Joint Board on Universal Service in CC Docket No. 96-45. 2 Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 9218, para. 869 (1997) (Universal Service First Report and Order). See 47 C.F.R. § 54.702(i). 3 CC Docket No. 98-202. 6 Index data and updated interstate access rate information. Section 5 includes the latest NECA data on interstate access minutes. This entire report is available electronically in page image (.pdf) format through the Wireline Competition Bureau Statistical Reports Internet site, located at www.fcc.gov/wcb/iatd/monitor.html. The tables of the report are available separately as spreadsheet files in a single compressed (.zip) format file at this site also. In addition, information received well in advance of the next Monitoring Report will be made available on an interim basis in separate staff reports or in raw data files (such as most NECA filings used in the Monitoring Report) on the Wireline Competition Bureau Statistical Reports Internet site. Supplementary material is available in a single compressed (.zip) format file at www.fcc.gov/wcb/iatd/monitor.html. The supplementary material includes tables too extensive to be practical for a printed report as well as descriptions of the universal service programs. A table listing the files available when this file is unzipped is provided at the end of this introduction. Additional data on Universal Service Fund contributions and support can be found in the Federal Communications Commission Response to United States House of Representatives Committee on Energy and Commerce Universal Service Fund Data Request of July 9, 2012 which is available at www.fcc.gov/wcb/iatd/other.html. Several changes have been made to this year’s report relative to the 2011 report. The following tables from the 2011 report do not appear in the 2012 report: • Tables 1.3 and 1.8 on annual revenues by type of service provider were removed from the report because the current self-classification by filers according to provider type may yield inconsistent and therefore unreliable data. • Tables 1.5 through 1.7 on annual revenues were removed from the report and made available on the website. These tables were considered too lengthy and of excessive detail for a printed report; however, since the data reported are informative, they were placed on the website to be available to those interested. • Tables 3.8 (Comparison of Penetration Rates by Level of Lifeline Assistance) and 3.9 (Comparison of Penetration Rates and Level of Lifeline Assistance for States) were not included because the Commission implemented a flat rate Lifeline amount in 2012. • Tables 4.4 through 4.7 on interstate access charges were not included because data for the tables were unavailable as a result of changes to access charges in the USF/ICC Transformation Order. For ease of public reference, parties submitting materials for this docket should provide a duplicate copy to the FCC's Reference Information Center,4 where copies of all materials filed in the docket are available for public reference. 4 Courtyard Level, 445 12th Street, SW, Washington, DC. 7 This report has been prepared by the federal staff listed below and reviewed by the state staff listed below. These staff members can be contacted for further information: General Information: Jay Bennett (Federal) (202) 418-2761 James Eisner (Federal) (202) 418-7302 Industry Revenues and Contributions: Susan Lee (Federal) (202) 418-1590 James Eisner (Federal) (202) 418-7302 Craig Stroup (Federal) (202) 418-0989 Low-Income Support: Suzanne Mendez (Federal) (202) 418-0941 James Eisner (Federal) (202) 418-7302 Natelle Dietrich (Missouri) (573) 751-7427 Kimberly Scardino (Federal) (202) 418-1442 High-Cost Support: Jay Bennett (Federal) (202) 418-2761 James Eisner (Federal) (202) 418-7302 Joel Shifman (Maine) (207) 287-1381 Robert Haga (California) (415) 703-2538 Kerri DeYoung Phillips (Massachusetts) (617) 368-1141 Schools and Libraries Support: Craig Stroup (Federal) (202) 418-0989 John Vu (Federal) (202) 418-2333 Rural Health Care Support: Craig Stroup (Federal) (202) 418-0989 John Vu (Federal) (202) 418-2333 Vicki Helfrich (Mississippi) (601) 359-5347 George Young (Vermont) (802) 828-2358 Subscribership and Penetration: Jay Schwarz (Federal) (202) 418-0948 James Eisner (Federal) (202) 418-7302 Rates and Price Indices: Jay Schwarz (Federal) (202) 418-0948 James Eisner (Federal) (202) 418-7302 Joel Shifman (Maine) (207) 287-1381 Christine Aarnes (Kansas) (785) 271-3132 Network Usage: James Eisner (Federal) (202) 418-7302 Suzanne Mendez (Federal) (202) 418-0941 M. Gene Hand (Nebraska) (402) 471-0244 8 SERVICE LIST All items filed in CC Docket No. 98-202 must be filed with the Secretary, Federal Communications Commission, 445 12th Street, SW, Room TW-B204, Washington, D.C. 20554, and the following Commissioners and staff members (e-mail addresses of staff members follow their mailing addresses): DOCKET NO. 96-45 JOINT BOARD MEMBERS Commissioner Jessica Rosenworcel Joint Board Chair Federal Communications Commission 445 12th Street SW, Room 8-A204C Washington, DC 20554 Jessica.Rosenworcel@fcc.gov Chairman James H. Cawley Joint Board State Chair Pennsylvania Public Utility Commission 400 North Street Commonwealth Keystone Building Harrisburg, PA 17120-3265 jhc@pa.gov Commissioner Mignon Clyburn Federal Communications Commission 445 12th Street SW, Room 8-A302 Washington, DC 20554 Mignon.Clyburn@fcc.gov Commissioner Ajit Pai Federal Communications Commission 445 12th Street SW, Room 8-C302C Washington, DC 20554 Ajit.Pai@fcc.gov Consumer Counsel William Levis Office of Consumer Counsel Colorado Department of Regulatory Agencies 1560 Broadway, Suite 200 Denver, CO 80202 bill.levis@state.co.us Board Member John D. Burke Vermont Public Service Board 112 State Street, 4th Floor Montpelier, VT 05620-2701 John.Burke@state.vt.us Commissioner Anne C. Boyle Nebraska Public Service Commission P.O. Box 94927 Lincoln, NE 68509-4927 Anne.Boyle@nebraska.gov Commissioner Randy Mitchell South Carolina Public Service Commission 101 Executive Center Drive P.O. Drawer 11649 Columbia, SC 29211 randy.mitchell@psc.sc.gov DOCKET NO. 96-45 FEDERAL-STATE JOINT BOARD STAFF Labros Pilalis Pennsylvania Public Utility Commission P.O. Box 3265 Harrisburg, PA 17105 lpilalis@pa.gov George Young Vermont Public Service Board Drawer 20 112 State Street, 4th Floor Montpelier, VT 05620-2701 George.Young@state.vt.us 9 Doug Pratt South Carolina Public Service Commission 101 Executive Center Drive, Suite 100 Columbia, SC 29210-8412 Douglas.pratt@psc.sc.gov M. Gene Hand Nebraska Public Service Commission P.O. Box 94927 Lincoln, NE 68509-4927 Gene.Hand@nebraska.gov Robert W. Haga California Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102 RWH@cpuc.ca.gov Natelle Dietrich Missouri Public Service Commission 200 Madison Street Governor’s Office Building Jefferson City, MO 65102 Natelle.Dietrich@psc.mo.gov Cary B. Hinton Public Service Commission of the District of Columbia 1333 H Street, NW, East Tower - Suite 729 Washington, D.C. 20005 CHinton@psc.dc.gov Kerri DeYoung Phillips Massachusetts Department of Telecommunications & Cable 1000 Washington Street, Suite 820 Boston, MA 02118-6500 Kerri.DeYoung@state.ma.us Kay Marinos Oregon Public Service Commission 550 Capitol Street NE Ste 215 PO Box 2148 Salem, OR 97308-2148 Kay.Marinos@state.or.us Susan Hardenbergh Regulatory Commission of Alaska 701 West 8th Avenue Suite 300 Anchorage, AK 99501-3469 susan.hardenbergh@alaska.gov Christine Aarnes Kansas Corporation Commission 1500 SW Arrowhead Rd. Topeka, KS 66604 c.aarnes@kcc.ks.gov Brad Ramsay NARUC 1101 Vermont Ave. NW, Suite 200 Washington, DC 20005 jramsay@naruc.org Joel Shifman Maine Public Utilities Commission State House Station 18 Augusta, ME 04333-0018 Joel.Shifman@maine.gov Jing Liu Washington Utilities & Transportation Commission P.O. Box 47250 1300 South Evergreen Park Drive, SW Olympia, WA 98504-7250 jliu@utc.wa.gov 10 Vicki B. Helfrich Miss. Wireless Communication Commission 412 East Woodrow Wilson Ave. Mail Stop 6601 Jackson, MS 39216 vhelfrich@wcc.ms.gov Barrett C. Sheridan Office of Consumer Advocate 555 Walnut Street, Forum Place, 5th Floor Harrisburg, PA 17101-1923 bsheridan@paoca.org Thomas F. Dixon Office of Consumer Counsel Colorado Department of Regulatory Agencies 1560 Broadway, Suite 200 Denver, CO 80202 thomas.dixon@state.co.us Lew Craig Alaska Department of Law Regulatory Affairs & Public Advocacy 701 W. 8th Avenue, Suite 300 Anchorage, AK 99501 lew.craig@alaska.gov Priscilla Argeris Office of Commissioner Rosenworcel Federal Communications Commission 445 12th Street SW, Room 8-A204 Washington, DC 20554 Priscilla.Argeris@fcc.gov Angela Kronenberg Office of Commissioner Clyburn Federal Communications Commission 445 12th Street SW, Room 8-A302 Washington, DC 20554 Angela.Kronenberg@fcc.gov Nicholas Degani Office of Commissioner Pai Federal Communications Commission 445 12th Street SW, Room 8-C302 Washington, DC 20554 Nicholas.Degani@fcc.gov Julie Veach, Chief Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-C354 Washington, DC 20554 Julie.Veach@fcc.gov Carol Mattey, Deputy Chief Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-C352 Washington, DC 20554 Carol.Mattey@fcc.gov Michael Jacobs, Legal Advisor Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-C347 Washington, DC 20554 Patrick.Halley@fcc.gov Trent Harkrader, Associate Bureau Chief Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A526 Washington, DC 20554 Trent.Harkrader@fcc.gov Kimberly Scardino, Acting Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A465 Washington, DC 20554 Kimberly.Scardino@fcc.gov 11 Amy Bender, Deputy Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A425 Washington, DC 20554 Amy.Bender@fcc.gov Divya Shenoy Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-B510 Washington, DC 20554 Divya.Shenoy@fcc.gov Katie King Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-B544 Washington, DC 20554 Katie.King@fcc.gov Ted Burmeister Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A445 Washington, DC 20554 Theodore.Burmeister@fcc.gov Joseph Cavender, Assistant Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A236 Washington, DC 20554 Joseph.Cavender@fcc.gov Alex Minard, Assistant Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-B442 Washington, DC 20554 Alexander.Minard@fcc.gov Jonathan Lechter Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-B438 Washington, DC 20554 Jonathan.Lechter@fcc.fov Garnet Hanly Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 5-A346 Washington, DC 20554 Garnet.Hanly@fcc.gov OTHER FEDERAL STAFF Jay Bennett Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-C212 Washington, DC 20554 Jay.Bennett@fcc.gov Rodger Woock, Division Chief Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A224 Washington, DC 20554 Rodger.Woock@fcc.gov 12 Jay Schwarz Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A134 Washington, DC 20554 Jay.Schwarz@fcc.gov Kenneth Lynch Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A103 Washington, DC 20554 Kenneth.Lynch@fcc.gov Suzanne Mendez Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A144 Washington, DC 20554 Suzanne.Mendez@fcc.gov James Eisner Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A102 Washington, DC 20554 James.Eisner@fcc.gov Craig Stroup Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A104 Washington, DC 20554 Craig.Stroup@fcc.gov John Vu Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A360 Washington, DC 20554 John.Vu@fcc.gov Susan Lee Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-B145 Washington, DC 20554 Susan.Lee@fcc.gov Ellen Burton, Assistant Division Chief Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A233 Washington, DC 20554 Ellen.Burton@fcc.gov Cathy Zima, Deputy Division Chief Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A221 Washington, DC 20554 Cathy.Zima@fcc.gov Chelsea Fallon, Assistant Division Chief Industry Analysis & Technology Division Wireline Competition Bureau Federal Communications Commission 445 12th Street SW, Room 6-A234 Washington, DC 20554 Chelsea.Fallon@fcc.gov 13 2012 Monitoring Report Supplementary Material This list provides the names of files provided in the 2012 Monitoring Report Supplementary Material zip file available at www.fcc.gov/wcb/iatd/monitor.html. Underlined names are folders containing those files after unzipping the file. Low Income LI Support - by State LI Support - by Study Area LI Subscribers and Beneficiaries - by State LI Adjustments - by Study Area High Cost Claims HC Claims - by State HC Claims - by Study Area HC ILEC Claims per Line - by State HC ILEC Claims per Line - by Study Area Disbursements HC Disbursements - by State HC Disbursements - by Study Area HC ILEC Disbursements per Line - by State HC ILEC Disbursements per Line - by Study Area NECA Support Data HC NECA ILEC Support Data - by State HC NECA ILEC Support Data - by Study Area Schools and Libraries SL Commitments and Disbursements - by Service Type and State SL Disbursements - by Service Provider Type SL Commitments and Disbursements per Student - by State Rural Health Care RHC Disbursements - by Speed and State RHC Disbursements per Person - by State RHC Pilot Commitments and Disbursements - by Speed and State End-User Revenue by State Estimating End-User Revenue by State - 2010 Technical Appendix Estimating End-User Revenue by State - 2010 Tables Program Descriptions Program Description - High Cost Support Program Description - Low Income Support Program Description - Rural Health Care Support Program Description - Schools and Libraries Support Other Changes in Local Exchange Carriers ILEC Interstate Switched Access Minutes of Use - by Study Area NECA Pool Results Revenue Details - 2010 1 - 1 1. Industry Revenues and Contributions This section provides a general overview of the revenues of the U.S. telecommunications industry and the contributions to the universal service support mechanisms that are based on these revenues. The first part discusses telecommunication revenues based on data filed in FCC Form 499 to the Universal Service Administrative Company (USAC). The second part discusses contributions and provides an overview of disbursements. Revenue Information Most of the data for 2010 are from filings of annual Telecommunications Reporting Worksheets (FCC Form 499-A) made with USAC, the data collection agent for the FCC, on April 1, 2011. 1, 2 Revenue data collected on these worksheets are used to administer contributions to the Universal Service Fund (USF), Interstate Telecommunications Relay Service (TRS), North American Numbering Plan (NANP), and local number portability (LNP) programs. Filer revenues also are used to calculate FCC Interstate Telecommunications Service Provider (ITSP) regulatory fees. Data presented for 2011 and 2012 are from FCC Form 499-Q quarterly filings. The Commission has established several universal service mechanisms, governed by section 254 of the Telecommunications Act of 1996, which help ensure that all Americans have access to affordable telecommunications service. In section 254(d) of the Telecommunications Act of 1996,3 Congress mandated that “[e]very telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service.” 4 The Commission implemented this mandate in the 1997 Universal Service First Report and Order.5 The Commission subsequently designated USAC as the universal service fund (USF) administrator. Telecommunications providers currently file FCC Form 499-A (due on April 1 of each year for the previous calendar year revenues) and FCC Form 499-Q (due one month after the close of each calendar quarter). 1 Much of the information filed on FCC Form 499-A is proprietary. Publicly available information on individual providers is available at Consumer and Governmental Affairs Bureau, Federal Communications Commission, Telecommunications Reporting Worksheet 499-A Search Form at http://fjallfoss.fcc.gov/cgb/form499/499a.cfm. 2 Telecommunications providers filed worksheets containing calendar year 2011 revenue data on April 1, 2012. The worksheets are filed with USAC, which extensively reviews and validates data. Telecommunications providers routinely make revised filings. As a result, the data are not considered reliable enough for publication for several months after the initial filing date. Therefore, the 2011 filings were not available for use in this report, and 2011 and 2012 data were based on the more abbreviated and less reliable FCC Form 499-Q quarterly filings. April 2011 FCC Form 499-A filings containing 2010 revenues were used to compile the 2010 data. Compilation was based on a database prepared by USAC as of February 29, 2012. Therefore, revised or new 2011 FCC Form 499-A filings that were received after February 29, 2012, are not reflected herein. 3 Pub. L. No. 104-104, 110 Stat. 56 codified at 47 U.S.C. §§ 151 et seq. 4 47 U.S.C. § 254(d). 5 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776 (1997) (subsequent history omitted) (Universal Service First Report and Order). 1 - 2 Virtually all providers of telecommunications must file FCC Form 499-A each year.6 On June 21, 2006, the Commission ruled that providers of interconnected Voice over Internet Protocol (VoIP) service also must file FCC Form 499-A.7 These filers first provided whole year revenue information in the April 2008 FCC Form 499-A filings. Form 499-A instructs filers to report amounts actually billed to customers. This means that filers are required to report revenues net of discounts, but without making adjustments to reflect uncollectible revenues or international settlement payments and receipts. Most filers are able to report revenues in this manner using information contained in their corporate books of account. Some service providers, however, have no business or regulatory requirements to record intrastate or international revenues separately from interstate revenues or to use the detailed revenue categories contained in the worksheets. These providers, such as mobile wireless and interconnected VoIP providers, may use the interim safe harbor percentages to estimate the interstate portion of their revenues.8 Table 1.1 shows the major components of telecommunications revenues for 2000 through 2011. This table was created by aggregating revenue by major service classifications, such as local, mobile, and toll; intrastate and interstate/international; and wholesale (also referred to as “carrier’s carrier”) and retail (also referred to as “end user”). 6 There are certain exceptions. Providers that offer telecommunications for a fee exclusively on a non- common carrier basis are not required to file if their total annual contribution to universal service would be less than $10,000. Government entities that purchase telecommunications services in bulk on their own behalf, public safety and local government entities licensed under Subpart B of Part 90 of the Commission’s rules, and entities providing interstate telecommunications exclusively to government or public safety entities are not required to file. In addition, broadcasters, non-profit schools, non-profit libraries, non-profit colleges, non-profit universities, and non-profit health care providers are not required to file. Finally, systems integrators that derive less than 5% of their systems integration revenues from the resale of telecommunications and entities that provide services only to themselves or to commonly owned affiliates need not file. However, services provided to exempt entities may be subject to contribution requirements, and therefore exempt entities may be required to pay USF pass through charges to their underlying service providers. 7 See Universal Service Contribution Methodology; Federal-State Joint Board on Universal Service, 1998 Biennial Regulatory Review – Streamlined Contributor Reporting Requirements Associated with Administration of Telecommunications Relay Service, North American Numbering Plan, Local Number Portability, and Universal Service Support Mechanisms, Telecommunications Services for Individuals with Hearing and Speech Disabilities, and the Americans with Disabilities Act of 1990, Administration of the North American Numbering Plan and North American Numbering Plan Cost Recovery Contribution Factor and Fund Size, Number Resource Optimization, Telephone Number Portability, Truth-in-Billing and Billing Format, WC Docket No. 06-122, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95- 116, 98-170, Report and Order and Notice of Proposed Rulemaking and Report and Order, 21 FCC Rcd 7518 (2006) (2006 Contribution Methodology Reform Order). 8 See Instructions to the Telecommunications Reporting Worksheet, FCC Form 499-A Section III.C.3., available at www.fcc.gov/Forms/Form499-A/499a-2011.pdf. In 2001 and 2002, the interim safe harbor for mobile wireless carriers was 15%. In December 2002, the Commission raised the mobile wireless interim safe harbor to 28.5%. Mobile wireless carriers began reporting revenues based on the higher interim safe harbor percent on the FCC Form 499-Q due on February 1, 2003, and began contributing on this basis in April 2003. In the 2006 Contribution Methodology Reform Order, the Commission raised the mobile wireless interim safe harbor to 37.1%. Mobile wireless carriers began reporting revenues based on this higher interim safe harbor percent in the FCC Form 499-Q due on August 1, 2006. The safe harbor for interconnected VoIP providers is 64.9%. 1 - 3 Table 1.2 provides a look at detailed industry revenues for 2000 to 2010 and categorizes revenues by type of service and shows, for example, that providers reported $111.6 billion in mobile service revenues for 2010. 9 Table 1.3 separates the 2010 numbers from Table 1.2 into two categories: the top five affiliated entities (combined) based on all revenues reported, and all other companies (combined).10 In the case of mobile service revenues, for example, the $111.6 billion total for all companies is broken down to $96.1 billion revenue for the top five and $15.6 billion for everyone else. Thus, breaking up the data illustrates that a few companies contribute most of the revenues in the USF. Table 1.4 looks at how much retail revenue comes from each region of the country, as well as the concentration of revenue among the five largest companies by region. These data are derived from Form 499- A data on how much of each filer’s revenue comes from each state and dividing revenues from each state into revenues by the top five affiliated entities and revenues by other filers. Table 1.5 illustrates how data from the Form 499-A are used to develop a funding base for the USF, TRS, and NANPA and LNP.11 As noted above, providers are considered de minimis for USF purposes if their annual contribution is expected to be less than $10,000. Table 1.6 provides interstate and international retail revenue over time, from 2009 to the first two quarters of 2012. Data for 2009 and 2010 came from Form 499-A, and data for 2011 and 2012 came from Form 499-Q. These data are also broken up into revenues from top five affiliated entities and other filers. Since the USF contribution base is calculated based on interstate and international retail revenues, this table gives an idea of how the base has changed over time and how much of the money comes from the largest companies versus other telecommunications companies. Table 1.7 presents data from quarterly filings of Form 499-Q for 2010 to 2012. It shows both projections of interstate and international retail revenue and the historical data later collected. Note that international-to-international revenues are included with non-telecommunications revenues rather than with end user revenues on the quarterly form.12 We estimate state-level end-user telecommunication revenues using information from several sources, including FCC Form 477, tariff access filings with the FCC and National Exchange Carrier Association (NECA) minutes of use data. 13 Estimates of interstate end-user revenues by state are reported in Table 1.8. 9 Each year, many filers erroneously report substantial amounts of switched toll revenues as other long distance revenues. The data are examined and some revenues are reclassified based on staff research. Even so, the other long distance category of Table 1.2 may contain some switched toll revenues, perhaps significant amounts in some years. 10 In 2010, the top five affiliated entities were, in alphabetical order, AT&T Inc., Deutsche Telekom AG, Qwest Services Corp., Sprint Nextel Corporation, and Verizon Communications, Inc. 11 See Telecommunications Industry Revenues (May 2011), available at www.fcc.gov/wcb/iatd/lec.html for a comparison with the funding bases used for the TRS, NANPA, and LNPA support mechanisms. 12 Filers record international-to-international revenues for calls that they receive outside the United States and that they carry to points outside the United States where the filer is operating as a U.S. carrier. 13 For a discussion of the methodology used to estimate revenues by state, see the Technical Appendix at 1 - 4 As noted above, the universal service rules prohibit the USF administrator from releasing company- specific information contained in Form 499-A and Form 499-Q worksheets.14 Detailed industry subtotals by type of service and type of business are posted at www.fcc.gov/wcb/iatd/monitor.html. Roll-up statistics are presented for the five affiliated entities with the most end-user telecommunications and all the remaining filers. Program Requirements and Contribution Factors Contributors make payments into the USF based on their interstate and international end user telecommunications revenues. Contributors report their revenue data to USAC, which collects the data and reports them to the Commission. The Commission reviews program requirements and the revenue data, and determines the appropriate contribution factor. The Commission’s Office of Managing Director releases a public notice stating the proposed contribution factor for the upcoming quarter. If, after 14 days, the Commission takes no action regarding the proposed contribution factor, the factor becomes final.15 In February 2002, the Commission issued an order that, in part, eliminated from the contribution base charges identified on customers’ bills as amounts recovering contributions to the universal service support mechanisms, i.e., USF pass through surcharges. This change was intended to prevent double assessment of the pass through surcharges, a situation known as “circularity.”16 Prior to these changes, providers filed historic revenue information each quarter, including revenue derived from pass through surcharges, and the Commission would use these revenue totals along with total estimated program requirements to calculate the contribution factor.17 In anticipation of this double assessment, providers would frequently inflate their reported USF pass through surcharges (reported on Line 403) above the contribution factor. The elimination of circularity was implemented in the third quarter of 2002. It reduced each provider’s contribution base by the amount that the provider paid into USF during the prior quarter. The line item “Circularity Adjustment” in Table 1.9 accounts for this change. This eliminated circularity as a reason for providers to inflate pass through charges. In December 2002, the Commission adopted an order that changed the basis for contribution assessments from historic gross-billed revenues to projected collected revenues.18 This change also addressed www.fcc.gov/wcb/iatd/monitor.html. 14 47 C.F.R. §54.711(b). 15 47 C.F.R. §54.709(a)(3). 16 See Federal-State Joint Board on Universal Service, et al, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170, Further Notice of Proposed Rulemaking and Report and Order, 17 FCC Rcd 3752 (2002). 17 The Commission reduces the revenue estimates by 1% to account for uncollectibles. 18 See Federal-State Joint Board on Universal Service, et al, CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170, Report and Order and Second Further Notice of Proposed Rulemaking, 17 FCC Rcd 24952 (2002). 1 - 5 the reason given by service providers with declining revenue for marking up their USF pass through charges. These service providers argued that they had to contribute based on historic amounts that were greater than their current period billings, resulting in the need to mark up their pass through charges. This change was fully implemented in the second quarter of 2003. Having addressed circularity and changing the contribution assessment methodology to address declining revenues -- the two main reasons cited by providers for marking up their USF pass through charges - - the Commission adopted a rule requiring those contributors that recover their universal service contributions through a universal service line item to limit their recovery to the interstate portion of the customer’s bill times the relevant contribution factor.19 Form 499-Q filers now file information on billed revenues for the previous quarter and both projected billed revenues and projected collected revenues for the upcoming quarter. Projected collected revenues, which are projected billed revenues less an allowance for uncollectible revenues, form the basis for USF contribution assessments. Projected collected revenues are then adjusted to eliminate circularity. Starting with the second quarter of 2003, the “Circularity Adjustment” amounts shown in Table 1.9 (discussed in more detail below) reflect expected USF contributions for the quarter rather than the industry's actual contributions from a prior quarter. Table 1.9 shows the program funding requirements for 2012. For each program and for each quarter, the table lists projected program demand, administrative costs, interest income, and periodic true-ups. The table also shows the revenue base and contribution factors for each quarter. As explained above, the contribution base is 1% less than reported revenues to reflect the fact that some contribution assessments may prove uncollectible. Table 1.10 implements the Commission’s directive in the USF/ICC Transformation Order and Lifeline Reform Order to report performance measures relating to contribution burden for the high-cost and low-income programs.20 Table 1.11 shows the contribution factor by quarter since the second quarter of 2003. Table 1.12 shows universal service disbursements on a mechanism-by-mechanism basis from 2001 and 2011. Chart 1.2 shows the 2011 information graphically. Table 1.13 shows, on a state-by-state basis, the total amount of funding disbursements for each of the universal service mechanisms, estimated contributions towards universal service, and the net estimated dollar flow (disbursements less estimated contributions) for 2011.21 19 47 C.F.R. §54.712. 20 Lifeline and Link Up Reform and Modernization, et al., WC Dkt. Nos. 11-42 et al., CC Dkt. No. 96-45, Report and Order and Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656 (2012) (Lifeline Reform Order) and Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing a Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform—Mobility Fund; WC Docket Nos. 10-90, 07-135, 05-337, 03-109, CC Docket Nos. 01-92, 96-45, GN Docket No. 09-51, WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, FCC 11-161 (rel. Nov. 18, 2011) (USF/ICC Transformation Order and FNPRM). 21 For a discussion of the methodology used to estimate contributions per state, see the Technical Appendix at www.fcc.gov/wcb/iatd/monitor.html. Preliminary16 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Local Service3,4 $36,621 $40,108 $38,412 $37,742 $38,546 $39,213 $39,392 $38,383 $39,200 $38,285 $37,955 $37,277 Mobile Service5 5,144 6,180 5,020 4,465 4,164 6,334 5,187 5,360 5,630 4,284 5,006 6,111 Toll Service6 21,849 19,999 16,476 18,205 15,703 16,892 15,101 16,093 13,843 13,003 15,549 17,342 Intrastate7 25,553 27,848 25,770 24,825 25,852 27,486 24,848 22,566 21,836 20,173 22,484 23,609 Interstate and International8,9 38,060 38,439 34,138 35,587 32,561 34,953 34,831 37,270 36,837 35,399 36,026 37,121 Total Wholesale Revenues $63,613 $66,287 $59,907 $60,412 $58,413 $62,439 $59,679 $59,836 $58,672 $55,571 $58,510 $60,730 Local Service3,10 $83,951 $86,403 $87,302 $84,691 $81,545 $80,155 $76,082 $73,095 $70,598 $66,591 $64,892 $58,674 Mobile Service11 56,362 67,826 75,659 83,558 92,286 98,156 107,255 112,579 115,304 110,341 106,637 107,380 Toll Service12 84,300 75,375 63,455 56,078 52,934 49,900 46,938 46,040 44,681 40,637 34,457 39,092 Universal Service Surcharges13 4,537 5,909 6,019 6,384 6,557 7,272 7,314 7,902 8,110 7,911 8,662 - Intrastate14 147,465 155,347 154,815 150,889 153,265 154,310 157,653 158,380 157,737 149,493 142,356 135,184 Interstate and International8,15 81,685 80,165 77,619 79,822 80,057 81,173 79,937 81,235 80,956 75,988 72,292 69,963 Total Retail Revenues $229,149 $235,513 $232,434 $230,711 $233,322 $235,482 $237,589 $239,615 $238,693 $225,481 $214,648 205,146 Local Service3 $120,572 $126,511 $125,713 $122,433 $120,091 $119,368 $115,474 $111,478 $109,798 $104,876 $102,847 $95,951 Mobile Service 61,505 74,006 80,679 88,022 96,450 104,489 112,442 117,939 120,934 114,625 111,643 113,491 Toll Service 106,148 95,374 79,930 74,283 68,637 66,792 62,039 62,133 58,523 53,640 50,006 56,435 Universal Service Surcharges 4,537 5,909 6,019 6,384 6,557 7,272 7,314 7,902 8,110 7,911 8,662 - Intrastate 173,018 183,195 180,585 175,714 179,117 181,796 182,501 180,946 179,573 169,666 164,840 158,793 Interstate and International8 119,745 118,605 111,756 115,409 112,617 116,125 114,768 118,505 117,793 111,387 108,318 107,083 Total Telecommunications Revenues $292,762 $301,799 $292,341 $291,123 $291,734 $297,921 $297,268 $299,451 $297,365 $281,052 $273,158 265,876 Retail (End User) Revenues Total Revenues (Wholesale + Retail) Table 1.1 Overview of Telecommunications Industry Revenues1 (Dollar amounts shown in millions) Wholesale (Carrier's Carrier) Revenues2 1 - 6 1Data include revenues for de minimis filers as well as for other carriers that are exempt from universal service contribution requirements. 3Payphone revenues are included with local service revenues in this table. 4Dollar amounts are calculated using the sum of Lines 303a to 308a from Form 499-A. 5Dollar amounts are calculated using Line 309a from Form 499-A. 6Dollar amounts are calculated using the sum of Lines 310a to 314a from Form 499-A. 7Dollar amounts are calculated using the sum of Lines 303a to 314a, minus the sum of Lines 303d to 314d, minus the sum of Lines 303e to 314e from Form 499-A. 9Dollar amounts are calculated using the sum of Lines 303d to 314d, plus the sum of Lines 303e to 314e from Form 499-A. 10Dollar amounts are calculated using the sum of Lines 404a to 408a from Form 499-A. 11Dollar amounts are calculated using the sum of Lines 409a and 410a from Form 499-A. 12Dollar amounts are calculated using the sum of Lines 411a to 417a from Form 499-A. 13Dollar amounts are calculated using Line 403a from Form 499-A. 14Dollar amounts are calculated using the sum of Lines 403a to 417a, minus the sum of Lines 403d to 417d, minus the sum of Lines 403e to 417e from Form 499-A. 15Dollar amounts are calculated using the sum of Lines 403d to 417d, plus the sum of Lines 403e to 417e from Form 499-A. Note: Detail may not add to totals due to rounding. Source: FCC Form 499-A and Form 499-Q. 2Wholesale revenues are reported on the FCC Form 499-A as sales to other universal service contributors for resale. This includes, for example, access services that local exchange carriers provide to toll carriers. Sales to de minimis resellers, end-user customers, governments, non-profits, and any other non-contributors are treated as end- user revenues. Filers contribute to the universal service funding mechanisms based on their end-user interstate revenues. See Table 1.5 for further details on contribution bases. 16Preliminary 2011 data are based on FCC Form 499-Q quarterly filings through February 2012. Companies that do not contribute to universal service are not required to make these filings. The quarterly filings include preliminary data for the just closed quarter and projections for the coming quarter and therefore are not as accurate as the subsequent annual filings. Also, FCC Form 499-Q filers do not separate revenue by type of service. Therefore, revenue totals by service type for 2011 are based on type of filer rather than on data filed by service. In addition, FCC Form 499-Q does not require filers to report universal service surcharge separately from other revenues, and therefore the surcharge is reflected in local, mobile, and toll service revenues. 8Revenues from calls that both originate and terminate in foreign points are reported as end-user revenues and are included in this table through 2010, but are not included in the universal service contribution base. These revenues are not included in preliminary 2011 data. Footnotes to Table 1.1 1 - 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Local Exchange1 $69,947 $72,346 $71,320 $70,606 $68,238 $66,506 $63,264 $62,790 $60,721 $56,839 $56,993 Pay Telephone2 1,932 1,585 1,192 1,063 1,002 924 659 470 379 268 197 Local Private Line3 16,864 21,966 23,070 22,415 23,840 25,673 25,448 24,307 26,314 27,098 26,809 Other Local4 3,249 3,391 3,418 3,242 2,944 3,331 3,884 3,227 3,321 3,531 3,032 Subscriber Line Charges5 11,563 12,127 12,758 12,136 11,715 11,113 10,827 10,141 9,283 8,363 7,481 Access6 17,017 15,096 13,955 12,972 12,352 11,822 11,392 10,543 9,776 8,778 8,336 Total Local Service and Payphone Revenues 120,572 126,511 125,713 122,434 120,091 119,368 115,474 111,478 109,795 104,876 102,847 Total Mobile Service Revenues7 61,505 74,006 80,678 88,023 96,450 104,489 112,442 117,939 120,934 114,625 111,643 Operator8 11,406 10,389 7,902 6,567 6,542 6,631 5,577 5,874 5,444 4,340 3,585 Non-Operator Switched Toll 9 75,183 65,325 54,475 50,178 46,387 44,876 41,570 42,518 39,329 34,943 27,132 Long Distance Private Line10 16,189 16,402 15,108 15,316 13,906 13,264 12,739 12,080 11,683 11,649 14,344 Other Long Distance11 3,372 3,259 2,445 2,222 1,801 2,021 2,154 1,661 2,071 2,708 4,945 Total Toll Service Revenues 106,149 95,374 79,930 74,283 68,637 66,792 62,039 62,133 58,527 53,640 50,006 Total Service Revenues Subtotal 288,226 295,891 286,322 284,739 285,177 290,649 289,954 291,549 289,255 273,141 264,496 4,537 5,908 6,019 6,383 6,557 7,273 7,314 7,902 8,110 7,911 8,662 Total Telecommunications Revenues Subtotal14 292,762 301,799 292,341 291,122 291,735 297,921 297,269 299,451 297,365 281,052 273,158 42,261 48,036 60,406 65,186 71,493 86,764 101,061 131,615 151,494 158,859 173,228 Total Reported Revenues $335,023 $349,835 $352,747 $356,308 $363,227 $384,685 $398,329 $431,066 $448,860 $439,911 $446,386 Toll Service Revenues Universal Service Surcharges12,13 Total Non-Telecommunications Revenues15 Table 1.2 Industry Revenues by Service Type: 2000-2010 (Dollar Amounts Shown in Millions) Local Service and Payphone Revenues Mobile Revenues 1 - 8 1Dollar amounts are calculated using the sum of Lines 303a, 308a, and 404a from Form 499-A. 2Dollar amounts are calculated using the sum of Lines 306a and 407a from Form 499-A. 3Dollar amounts are calculated using the sum of Lines 305a and 406a from Form 499-A. 4Dollar amounts are calculated using the sum of Lines 307a and 408a from Form 499-A. 5Dollar amounts are calculated using Line 405a from Form 499-A. 6Dollar amounts are calculated using Line 304a from Form 499-A. 7Dollar amounts are calculated using the sum of Lines 309a, 409a, and 410a from Form 499-A. 8Dollar amounts are calculated using the sum of Lines 310a, 411a, 412a, and 413a from Form 499-A. 9Dollar amounts are calculated using the sum of Lines 311a and 414a from Form 499-A. 10Dollar amounts are calculated using the sum of Lines 312a and 415a from Form 499-A. 11Dollar amounts are calculated using the sum of Lines 313a, 314a, 416a, and 417a from Form 499-A. 13Dollar amounts are calculated using Line 403a from Form 499-A. 14Subtotal includes surcharge. 15Dollar amounts are calculated using Line 418a from Form 499-A. Source: FCC Form 499-A. Note: Detail may not add to totals due to rounding. 12The surcharge figure indicates only surcharges that have been explicitly reported as such in Form 499-A and does not account for implicit surcharge revenues where carriers collect the surcharge through higher prices. Footnotes to Table 1.2 1 - 9 Top 5 Affiliated Entities1 Other Companies Total Local Exchange2 $30,838 $21,274 $52,112 Pay Telephone3 48 148 197 Local Private Line4 17,972 8,837 26,809 Other Local5 2,487 544 3,032 Federal and State USF Support6 1,439 3,441 4,880 Subscriber Line Charges7 4,668 2,813 7,481 Access8 4,029 4,307 8,336 Total Local Service and Payphone Revenues 61,482 41,365 102,847 Total Mobile Service Revenues9 96,039 15,604 111,643 Operator10 851 2,734 3,585 Non-Operator Switched Toll11 15,899 11,233 27,132 Long Distance Private Line12 7,115 7,228 14,344 Other Long Distance13 597 4,348 4,945 Total Toll Service Revenues 24,463 25,544 50,006 Total Service Revenues 181,984 82,512 264,496 Universal Service Surcharges14,15 6,681 1,981 8,662 Total Telecommunications Revenues 188,665 84,493 273,158 Total Non-Telecommunications Revenues16 107,665 65,563 173,228 Total Reported Revenues $296,330 $150,056 $446,386 2Dollar amounts are calculated using the sum of Lines 303a and 404a from Form 499-A. 3Dollar amounts are calculated using the sum of Lines 306a to 407a from Form 499-A. 4Dollar amounts are calculated using the sum of Lines 305a to 406a from Form 499-A. 5Dollar amounts are calculated using the sum of Lines 307a to 408a from Form 499-A. 6Dollar amounts are calculated using Line 308a from Form 499-A. 7Dollar amounts are calculated using Line 405a from Form 499-A. 8Dollar amounts are calculated using Line 304a from Form 499-A. 9Dollar amounts are calculated using the sum of Lines 309a, 409a, and 410a from Form 499-A. 10Dollar amounts are calculated using the sum of Lines 310a, 411a, 412a, and 413a from Form 499-A. 11Dollar amounts are calculated using the sum of Lines 311a and 414a from Form 499-A. 12Dollar amounts are calculated using the sum of Lines 312a and 415a from Form 499-A. 13Dollar amounts are calculated using the sum of Lines 313a, 314a, 416a, and 417a from Form 499-A. 15Dollar amounts are calculated using Line 403a from Form 499-A. 16Dollar amounts are calculated using Line 418a from Form 499-A. Source: FCC Form 499-A. Table 1.3 2010 Industry Revenues by Service Type: Top 5 Affiliated Entities vs. Other Companies (Dollar Amounts Shown in Millions) Note: Detail may not add to totals due to rounding. Mobile Revenues Toll Service Revenues Local Service and Payphone Revenues 1The "Top 5 Affiliated Entities" are those with the greatest revenues as defined by Line 419a, which includes Lines 303a to 314a and Lines 403a to 418a. These companies are (in alphabetlical order): AT&T Inc., Deutsche Telekom AG, Qwest Services Corp., Sprint Nextel Corporation, and Verizon Communications. 14The surcharge figure indicates only surcharges that have been explicitly reported as such in Form 499-A and does not account for all the surcharge revenues collected for universal service. 1 - 10 Region States Top 5 Affiliated Entities3 Other Companies Total End-User Revenue4 Region as % of Total Southeast: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, and the U.S. Virgin Islands $32,595 $14,095 $46,690 21.8% Western: Alaska, Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming 19,168 7,790 26,958 12.6% West Coast: California, Hawaii, Nevada, American Samoa, Guam, Northern Mariana Islands, and Wake Island 23,328 5,874 29,203 13.6% Mid-Atlantic: Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia, and West Virginia 21,723 6,261 27,984 13.0% Mid-West: Illinios, Indiana, Michigan, Ohio, and Wisconsin 20,829 8,936 29,765 13.9% Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont 18,141 6,787 24,928 11.6% Southwest: Arkansas, Kansas, Missouri, Oklahoma, and Texas 21,367 6,177 27,544 12.8% Filers that did not provide revenue information by region1 15 1,562 1,577 0.7% Total $157,167 $57,481 $214,648 100.0% 2Surcharges (Line 403) and international-to-international revenues (Line 412) are included in the revenue figures. Source: FCC Form 499-A. Note: Detail may not add to totals due to rounding. 3The "Top 5 Affiliated Entities" are those with the greatest revenues as defined by Line 419a, which is the sum of Lines 303a to 314a and Lines 403a to 418a. These companies are (in alphabetical order): AT&T Inc., Deutsche Telekom AG, Qwest Services Corp., Sprint Nextel Corporation, and Verizon Communications. 1Filers that are exempt from contributing to local number portability administration are not required to provide a breakout by region of the country. Table 1.4 Estimated Retail (End-User) Telecommunications and Interconnected VoIP Service Revenues By Region1,2: 2010 (Dollar Amounts Shown in Millions) 4Totals for each region are calculated using the sum of Lines 403a to 417a, multiplied by the percentage of the company's end-user revenues for that region, from Form 499-A. 1 - 11 2010 Revenues subject to universal service contribution Billed interstate and international end-user revenues (includes Universal Service Surcharge) [Line 403 to Line 417, parts (d) and (e)] $72,292 less revenues for international - to - international services [ Line 412(e) ] 469 less international revenues of international-only filers and international revenues that were excluded because of the LIRE Exemption2 3,326 less interstate and other international revenues for 1,775 filers who are de minimis or otherwise exempt from universal service support requirements 34 less uncollectible contribution base revenues [ Line 422(d) + Line 422(e) ] 960 (Does not include uncollectible amounts associated with revenues excluded above.) equals $67,503 Revenues subject to TRS contribution Interstate and international end-user revenues $72,292 less interstate and international revenues for filers who identify themselves as private service providers or as shared- tenant service providers and who therefore are exempt from telecommunications relay service (TRS) contribution requirements if they provide no carrier services 291 less interstate and international revenues for services provided for resale but reported as end user because it was provided to carriers that do not contribute to universal service support mechanisms [ Line 511(b) ] 472 equals $71,528 Revenues subject to NANPA and LNP contribution Total telecommunications service end-user revenues (including intrastate, interstate and international) $214,648 less telecommunications revenues for filers who identify themselves as private service providers, shared-tenant service providers or payphone service providers and who therefore are exempt from North American Numbering Plan Administration (NANPA) and local number portability administration (LNP) contribution requirements if they provide no carrier services 891 less telecommunications revenues for services provided for resale but reported as end user because it was provided to carriers that do not contribute to universal service support mechanisms [ Line 511 (a) ] 500 equals $213,256 Source: FCC Form 499-A. Note: Detail may not add to totals due to rounding. 2A provider receives the Limited International Revenue Exemption (LIRE) and its international revenues excluded from the contribution base if the total amount of interstate end-user revenues for the filing entity consolidated with all affiliates is less than 12% of the total of interstate and international end-user revenues for the filing entity consolidated with all affiliates. See 47 C.F.R. § 54.706(c). The threshold was increased from 8% to 12% in 2002. See Federal- State Joint Board on Universal Service, et al., CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-166, 98-170, Further Notice of Proposed Rulemaking and Report and Order, 17 FCC Rcd 3752, 3806, para. 125 (2002). In addition, filers that provide only international services are exempt regardless of services offered by affiliates. Table 1.5 Contribution Base Revenues By Program1: 2010 (Dollar Amounts Shown in Millions) 1This table shows how contribution bases differ for different programs and provides relative magnitudes, but does not provide the actual amounts used for determining contributions. Amounts shown represent the amounts contained in the FCC Form 499-A database as of February 29, 2012. The universal service administrator continues to receive additional and corrected filings. Exempt amounts were based on revenues and the filer type (i.e., principal business activity) information contained in the FCC Form 499-A filings. The fund administrators may use carrier type, revenue type, Line 603 exemption certifications, and additional information requested from filers to determine which filers are required to contribute. The universal service fund administrator bills delinquent filers based on estimated revenues and may, in some instances, include estimated revenue amounts in contribution base amounts. The universal service contribution factors are set quarterly based on FCC Form 499-Q filings. FCC Form 499-A data are used for true-up and auditing purposes. Local number portability contribution amounts are determined by region of the country rather than on a nationwide basis. As a result of these factors, actual contribution bases have been based on different amounts than those shown. 1 - 12 2009 2010 2011 First Half 2012 Top 5 Affiliated Entities2 $54,503 $51,655 $50,334 $25,203 Other Companies 21,485 20,637 19,628 9,988 Total $75,988 $72,292 $69,963 $35,191 Note: Detail may not add to totals due to rounding. Source: 2009-2010 from FCC Form 499-A; 2011-2012 from FCC Form 499-Q. 1Current year revenues are calculated as the sum of Lines 403d to 417d, plus the sum of Lines 403e to 417e, minus Lines 412e, 422d, and Line 422e. 3Preliminary revenues are calculated using Line 116b plus Line 116c for each quarter in FCC Form 499-Q. 2The "Top 5 Affiliated Entities" are the five affiliated entities with the greatest revenues as defined by Line 419a, which is the sum of Lines 303a to 314a and Lines 403a to 418a. In 2009 and 2010, these companies were (in alphabetical order): AT&T Inc., Deutsche Telekom AG, Qwest Services Corp., Sprint Nextel Corporation, and Verizon Communications. In 2011 and 2012, these companies were (in alphabetical order): AT&T Inc., CenturyLink, Deutsche Telekom AG, Sprint Nextel Corporation, and Verizon Communications. Preliminary3 Table 1.6 Billed Interstate and International Retail Revenues1 by Top 5 Affiliated Entities vs. Other Companies (Dollar Amounts Shown in Millions) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2009 2010 2011 First Half 2012 Pe rce nta ge Year Chart 1.1 Interstate and International Retail Revenues by Top 5 Affiliated Entities vs. Other Companies Top 5 Affiliated Entities Other Companies 1 - 13 All Filers LIRE Exemption Total Less LIRE Billed to End Users $74,192 Collected from End Users 72,997 (3,500) 69,497 Implied Uncollectible Rate 1.6% Billed to Resellers 58,575 Billed to End Users 214,791 Total Revenue 273,366 Interstate and International Billed to End Users 71,796 Billed to End Users 70,995 Collected from End Users 69,739 (3,096) 66,642 Implied Uncollectible Rate 1.8% Billed to Resellers 60,730 Billed to End Users 205,146 Total Revenue 265,876 Interstate and International Billed to End Users 69,963 Billed to End Users1 70,141 Collected from End Users2,3 69,125 (2,892) 66,233 Implied Uncollectible Rate 1.4% Billed to Resellers4 30,156 Billed to End Users5 100,692 Total Revenue 130,847 Interstate and International Billed to End Users6 35,191 1Dollar amounts for projected revenues billed to end users are calculated using the sum of Lines 119b and 119c from Form 499-Q. 4Dollar amounts for historical revenues billed to resellers is calculated using Line 115a from Form 499-Q. 5Dollar amounts for historical revenues billed to end users is calculated using Line 116a from Form 499-Q. Note: Detail may not add to totals due to rounding. Source: FCC Form 499-Q. Table 1.7 Carrier Telecommunications Revenue Reported on FCC Form 499-Q: 2010-2012 (Dollar Amounts Shown in Millions) Projected Revenues for 2010 Data from FCC Form 499-Q 2Dollar amounts for projected revenues collected from end users including All Filers are calculated using the sum of Lines 120b and 120c from Form 499-Q. 3Dollar amounts for projected LIRE exempt revenues are calculated using the sum of Lines 120b and 120c from those filers who are LIRE- exempt based on Form 499-Q filings. 6Dollar amounts for interstate and international historical revenues billed to end users is calculated using the sum of Lines 116b and 116c from Form 499-Q. Historical Revenues Reported for 2010 Interstate and International Intrastate, Interstate, and International Historical Revenues Reported for First Half of 2012 Intrastate, Interstate, and International Projected Revenues for 2011 Interstate and International Historical Revenues Reported for 2011 Intrastate, Interstate, and International Projected Revenues for 2012 Interstate and International 1 - 14 Table 1.8 End-User Telecommunications Revenues by State: 2010 (Dollar Amounts Shown in Millions) Intrastate Interstate and International Total % of Total Alabama $2,085 $1,146 $3,231 1.51% Alaska 328 190 518 0.24 American Samoa 12 6 17 0.01 Arizona 2,621 1,406 4,027 1.88 Arkansas 1,210 635 1,845 0.86 California 17,737 7,892 25,630 11.94 Colorado 2,336 1,290 3,626 1.69 Connecticut 1,742 962 2,704 1.26 Delaware 452 259 711 0.33 District of Columbia 720 352 1,072 0.50 Florida 8,740 4,681 13,421 6.25 Georgia 4,350 2,339 6,688 3.12 Guam 68 40 107 0.05 Hawaii 609 413 1,022 0.48 Idaho 639 357 996 0.46 Illinois 5,960 2,921 8,882 4.14 Indiana 2,729 1,381 4,111 1.92 Iowa 1,271 656 1,927 0.90 Kansas 1,227 621 1,848 0.86 Kentucky 1,820 960 2,780 1.30 Louisiana 1,976 1,007 2,983 1.39 Maine 598 318 915 0.43 Maryland 2,945 1,610 4,555 2.12 Massachusetts 3,336 1,700 5,036 2.35 Michigan 4,328 2,045 6,373 2.97 Minnesota 2,377 1,163 3,541 1.65 Mississippi 1,139 636 1,775 0.83 Missouri 2,659 1,382 4,041 1.88 Montana 416 241 657 0.31 Nebraska 792 416 1,208 0.56 Nevada 1,208 628 1,836 0.86 New Hampshire 615 332 947 0.44 New Jersey 4,553 2,407 6,960 3.24 New Mexico 830 455 1,285 0.60 New York 9,630 4,834 14,464 6.74 North Carolina 4,188 2,217 6,404 2.98 North Dakota 309 165 475 0.22 N. Mariana Islands 20 10 30 0.01 Ohio 5,137 2,497 7,634 3.56 Oklahoma 1,564 784 2,348 1.09 Oregon 1,637 854 2,491 1.16 Pennsylvania 5,990 3,024 9,014 4.20 Puerto Rico 1,237 740 1,977 0.92 Rhode Island 476 242 718 0.33 South Carolina 1,957 1,079 3,037 1.41 South Dakota 358 186 544 0.25 Tennessee 2,912 1,490 4,403 2.05 Texas 10,704 5,010 15,714 7.32 Utah 1,054 531 1,585 0.74 Vermont 279 171 450 0.21 Virgin Islands 62 55 118 0.05 Virginia 3,977 2,192 6,169 2.87 Washington 2,978 1,485 4,464 2.08 West Virginia 759 494 1,252 0.58 Wisconsin 2,452 1,243 3,695 1.72 Wyoming 247 142 389 0.18 Total $142,356 $72,292 $214,648 100.00% Note: Figures may not add to totals due to rounding. Source: FCC/WCB staff estimates. For methodology end-user revenue per state, see the the Technical Appendix at www.fcc.gov/wcb/monitor.html. 1 - 15 Universal Service Program Requirements and Contribution Factors for 2012 (in Millions) First Second Third Fourth Full Quarter Quarter Quarter Quarter Year All Support Mechanisms Projections of demand and administrative expenses at the time the contribution factors were adopted High Cost High Cost Loop Support $314.330 $211.440 $208.450 $208.470 $942.690 Local Switching Support1 $87.730 $57.020 $144.750 Interstate Common Line Support $417.560 $226.210 $216.740 $216.620 $1,077.130 Interstate Access Support Mechanism $131.120 $131.120 Forward-Looking High Cost Model Support $69.300 $69.300 Frozen High Cost Support2 $256.550 $258.640 $258.560 $773.750 Frozen Competitive ETC Support3 $254.650 $220.960 $220.880 $696.490 Reserves Pursuant to FCC 10-155 and 11-1614 $77.000 $119.130 $220.210 $145.470 $561.810 Connect America Fund Phase I - Incremental Support5 $75.000 $75.000 Prior Period Adjustment $98.670 $5.970 $13.120 -$3.070 $114.690 Administrative Expenses $4.590 $4.980 $5.120 $3.900 $18.590 Interest Income6 -$2.040 -$3.100 -$1.240 -$1.540 -$7.920 Program Total $1,198.260 $1,132.850 $1,142.000 $1,124.290 $4,597.400 Low Income Lifeline Assistance $535.170 $573.210 $542.790 $724.860 $2,376.030 Link-Up $45.870 $46.110 $0.710 $0.230 $92.920 Incremental Toll Limitation $3.070 $2.690 $2.160 $1.980 $9.900 Prior Period true-ups $71.160 -$6.120 -$48.150 -$63.660 -$46.770 Administrative expenses $2.220 $2.150 $2.150 $1.090 $7.610 Interest Income6 -$0.030 -$0.170 -$0.110 -$0.230 -$0.540 Program Total $657.460 $617.870 $499.550 $664.270 $2,439.150 Rural Health Rural Health Care Support $22.530 $35.740 $28.390 $31.140 $117.800 Prior Period True-ups $0.860 -$0.220 -$0.390 -$0.240 $0.010 Administrative expenses $3.460 $3.510 $3.550 $2.950 $13.470 Interest Income6 -$1.440 -$2.210 -$0.690 -$0.640 -$4.980 Program Total $25.410 $36.820 $30.860 $33.210 $126.300 Schools & Libraries Schools and Libraries Support $562.500 $562.500 $562.500 $562.500 $2,250.000 Inflation adjustment7 $40.680 $15.320 $24.490 $80.490 Prior Period True-ups $49.500 $10.640 -$7.560 -$4.250 $48.330 Administrative expenses $20.030 $18.190 $18.970 $16.960 $74.150 Interest Income6 -$3.050 -$1.540 -$4.410 -$4.390 -$13.390 Program Total $628.980 $630.470 $584.820 $595.310 $2,439.580 Grand Total $2,510.110 $2,418.010 $2,257.230 $2,417.080 $9,602.430 Applicable interstate and international end-user revenues Reported contribution base revenues $16,609.415 $16,392.277 $16,697.469 $16,410.687 Circularity Adjustment Amount carriers will contribute to USF in this quarter. -2,490.080 -2,399.820 -2,238.260 -2,400.120 Subtotal $14,119.335 $13,992.457 $14,459.209 $14,010.567 Adjustment factor for uncollectibles 1.0% 1.0% 1.0% 1.0% Contribution base at the time the factor was calculated $13,978.142 $13,852.532 $14,314.617 $13,870.461 Contribution factor 17.9% 17.4% 15.7% 17.4% Contribution factor times contribution base $2,502.087 $2,410.341 $2,247.395 $2,413.460 6 Interest income is shown as negative because it is subtracted from expenses to yield the total. 7 In FCC 11-161, the FCC directed USAC to include the inflation adjustments to the E-rate cap in the Schools and Library Support Mechanism demand projection. Source: Support mechanism data are from USAC Appendix M02 from pertinent filings as shown at http://www.usac.org/about/tools/fcc/filings/default.aspx. Contribution factor information is available at https://www.fcc.gov/encyclopedia/contribution-factor-quarterly-filings-universal-service-fund-usf-management-support. Because the purpose of this table is to show the demand filings on which the contribution factors were set, figures in this table are based on the initial M02 rather than the revised one (which was filed after the USF/ICC Transformation Order ). Any differences between the initially filed M02 and the revised one would ultimately appear as a prior period adjustment in a subsequent quarter. Table 1.9 2 In the USF/ICC Transformation Order , the Commission converted support received by Price Cap carriers and their rate-of-return affiliates, including IAS, HCMS, ICLS, LSS, and HCLS, to Frozen High Cost Carrier Support. USF/ICC Transformation Order , paras. 128-57. 3 In the USF/ICC Transformation Order , the Commission froze support received by competitive ETCs, including IAS, HCMS, ICLS, LSS, and HCLS at 2011 levels, effective January 1, 2012, and began phasing the frozen support down effective July 1, 2012. USF/ICC Transformation Order, paras. 498-32. 4 In the Corr Wireless Order (FCC 10-155), the Commission ordered USAC to reserve excess competitive ETC support for future uses. In the USF/ICC Transformation Order (11-161), the Commission provided instructions for utilizing the remaining funds in the reserve created by the Corr Wireless Order . USF/ICC Transformation Order , paras. 564-67. At the same time, the Commission created the Connect America reserve to be used to manage fluctuations in high-cost demand. Id., paras. 547-56. 5 Incremental Support is designed to provide an immediate boost to broadband deployment in areas that are unserved by any broadband provider (See USF/ICC Transformation Order , para. 137). 1 In the USF/ICC Transformation Order , the Commission froze LSS at 2011 levels for rate-of-return carriers, effective January 1, 2012, and eliminated it effective July 1, 2012. See USF/ICC Transformation Order , paras. 253-57. 1 - 16 High-Cost Support Low-Income Support Rural Health Care Schools and Libraries Total Per- Household Low Estimate Per- Household High Estimate Per-Line Low Estimate Per-Line High Estimate 2011 $3.21 $1.20 $0.07 $1.68 $6.15 $2.77 $3.38 $0.99 $1.21 2012 $3.15 $1.67 $0.09 $1.67 $6.58 $2.96 $3.62 $1.02 $1.25 Source: Universal service contributions in 2011 from Table 1.10 of the 2011 Monitoring Report and for 2012 from Table 1.9. Inflation adjusted using CPI values reported for July of each year in Table 4.3. Household data as reported in Table 3.1 were used to calculate per household amount. Year Total Contribution Average Residential Contribution Table 1.10 Total Universal Service Contributions Divided by Number of Households Monthly Inflation Adjusted (2012 Dollars) Notes: Performance measures reported pursuant to the USF/ICC Transformation Order and Lifeline Reform Order . Figures do not represent the average amount individual households see on their bills because universal service contribution data do not separate business from residential contributions. The Commission does not currently collect data that would allow the residential or per-line contribution amount to be calculated accurately. FCC staff, using data from FCC Form 499 and third party reports, estimates that contributions based on services typically sold to residential users represent roughly one-half of overall contributions; the third party data sources used in creating these estimates are the 2013 Telecommunications Industry Association (TIA) Market Forecast and Review and the U.S. Census. FCC staff believe that the residential portion of the total contribution is between 45% (low estimate) and 55% (high estimate). The per-bill amount is a fraction of this per- household amount because many households have multiple phone lines. FCC staff, using TIA and U.S. Census data, estimates that on average U.S. households had 2.8 telephone lines in 2011 and 2.9 in 2012. Using the 2012 estimate for example, the average 2012 per-line contribution would be at 45% about $1.02 and at 55% about $1.25. Figures may not add due to rounding. Rural Health Care support includes both the primary and pilot programs. 1 - 17 Year 2003 Second Quarter 9.1 Third Quarter 9.5 Fourth Quarter 9.2 2004 First Quarter 8.7 Second Quarter 8.7 Third Quarter 8.9 Fourth Quarter 8.9 2005 First Quarter 10.7 Second Quarter 11.1 Third Quarter 10.2 Fourth Quarter 10.2 2006 First Quarter 10.2 Second Quarter 10.9 Third Quarter 10.5 Fourth Quarter 9.1 2007 First Quarter 9.7 Second Quarter 11.7 Third Quarter 11.3 Fourth Quarter 11.0 2008 First Quarter 10.2 Second Quarter 11.3 Third Quarter 11.4 Fourth Quarter 11.4 2009 First Quarter 9.5 Second Quarter 11.3 Third Quarter 12.9 Fourth Quarter 12.3 2010 First Quarter 14.1 Second Quarter 15.3 Third Quarter 13.6 Fourth Quarter 12.9 2011 First Quarter 15.5 Second Quarter 14.9 Third Quarter 14.4 Fourth Quarter 15.3 2012 First Quarter 17.9 Second Quarter 17.4 Third Quarter 15.7 Fourth Quarter 17.4 Source: Quarterly Public Notices on universal service contribution factors are in CC Docket 96-45. See http://www.fcc.gov/omd/contribution-factor.html. Table 1.11 Universal Service Fund Contribution Factor 1 Quarter Factor 1 Beginning with the second quarter of 2003, carriers contribute based on projected, collected, end-user interstate and international telecommunications revenues. Previously, carriers contributed on historical, gross billed revenues. 1 - 18 Year High-Cost Support Low-Income Support Rural Health Care Schools and Libraries Total 2001 $2,602 $584 $8 $1,464 $4,659 2002 2,978 673 16 1,683 5,351 2003 3,273 713 3 1,644 5,633 2004 3,488 759 1 1,076 5,324 2005 3,824 809 26 1,862 6,520 2006 4,096 820 41 1,669 6,626 2007 4,287 823 37 1,808 6,955 2008 4,478 819 49 1,760 7,106 2009 4,292 1,025 72 1,878 7,268 2010 4,268 1,316 110 2,282 7,976 2011 4,031 1,751 141 2,233 8,156 Source: Universal Service Administration Company (USAC). Table 1.12 Universal Service Disbursements 2001-2011 (in Million of Dollars) Notes: Figures may not add due to rounding. The figures used in this table are for the calendar year and include disbursements that were committed over several years but paid out in the respective calendar year. In Section 2, figures for the Schools and Libraries program and the Rural Health Care program are reported based on fiscal year rather than calendar year. Rural Health Care support includes both the primary and pilot programs. High-Cost Support 49% Low-Income Support 22% Rural Health Care 2% Schools and Libraries 27% Chart 1.2 Distribution of Universal Service Payments: 2011 1 - 19 (Annual Payments and Contributions in Thousands) Payments from USF to Service Providers 1 High-Cost Support Low-Income Support Schools & Libraries Rural Health Care 2 Amount % of Total Amount % of Total Alabama $90,341 $33,263 $58,891 $1,416 $183,912 2.26% $130,998 1.59% $52,914 Alaska 202,518 25,585 30,142 43,925 302,169 3.71% 21,675 0.26% 280,494 American Samoa 1,813 85 3,553 103 5,554 0.07% 659 0.01% 4,896 Arizona 71,292 23,112 60,428 1,541 156,373 1.92% 160,732 1.95% -4,359 Arkansas 89,481 40,472 18,068 1,303 149,323 1.83% 72,615 0.88% 76,709 California 90,587 163,314 321,118 1,360 576,380 7.07% 902,067 10.92% -325,687 Colorado 70,990 2,184 29,108 2,267 104,548 1.28% 147,494 1.79% -42,946 Connecticut 453 11,561 21,103 0 33,116 0.41% 109,984 1.33% -76,868 Delaware 221 3,258 2,225 0 5,706 0.07% 29,619 0.36% -23,913 Dist. of Columbia 0 3,540 9,020 0 12,560 0.15% 40,248 0.49% -27,688 Florida 54,708 112,350 76,928 572 244,557 3.00% 534,994 6.47% -290,437 Georgia 111,272 78,190 91,205 3,422 284,089 3.48% 267,295 3.23% 16,794 Guam 20,037 288 188 127 20,639 0.25% 4,526 0.05% 16,113 Hawaii 60,971 485 3,557 312 65,326 0.80% 47,171 0.57% 18,154 Idaho 49,662 3,313 9,620 348 62,943 0.77% 40,844 0.49% 22,099 Illinois 65,133 67,690 92,605 7,134 232,561 2.85% 333,870 4.04% -101,308 Indiana 78,417 9,401 34,463 1,803 124,084 1.52% 157,861 1.91% -33,777 Iowa 129,905 5,453 12,853 6,982 155,193 1.90% 74,992 0.91% 80,202 Kansas 190,681 7,006 15,149 482 213,318 2.62% 70,926 0.86% 142,392 Kentucky 101,168 7,953 41,830 833 151,784 1.86% 109,749 1.33% 42,035 Louisiana 114,460 98,331 54,564 167 267,522 3.28% 115,048 1.39% 152,474 Maine 30,004 11,478 6,995 669 49,145 0.60% 36,294 0.44% 12,851 Maryland 3,351 42,822 23,816 2 69,991 0.86% 183,965 2.23% -113,974 Massachusetts 2,088 29,693 26,292 129 58,203 0.71% 194,274 2.35% -136,071 Michigan 42,111 65,634 51,144 1,542 160,432 1.97% 233,709 2.83% -73,277 Minnesota 98,883 5,944 26,728 3,192 134,746 1.65% 132,974 1.61% 1,773 Mississippi 245,674 34,913 23,507 214 304,308 3.73% 72,677 0.88% 231,631 Missouri 98,065 26,325 40,135 747 165,273 2.03% 157,903 1.91% 7,370 Montana 88,018 3,636 3,993 2,685 98,333 1.21% 27,537 0.33% 70,796 Nebraska 90,350 1,619 9,636 15,981 117,586 1.44% 47,560 0.58% 70,027 Nevada 20,640 6,329 6,819 116 33,905 0.42% 71,752 0.87% -37,847 New Hampshire 9,381 2,215 2,601 18 14,215 0.17% 37,958 0.46% -23,743 New Jersey 1,501 41,176 57,174 0 99,851 1.22% 275,112 3.33% -175,261 New Mexico 81,869 13,785 33,342 1,018 130,014 1.59% 51,967 0.63% 78,046 New York 41,715 130,928 148,954 783 322,379 3.95% 552,494 6.69% -230,114 North Carolina 68,469 67,098 68,387 1,326 205,280 2.52% 253,340 3.07% -48,060 North Dakota 96,987 2,134 4,226 1,327 104,675 1.28% 18,867 0.23% 85,808 Northern Mariana Is. 2,905 232 765 0 3,902 0.05% 1,179 0.01% 2,723 Ohio 32,959 77,816 67,352 13,159 191,285 2.35% 285,423 3.45% -94,138 Oklahoma 144,443 121,524 57,561 1,054 324,582 3.98% 89,629 1.08% 234,953 Oregon 75,941 6,641 16,066 4,513 103,161 1.26% 97,596 1.18% 5,565 Pennsylvania 66,245 43,916 64,226 1,391 175,778 2.16% 345,641 4.18% -169,863 Puerto Rico 165,376 58,904 9,317 0 233,596 2.86% 84,591 1.02% 149,004 Rhode Island 29 3,425 9,014 0 12,468 0.15% 27,646 0.33% -15,178 South Carolina 111,731 13,736 45,553 1,788 172,808 2.12% 123,368 1.49% 49,440 South Dakota 64,856 1,268 2,293 2,359 70,776 0.87% 21,312 0.26% 49,464 Tennessee 63,407 49,262 56,249 464 169,383 2.08% 170,329 2.06% -946 Texas 247,012 97,773 234,844 2,335 581,964 7.14% 572,609 6.93% 9,355 Utah 22,290 3,988 19,508 1,846 47,632 0.58% 60,641 0.73% -13,009 Vermont 18,298 2,477 1,827 46 22,647 0.28% 19,567 0.24% 3,080 Virgin Islands 18,944 111 10,537 82 29,673 0.36% 6,309 0.08% 23,364 Virginia 69,503 29,207 41,004 505 140,219 1.72% 250,548 3.03% -110,329 Washington 81,100 22,563 32,322 114 136,099 1.67% 169,777 2.05% -33,677 West Virginia 53,037 14,260 13,436 1,314 82,047 1.01% 56,427 0.68% 25,620 Wisconsin 136,230 20,660 27,006 5,944 189,839 2.33% 142,019 1.72% 47,821 Wyoming 43,746 403 3,294 250 47,695 0.58% 16,273 0.20% 31,422 Total $4,031,268 $1,750,728 $2,232,539 $141,013 $8,155,548 100.00% $8,262,633 100.00% -$107,085 3 Contributions include administrative cost of approximately $107 million, as shown in USAC's Annual Report. Allocation of contributions among states is an FCC/WCB staff estimate. 4 Net dollar flow is positive when payments from USF to carriers exceed contributions to USF. Total is negative because of administrative expenses. Table 1.13 2 Includes both the primary and pilot programs. Notes: Figures may not add due to rounding. USF is an abbreviation for the Universal Service Fund. 1 Data are from USAC. Universal Service Support Mechanisms by State: 2011 Total Estimated Contributions 3 Estimated Net Dollar Flow 4 1 - 20 2 - 1 2. Program Review Section 2 includes the latest data on the low-income (Lifeline and Link Up), high-cost, schools and libraries, and rural health care support programs through 2011. The data provided in this section are supplemented by additional tables at www.fcc.gov/wcb/iatd/monitor.html. This website location also provides more details on the history and operation of each of the four support programs. Low-Income Support Program: Lifeline and Link Up The Lifeline program promotes increased telephone subscribership by providing low-income households with discounts on the monthly cost of telephone service. Link Up provides qualified subscribers with a one-time discount off of the initial installation fee for one traditional, wireline phone service at the primary residence or the activation fee for one wireless phone service. The Lifeline program was created in 1984, and Link Up rules were created in 1987. In June 2000, the Commission further expanded Lifeline and Link Up to address the needs of households on Tribal lands.1 On February 6, 2012, the Commission released the Lifeline Reform Order, which took significant steps to reform the low-income program.2 These reforms include establishing a new interim flat Lifeline support amount of $9.25 per subscriber per-month in non-Tribal areas;3 restricting Link Up support to only Eligible Telecommunications Carriers (ETCs) receiving high cost support on Tribal lands;4 capping Toll Limitation Support at $3.00 per-month and eliminating support by the end of 2013;5 directing USAC to continue with in-depth data validations; and requiring consumers to provide proof of eligibility, certify their eligibility at sign up and recertify eligibility on an annual basis.6 The Lifeline Reform Order also establishes a pilot program to provide broadband service to low-income consumers as well as a savings target of $200 million as compared to what would have been spent in the absence of reform.7 Through these and other reforms, the Commission sought to eliminate waste and inefficiency, and increase accountability. The Lifeline Reform Order represents another step in the Commission’s ongoing efforts to overhaul all USF programs to promote the availability of modern networks and the capability of all 1 Federal-State Joint Board on Universal Service; Promoting Deployment and Subscribership in Unserved and Underserved Areas, Including Tribal and Insular Areas, Twelfth Report and Order, and Further Notice of Proposed Rulemaking, CC Docket No. 96-45, FCC 00-208, 15 FCC Rcd 12,208 (2000). 2 Lifeline and Link Up Reform and Modernization, et al., WC Dkt. Nos. 11-42 et al., CC Dkt. No. 96-45, Report and Order and Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656 (2012) (Lifeline Reform Order). 3 See 47 C.F.R. § 54.403(a)(1). 4 See 47 C.F.R. § 54.413(a). 5 See 47 C.F.R. § 54.403(c). 6 See Lifeline Reform Order 27 FCC Rcd at 6747, para. 211; 47 C.F.R. § 54.410. In-depth data validations are a process through which USAC obtains subscriber lists from ETCs and directs ETCs to de-enroll duplicative subscribers. 7 See Lifeline Reform Order 27 FCC Rcd at 6794-6811, paras. 321-360. 2 - 2 American consumers to access and use those networks. The changes to the low-income program as a result of the 2012 Lifeline Reform Order are not reflected in the data in this year’s report, which covers the period through 2011. The low-income program grew between 2008 and 2011.8 As shown in Table 2.1, lifeline subscribers increased 104% from 6.7 million subscribers in 2008 to 13.7 million subscribers in 2011.9 Similarly, as shown in Table 2.2, low-income support (the sum of Lifeline and Link Up support) increased 118% from $822 million in 2008 to $1.79 billion in 2011.10 Chart 2.1 shows the growth in low-income subscribers and beneficiaries graphically. Table 2.3 reports federal and state average Lifeline monthly support for incumbent local exchange carriers (ILECs) by state in December 2011, and indicates the additional contribution from the federal program to reduce local rates where states have authorized statewide or carrier-specific intrastate local rate reductions. The table indicates the average monthly non-Tribal support provided by carriers in each state for ILECs. In December 2011, average monthly nationwide combined federal and state support for ILECs was $12.00. Table 2.4 reports average monthly federal Lifeline support per subscriber by state and average monthly Tribal Lifeline support by state for 2011.11 Table 2.5 reports the average Link Up support per beneficiary by state for both Tribal and non-Tribal beneficiaries. Table 2.6 shows low-income support payments by state for Lifeline and Link Up for 2011. American Indian and Native American Tribal Lifeline Tier 4 and Link Up data are also reported. Total carrier payments data include the carrier’s incremental cost of providing toll-limitation services (TLS) in each state. Competitive eligible telecommunication carriers (CETCs) have received a growing share of total low-income support over the past 10 years and now receive substantially more support than ILECs. Support received by CETCs increased from $147 million in 2008 (18% of total) to $1.23 billion (69% of total) in 2011. In contrast, ILEC support declined from $675 million in 2008 to $558 million in 2011. Table 2.7 shows annual low-income support since 1998 for both ILECs and CETCs, and Chart 2.2 shows the increase in CETC share of total support since 1998. The five largest telecommunications companies (when including their affiliated entities) combined accounted for greater than two-thirds of low-income support payments in 2011.12 Table 2.8 8 Low-income information reported in this section is based on claims data submitted to USAC by carriers on FCC Form 497. 9 Table 2.1 reports Tribal and non-Tribal Lifeline subscriber and Link Up beneficiary data for years 1987 through 2011. 10 Table 2.2 reports annual low-income claims for years 1988 through 2011. 11 Lifeline support includes Tiers 1-3 support. Tribal support is Tier 4 support. See the program appendix for an explanation of Tiers 1-4 support. The Lifeline Reform Order replaced Tiers 1-3 with a $9.25 flat rate support amount. 12 América Móvil owns TracFone and Puerto Rico Telephone Company. 2 - 3 reports low-income support by company for the top 10 recipients of low-income support in 2011. Table 2.9 breaks these figures out by Lifeline, Link Up, and TLS support. Additional data on the low-income support program have been posted at www.fcc.gov/wcb/iatd/monitor.html. These data include Lifeline subscribership and Link Up beneficiaries by state since 1998, low-income support claims data by state and study area since 1998, as well as low-income adjustments by study area for 2011. 2 - 4 Table 2.1 Lifeline Subscribers and Link Up Beneficiaries Year Non-Tribal Tribal Total Non-Tribal Tribal Total 1987 1,063 8 1988 1,829 106 1989 2,115 207 1990 2,467 513 1991 2,984 640 1992 3,440 743 1993 3,972 737 1994 4,423 838 1995 4,914 824 1996 5,233 808 1997 1 5,111 NA 1998 5,376 0 5,376 2,195 0 2,195 1999 5,638 0 5,638 1,835 0 1,835 2000 5,856 4 5,861 1,690 2 1,692 2001 6,088 53 6,140 1,670 23 1,694 2002 6,393 111 6,504 1,657 30 1,687 2003 6,352 146 6,498 1,662 23 1,685 2004 6,612 176 6,788 1,670 42 1,712 2005 6,829 234 7,063 1,672 90 1,762 2006 6,634 287 6,921 1,553 101 1,654 2007 6,615 328 6,943 1,382 112 1,494 2008 6,382 350 6,732 1,510 118 1,627 2009 7,666 371 8,038 1,751 111 1,862 2010 9,892 382 10,274 2,530 126 2,657 2011 13,286 463 13,749 4,012 286 4,297 NA - Not available. Note: The reported subscribers and beneficiaries represent USAC data for the time period January through December which include true-ups for Lifeline subscribers and Link-Up beneficiaries through March of the following year. Data for 1998-2010 were revised. 1 Subscriber data were not collected in 1997. Lifeline subscribership data were estimated by USAC. Source: Universal Service Administrative Company. Lifeline Link Up (in Thousands) 2 -5 Table 2.2 Low-Income Claims (in Thousands) Total Year General Tribal 2 TLS 3 PICC 4 Total Non-Tribal Tribal Total 1988 $31,952 $0 $0 $0 $31,952 $1,991 $0 $1,991 $33,943 1989 50,878 0 0 0 50,878 4,480 0 4,480 55,358 1990 62,464 0 0 0 62,464 11,351 0 11,351 73,815 1991 79,104 0 0 0 79,104 13,705 0 13,705 92,809 1992 93,766 0 0 0 93,766 15,342 0 15,342 109,108 1993 109,083 0 0 0 109,083 17,019 0 17,019 126,102 1994 123,284 0 0 0 123,284 18,573 0 18,573 141,857 1995 137,277 0 0 0 137,277 18,392 0 18,392 155,670 1996 148,186 0 0 0 148,186 18,247 0 18,247 166,433 1997 147,579 0 0 0 147,579 13,711 0 13,711 161,290 1998 1 416,504 0 2,700 2,802 422,006 42,461 0 42,461 464,467 1999 438,578 0 3,134 4,450 446,162 33,988 0 33,988 480,150 2000 482,052 522 2,846 3,168 488,588 30,411 30 30,441 519,029 2001 548,419 6,960 3,195 0 558,574 30,314 475 30,788 589,362 2002 623,350 17,955 3,779 0 645,083 30,323 700 31,022 676,106 2003 657,095 24,167 4,425 0 685,687 30,170 515 30,686 716,373 2004 695,188 30,502 5,111 0 730,800 30,898 1,230 32,129 762,929 2005 716,133 45,124 6,215 0 767,472 31,715 2,788 34,503 801,975 2006 703,958 61,524 8,885 0 774,367 29,832 2,869 32,701 807,068 2007 710,180 73,145 8,514 0 791,839 27,816 3,575 31,391 823,230 2008 695,016 80,914 8,634 0 784,564 30,682 6,578 37,260 821,824 2009 868,112 88,062 8,959 0 965,133 40,812 7,485 48,297 1,013,430 2010 1,126,616 92,878 22,504 0 1,241,999 67,905 9,798 77,703 1,319,702 2011 1,526,073 118,147 11,091 0 1,655,311 113,064 21,566 134,630 1,789,941 2 Tribal support is Tier 4 support only. Tiers 1 to 3 support for Tribal beneficiaries is included under General. 3 TLS is an abbreviation for toll limitation service. 4 Carriers no longer charge a residential Presubscribed Interexchange Carrier Charge (PICC) as of July 1, 2000. Source: Universal Service Administrative Company. Lifeline Link Up Lifeline Subscribers and Link Up Beneficiaries (in Thousands) 1 Effective in 1998, the federal Lifeline support mechanism was expanded so that a basic level of assistance would be provided in all states. Additional federal support is also provided wherever a state chooses to provide matching assistance. Prior to the expansion, states were required to match all federal support with their own state support, and if the state provided no support, then no federal support was available in that state. The basic level of federal support was also increased in 1998. Chart 2.1 Note: Data for 2006-2010 were revised. Beginning in 2011, some claims for 2011 and earlier years were recovered due to audits or other corrections. This amounts to $8.1 million recovered in 2011, of which $4.3 million came from the Lifeline program, $3.7 million came from the Link Up program, and $28,000 came from the TLS program. 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Lifeline 5,861 6,140 6,504 6,498 6,788 7,063 6,921 6,943 6,732 8,038 10,274 13,749 Link Up 1,692 1,694 1,687 1,685 1,712 1,762 1,654 1,494 1,627 1,862 2,657 4,297 2 - 6 Basic Federal Support1 State Support2 Federal Match Total Federal Support3 Total Alabama $8.23 $3.50 $1.75 $9.98 $13.48 Alaska 8.25 3.50 1.75 10.00 13.50 American Samoa 8.25 0.00 0.00 8.25 8.25 Arizona 8.01 1.23 0.61 8.62 9.85 Arkansas 7.44 1.87 0.94 8.38 10.25 California 6.60 3.50 1.75 8.35 11.85 Colorado 8.18 3.50 1.75 9.93 13.42 Connecticut 7.50 1.17 0.59 8.09 9.26 Delaware 8.15 0.00 0.00 8.15 8.15 District of Columbia 5.60 3.50 1.75 7.35 10.85 Florida 8.17 3.50 1.75 9.92 13.41 Georgia 8.23 3.38 1.69 9.92 13.30 Guam 8.25 1.70 0.85 9.10 10.81 Hawaii 8.25 0.00 0.00 8.25 8.25 Idaho 8.15 3.47 1.73 9.89 13.35 Illinois 6.58 0.00 0.00 6.58 6.58 Indiana 7.52 0.00 0.00 7.52 7.52 Iowa 7.06 0.00 0.00 7.06 7.06 Kansas 7.26 3.50 1.75 9.01 12.50 Kentucky 8.18 3.47 1.74 9.92 13.39 Louisiana 8.23 0.00 0.00 8.23 8.23 Maine 7.98 3.50 1.75 9.73 13.23 Maryland 7.38 3.41 1.71 9.08 12.50 Massachusetts 8.11 3.50 1.75 9.86 13.36 Michigan 7.28 2.24 1.12 8.40 10.64 Minnesota 7.18 1.97 0.99 8.17 10.14 Mississippi 8.23 3.32 1.66 9.89 13.21 Missouri 7.33 3.49 1.74 9.07 12.56 Montana 8.25 2.43 1.21 9.46 11.89 Nebraska 7.03 3.35 1.67 8.71 12.06 Nevada 6.12 3.34 1.67 7.79 11.14 New Hampshire 7.94 0.00 0.00 7.94 7.94 New Jersey 8.01 3.48 1.74 9.75 13.23 New Mexico 8.25 3.22 1.61 9.86 13.08 New York 8.02 3.30 1.65 9.67 12.97 North Carolina 7.85 3.50 1.75 9.60 13.10 North Dakota 8.25 1.95 0.98 9.23 11.18 Northern Mariana Islands 8.25 3.33 1.67 9.92 13.25 Ohio 7.28 3.49 1.75 9.03 12.52 Oklahoma 7.43 0.40 0.20 7.63 8.03 Oregon 8.21 3.48 1.74 9.95 13.44 Pennsylvania 7.66 0.75 0.38 8.03 8.78 Puerto Rico 8.25 3.50 1.75 10.00 13.50 Rhode Island 8.11 3.50 1.75 9.86 13.36 South Carolina 8.20 3.50 1.75 9.95 13.45 South Dakota 8.20 0.10 0.05 8.25 8.34 Tennessee 8.14 3.19 1.59 9.73 12.92 Texas 7.28 3.49 1.75 9.02 12.52 Utah 8.09 3.50 1.75 9.83 13.33 Vermont 7.97 3.50 1.75 9.72 13.22 Virgin Islands 8.25 3.49 1.74 9.99 13.48 Virginia 7.16 3.24 1.62 8.78 12.02 Washington 7.70 2.62 1.31 9.01 11.62 West Virginia 8.24 0.01 0.00 8.25 8.25 Wisconsin 7.39 2.35 1.18 8.56 10.91 Wyoming 8.25 3.50 1.75 10.00 13.50 Total $7.35 $3.10 $1.55 $8.90 $12.00 Notes: This table reflects only non-Tribal support. All averages are weighted averages. ILECs is an abbreviation for incumbent local exchange carriers. 1 Basic federal support includes both Tier 1 and Tier 2 support. See the Low-Income Support Program Technical Appendix for definitions. 2 Includes only state support (Tier 3) that is matched by federal support. Source: Universal Service Administrative Company. annual rate for 2011. Table 2.3 Average Lifeline Monthly Claims for ILECs by State (December 2011) 3 Total federal support reported in Table 2.3 is different from Table 2.4 since Table 2.3 reports a rate as of December 2011 and Table 2.4 reports an 2 - 7 State General Tribal Non-Tribal Tribal General1 Tribal Alabama $35,560 $3 296,451 27 $10.00 $8.30 Alaska 8,179 17,391 0 67,115 10.16 21.59 American Samoa 69 0 690 0 8.33 - Arizona 9,783 13,001 37,365 49,480 9.39 21.90 Arkansas 30,819 0 287,738 3 8.93 5.95 California 157,623 44 1,559,817 676 8.42 5.40 Colorado 2,161 1 18,155 4 9.92 14.29 Connecticut 11,535 0 107,847 0 8.91 - Delaware 3,263 0 27,687 0 9.82 - District of Columbia 3,491 0 39,637 0 7.34 - Florida 111,457 1 937,538 6 9.91 9.53 Georgia 73,849 0 619,504 0 9.93 - Guam 248 0 2,222 0 9.31 - Hawaii 522 0 5,007 0 8.68 - Idaho 3,072 198 25,226 737 9.86 22.37 Illinois 57,457 0 636,741 0 7.52 - Indiana 9,283 0 88,538 0 8.74 - Iowa 5,099 0 55,618 1 7.64 19.00 Kansas 6,032 2 59,011 23 8.52 6.71 Kentucky 8,400 0 70,973 0 9.86 - Louisiana 79,977 0 691,658 0 9.64 - Maine 10,723 47 91,105 481 9.76 8.11 Maryland 32,995 0 299,612 0 9.18 - Massachusetts 29,825 0 251,932 0 9.87 - Michigan 62,887 59 590,085 313 8.88 15.78 Minnesota 5,611 271 55,864 1,548 8.15 14.60 Mississippi 29,569 5 246,781 16 9.98 25.00 Missouri 22,629 1 213,268 33 8.84 2.85 Montana 1,675 1,938 7,265 7,341 9.56 22.00 Nebraska 1,522 82 14,258 421 8.64 16.25 Nevada 5,779 24 61,716 600 7.73 3.37 New Hampshire 2,186 0 19,442 0 9.37 - New Jersey 40,226 0 343,997 0 9.74 - New Mexico 7,772 5,810 43,122 22,698 9.84 21.33 New York 130,511 1 1,107,491 11 9.82 10.17 North Carolina 66,315 1 566,754 5 9.75 13.85 North Dakota 1,615 513 11,444 3,075 9.27 13.90 Northern Mariana Islands 223 0 1,871 0 9.92 - Ohio 75,415 0 687,110 0 9.15 - Oklahoma 28,182 74,700 3,585 292,790 7.92 21.26 Oregon 6,629 34 55,059 209 10.00 13.46 Pennsylvania 44,277 0 412,237 0 8.95 - Puerto Rico 56,753 0 472,153 0 10.02 - Rhode Island 3,271 0 27,599 0 9.88 - South Carolina 12,707 9 106,459 112 9.94 6.35 South Dakota 908 354 6,892 2,325 8.21 12.71 Tennessee 48,204 0 410,012 0 9.80 - Texas 93,731 19 850,234 324 9.18 4.79 Utah 3,753 224 30,877 915 9.84 20.42 Vermont 2,295 0 19,385 0 9.87 - Virgin Islands 112 0 871 0 10.70 - Virginia 29,483 0 258,178 0 9.52 - Washington 18,838 3,158 160,069 10,805 9.19 24.36 West Virginia 12,704 0 106,232 0 9.97 - Wisconsin 18,515 210 182,903 813 8.40 21.52 Wyoming 353 47 2,749 194 10.00 20.17 Total $1,526,073 $118,147 13,286,032 463,099 $9.25 $21.26 Source: Universal Service Administrative Company. subscribers for December 2011 and subscribers in Table 2.4 are average 2011 subscribers. Notes: General support includes Tier 1 to 3 support. Tribal Lifeline rates are just for Tier 4 payments. Tribal Lifeline subscribers also qualify for Tier 1 to 3 support, which is included in General. These calculations exclude TLS. Table 2.4 Federal Lifeline Average Claims by State: 2011 Subscribers Support per MonthSupport in Thousands 1 Total federal support reported in Table 2.3 is different from Table 2.4 since Lifeline subscribers in Table 2.3 include only ILEC 2 - 8 State Non-Tribal Tribal Non-Tribal Tribal Non-Tribal Tribal Alabama $1,889 $0 63,702 0 $29.66 - Alaska 0 70 2 3,613 18.50 19.26 American Samoa 1 0 21 0 30.00 - Arizona 107 168 6,334 8,402 16.90 19.97 Arkansas 11,866 0 396,332 0 29.94 - California 4,274 0 179,575 1 23.80 20.00 Colorado 28 0 1,627 0 17.46 - Connecticut 20 0 741 0 26.91 - Delaware 1 0 59 0 18.00 - District of Columbia 62 0 2,490 0 24.97 - Florida 929 0 29,253 0 31.77 - Georgia 9,869 0 337,686 0 29.22 - Guam 34 0 1,313 0 26.01 - Hawaii 9 0 590 0 14.94 - Idaho 27 0 1,787 13 14.84 14.31 Illinois 14,512 0 485,889 0 29.87 - Indiana 158 0 6,693 0 23.54 - Iowa 387 0 14,039 0 27.56 - Kansas 1,284 0 43,214 0 29.71 - Kentucky 471 0 18,363 0 25.66 - Louisiana 23,298 0 778,184 0 29.94 - Maine 436 1 16,184 53 26.95 22.70 Maryland 11,713 0 390,848 0 29.97 - Massachusetts 3 0 491 0 6.86 - Michigan 2,475 0 84,634 29 29.24 11.83 Minnesota 48 2 4,552 88 10.48 19.58 Mississippi 3,682 0 120,563 0 30.54 - Missouri 7,084 0 238,008 6 29.77 7.50 Montana 10 17 731 1,084 13.46 15.33 Nebraska 16 0 971 1 15.97 17.00 Nevada 1,000 1 34,850 33 28.68 17.36 New Hampshire 4 0 181 0 19.43 - New Jersey 1,082 0 36,754 0 29.43 - New Mexico 131 74 7,272 3,680 17.96 20.24 New York 97 0 3,663 0 26.41 - North Carolina 1,247 0 43,401 0 28.73 - North Dakota 13 6 806 227 15.72 26.37 Northern Mariana Islands 14 0 584 0 23.32 - Ohio 1,290 0 139,122 0 9.28 - Oklahoma 35 21,176 1,703 266,759 20.65 79.38 Oregon 38 0 4,325 6 8.76 8.33 Pennsylvania 408 0 19,125 0 21.32 - Puerto Rico 2,050 0 85,697 0 23.92 - Rhode Island 359 0 12,655 0 28.39 - South Carolina 760 0 27,321 0 27.84 - South Dakota 7 1 566 92 12.42 14.67 Tennessee 948 0 35,067 0 27.02 - Texas 3,619 1 144,017 31 25.13 19.48 Utah 26 4 2,102 172 12.60 20.35 Vermont 19 0 1,332 0 14.25 - Virgin Islands 1 0 222 0 5.55 - Virginia 31 0 1,485 0 21.08 - Washington 760 43 34,983 1,428 21.71 29.91 West Virginia 2,307 0 76,967 0 29.97 - Wisconsin 2,124 3 72,252 236 29.40 13.04 Wyoming 4 0 205 10 17.47 17.90 Total $113,064 $21,566 4,011,533 285,964 $28.18 $75.41 Source: Universal Service Administrative Company. Table 2.5 Link Up Average Claims by State: 2011 Beneficiaries Support per BeneficiarySupport in Thousands 2 - 9 State or Jurisdiction Lifeline Link Up General Tribal Non-Tribal Tribal Alabama $35,560 $3 $1,889 $0 $1,229 $38,681 Alaska 8,179 17,391 0 70 51 25,691 American Samoa 69 0 1 0 0 70 Arizona 9,783 13,001 107 168 34 23,094 Arkansas 30,819 0 11,866 0 109 42,794 California 157,623 44 4,274 0 93 162,034 Colorado 2,161 1 28 0 4 2,194 Connecticut 11,535 0 20 0 0 11,555 Delaware 3,263 0 1 0 0 3,265 District of Columbia 3,491 0 62 0 0 3,553 Florida 111,457 1 929 0 542 112,929 Georgia 73,849 0 9,869 0 70 83,787 Guam 248 0 34 0 0 282 Hawaii 522 0 9 0 0 531 Idaho 3,072 198 27 0 6 3,302 Illinois 57,457 0 14,512 0 144 72,112 Indiana 9,283 0 158 0 4 9,444 Iowa 5,099 0 387 0 7 5,493 Kansas 6,032 2 1,284 0 63 7,381 Kentucky 8,400 0 471 0 350 9,222 Louisiana 79,977 0 23,298 0 928 104,203 Maine 10,723 47 436 1 4 11,211 Maryland 32,995 0 11,713 0 0 44,709 Massachusetts 29,825 0 3 0 0 29,829 Michigan 62,887 59 2,475 0 407 65,828 Minnesota 5,611 271 48 2 4 5,936 Mississippi 29,569 5 3,682 0 441 33,697 Missouri 22,629 1 7,084 0 100 29,814 Montana 1,675 1,938 10 17 4 3,644 Nebraska 1,522 82 16 0 8 1,627 Nevada 5,779 24 1,000 1 1 6,804 New Hampshire 2,186 0 4 0 0 2,189 New Jersey 40,226 0 1,082 0 1 41,309 New Mexico 7,772 5,810 131 74 22 13,809 New York 130,511 1 97 0 248 130,857 North Carolina 66,315 1 1,247 0 680 68,242 North Dakota 1,615 513 13 6 1 2,148 Northern Mariana Islands 223 0 14 0 0 236 Ohio 75,415 0 1,290 0 570 77,275 Oklahoma 28,182 74,700 35 21,176 3,503 127,596 Oregon 6,629 34 38 0 7 6,708 Pennsylvania 44,277 0 408 0 3 44,688 Puerto Rico 56,753 0 2,050 0 0 58,803 Rhode Island 3,271 0 359 0 0 3,630 South Carolina 12,707 9 760 0 373 13,850 South Dakota 908 354 7 1 1 1,271 Tennessee 48,204 0 948 0 191 49,343 Texas 93,731 19 3,619 1 844 98,214 Utah 3,753 224 26 4 13 4,020 Vermont 2,295 0 19 0 1 2,315 Virgin Islands 112 0 1 0 0 113 Virginia 29,483 0 31 0 0 29,514 Washington 18,838 3,158 760 43 18 22,817 West Virginia 12,704 0 2,307 0 0 15,012 Wisconsin 18,515 210 2,124 3 12 20,863 Wyoming 353 47 4 0 0 404 Total $1,526,073 $118,147 $113,064 $21,566 $11,091 $1,789,941 Source: Universal Service Administrative Company. Notes: These dollars represent submitted claims to USAC for the time period January 2011 through December 2011, including true-ups reported through August 2012. General Lifeline support is Tier 1 to 3 support for all subscribers, including Tribal subscribers. Tribal Lifeline support is Tier 4 support only. For Lifeline, "General" payments are made to all Lifeline subscribers and "Tribal" payments are additional payments to Tribal Lifeline subscribers only. For Link Up, the payments and subscribers for the two categories of recipients are kept separate. (in Thousands) Table 2.6 Low-Income Claims by State: 2011 TLS Total 2 - 10 Table 2.7 ILECs CETCs Total 1998 $464,207 $260 $464,467 0.1 % 1999 479,353 796 480,150 0.2 2000 517,901 1,128 519,029 0.2 2001 585,790 3,572 589,362 0.6 2002 663,009 13,097 676,106 1.9 2003 693,378 22,994 716,373 3.2 2004 723,580 39,349 762,929 5.2 2005 734,344 67,631 801,975 8.4 2006 707,135 99,933 807,068 12.4 2007 701,990 121,240 823,230 14.7 2008 674,805 147,019 821,824 17.9 2009 643,217 370,213 1,013,430 36.5 2010 596,115 723,557 1,319,702 54.8 2011 557,815 1,232,126 1,789,941 68.8 Percent of Low-Income Claims Received by CETCs Chart 2.2 Percent CETCs Source: Universal Service Administrative Company. Low-Income Claims Received by ILECs and CETCs (in Thousands) Notes: ILECs is an abbreviation for incumbent local exchange carriers. CETCs is an abbreviation for competitive eligible telecommunications carriers. CETCs include both wireless and wireline carriers. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2 - 11 Rank Affiliated Entity Name1 Low-Income Support Percent of Total Cumulative Percent of Total 1 América Móvil $451,833 25.2% 25.2% 2 AT&T Inc. 280,052 15.6 40.9 3 Sprint Nextel Corporation 273,466 15.3 56.2 4 Nexus Communications, Inc. 116,178 6.5 62.7 5 Verizon Communications Inc. 109,186 6.1 68.8 6 CenturyLink, Inc. 52,124 2.9 71.7 7 True Wireless, LLC 37,167 2.1 73.7 8 Budget Prepay Inc. 33,725 1.9 75.6 9 TerraCom, Inc. 33,558 1.9 77.5 10 Amvensys Telecom Holdings 32,652 1.8 79.3 Other Carriers 369,999 20.7 100.0 All Holding Companies $1,789,941 100.0% 100.0% Rank Affiliated Entity Name1 Lifeline Support Link Up Support TLS Support 1 América Móvil $451,704 $130 $0 2 AT&T Inc. 274,855 4,998 199 3 Sprint Nextel Corporation 273,466 0 0 4 Nexus Communications, Inc. 96,162 20,000 17 5 Verizon Communications Inc. 108,200 945 41 6 CenturyLink, Inc. 51,401 655 67 7 True Wireless, LLC 27,795 9,372 0 8 Budget Prepay Inc. 20,545 12,536 644 9 TerraCom, Inc. 26,857 6,175 526 10 Amvensys Telecom Holdings 23,868 7,409 1,376 Other Carriers 289,367 72,410 8,221 All Holding Companies $1,644,220 $134,630 $11,091 1 Affiliated entities include all commonly-controlled or commonly-owned affiliates as of 2011. (in Thousands) Table 2.8 Table 2.9 Low-Income Claims by Affiliated Entities: 2011 Low-Income Claims by Program and by Affiliated Entities: 2011 (in Thousands) 2 - 12 High-Cost Support Program The high-cost support mechanisms enable eligible telecommunications carriers (ETCs) serving areas with very high costs to recover some of these costs from the federal universal service fund, leaving a smaller remainder of the costs to be recovered through end-user rates or state universal service support mechanisms. In this manner, the high-cost support mechanisms are intended to ensure reasonably comparable local rates and thereby further one of the most important goals of federal and state regulation -- the preservation and advancement of universal telephone service. This section of the report outlines the high-cost support mechanisms and provides data for these mechanisms. Until recently, the high-cost support mechanisms included high-cost loop support (HCLS),13 safety net additive support (SNAS), safety valve support (SVS), interstate common line support (ICLS),14 which generally went to rate-of- return carriers,15 forward-looking non-rural high-cost model support (HCMS), interstate access support (IAS) for price-cap carriers, and local switching support (LSS) for carriers that serve study areas with 50,000 or fewer access lines. On October 27, 2011, the Commission adopted the USF/ICC Transformation Order, which comprehensively reformed and modernized the universal service and intercarrier compensation systems, creating a new Connect America Fund to ensure that robust voice and broadband services are available to Americans throughout the nation.16 Among other things, the Commission eliminated certain high-cost support mechanisms, modified others, and established a new framework for distributing high-cost funding in the most efficient and technologically neutral manner possible, through market-based mechanisms such as competitive bidding. Some reforms took effect for support in 2012, while others will be implemented in 2013 or later. Accordingly, some data available in 2012 reflect the effect of reforms, but data reflecting the full effect of the reforms will not be available until later years. In January 2012, two transitional mechanisms were introduced for price cap carriers and their rate-of-return affiliates: frozen high-cost support, which replaced the existing support mechanisms for those carriers, and incremental support, which provides additional support for those carriers that elect to receive it to extend broadband- capable networks in unserved areas. In July 2012, the Connect America Fund intercarrier compensation (CAF-ICC) mechanism was introduced. Further description of these transitional mechanisms can be found in the program description of the high-cost support program at www.fcc.gov/wcb/iatd/monitor.html. 13 This was formerly referred to as the Universal Service Fund, and still bears that name in the Commission rules. It is now referred to as high-cost loop support to avoid confusion with the universal service support mechanisms that the Commission developed to implement the 1996 Act. See 47 C.F.R. § 36.601. See also 47 C.F.R. Part 54. 14 Effective July 1, 2004, long term support (LTS) was merged into ICLS. Any LTS amounts reported in subsequent years are out-of-year adjustments for prior payments. Such adjustments occurred for ILECs only in 2005, but continued for some CETCs through 2008. 15 A number of mid-sized carriers elected to convert to price-cap regulation in recent years and received ICLS that was frozen at a per-line amount. See, e.g., Windstream Petition for Conversion to Price Cap Regulation and for Limited Waiver Relief, WC Docket No. 07-171, Order, 23 FCC Rcd 5294 (2008). 16 See generally Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing a Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform—Mobility Fund; WC Docket Nos. 10-90, 07-135, 05-337, 03-109, CC Docket Nos. 01-92, 96-45, GN Docket No. 09-51, WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, FCC 11-161 (rel. Nov. 18, 2011) (USF/ICC Transformation Order and FNPRM). 2 - 13 High-Cost Disbursements Table 2.10 summarizes the annual disbursements17 for the high-cost support mechanisms from 2003 through 2012. 18 The table is based on information provided by the Universal Service Administrative Company (USAC). The values in Table 2.10 are the amounts disbursed in each year. For each year, the values include prior period adjustments disbursed in that year in support of these mechanisms for prior years. Chart 2.3 plots the total annual disbursements since 2003. Chart 2.3 and all subsequent high-cost bar charts also include reserve fund dollars for 2010 through 2012; the high-cost tables do not include these reserves. 19 Representing over 40% of total support in 2012, frozen high-cost support has become the largest high-cost support mechanism. The mechanisms in place prior to 2012 are estimated to show substantial percentage drops in disbursements from 2011, notably ICLS (43%), HCLS (31%), LSS (71%), and SNAS (56%). HCMS and IAS disbursements apart from true-ups stopped in 2012. Only SVS disbursements displayed an estimated increase, consistent with the trend since 2008. Incremental support represented about 3% of all disbursements. CAF-ICC represented 5% of all disbursements; CAF-ICC was initiated midway through 2012. LSS was eliminated in July 2012 as a result of its incorporation into CAF-ICC at that time, resulting in a substantial reduction of LSS disbursements in 2012. 20 Table 2.11 compares the annual amounts of support received by ILECs and by CETCs for each support mechanism. Chart 2.4 shows the total disbursement to ILECs and CETCs since 2003. Over 90% of CETC disbursements in 2012 are estimated to be from frozen high cost support. Historically, most CETC disbursements were in areas served by price cap carriers and their rate-of-return affiliates. Table 2.11 shows that about 65% of the total decline in HCLS and ICLS in 2012 was due to CETCs receiving frozen support instead of HCLS and ICLS. HCLS and ICLS disbursements to CETCs in 2012 were less than 10% of those in 2011. The decline in ICLS for ILECs in 2012 is due to price cap ILECs and their rate-of-return affiliates receiving frozen support instead of ICLS. Similarly, over 75% of the reduction in HCLS for ILECs in 2012 was due to price cap carriers and their rate-of-return affiliates receiving frozen support instead of HCLS. Table 2.12 lists high-cost disbursements by mechanism within each state in 2011. Chart 2.5 is a map of total high-cost disbursements within each state for 2011. Texas received the most disbursements in 2011 ($247 million); its support was primarily in the HCLS mechanism ($113 million, the most of any state and more than the total support of all but eight other states). Mississippi received almost as much in 17 A “disbursement” is the distribution of funds in a specified time period. These funds were distributed in support of high-cost mechanisms in that period and possibly in support of earlier time periods. The disbursements in support of earlier time periods are the result of true-ups to resolve differences between initial payments and disbursements necessitated by revisions to supporting data. It is possible for disbursements to be negative, thus requiring the recipient to return dollars to the high-cost fund. 18 Disbursements for 2012 were extrapolated based on disbursements from January through August. In prior reports, this extrapolation was performed using a linear multiplier of all disbursements in those months. Because of changes in the funding process in July 2012, a different extrapolation calculation was used in this report. The table values for annual disbursements for 2012 are the sum of disbursements in the first half of 2012 added to 3 times the disbursements made in July and August 2012. The same calculation process was used for claim values in 2012. 19 The reserve funds are described in Table 1.10. 20 CETCs in Remote Alaska and Standing Rock continued to receive a deferred phase down of LSS in the second half of 2012. 2 - 14 disbursements as Texas ($246 million); over 70% of the support was in HCMS ($188 million, more than 60% of all HCMS and more than the total support of all but three other states). Alaska ($203 million), Kansas ($191 million), and Puerto Rico (($165 million) were third, fourth, and fifth respectively in total disbursements. Puerto Rico and Alaska were the leading recipients of disbursements for ICLS; all of Puerto Rico’s disbursements were for ICLS while Alaska received disbursements of $97 million for ICLS. Alaska was also the leading recipient of LSS ($27 million). Over half of Kansas support was for HCLS ($99 million), the most of any other state aside from Texas. No other state or jurisdiction received more than $150 million dollars in disbursements. Table 2.13 lists total high-cost disbursements received by the top 10 affiliated entity recipients from 2009 through 2011. As a whole, these affiliated entities received 49% of disbursements in this time period. Verizon led all affiliated entities in disbursements in 2009, but a continual drop in its disbursements has moved AT&T to the top in 2010 and 2011. Table 2.14 provides a breakdown by mechanism of disbursements to affiliated entities for 2011 as well as an analysis of disbursements per supported line for affiliated entities. As a group, these 25 affiliated entities accounted for 94% of all supported lines, but only 54% of all disbursements. AT&T and Verizon had the most supported lines in 2011; together they accounted for 53% of supported lines with only 16% of total disbursements. Disbursements per supported line are highly variable; among these 25 affiliated entities, they range from over $10,000 per line (Sandwich Isles Communications) to less than $10 per line (Qwest and Sprint Nextel, Verizon Communications, and Deutsche Telekom AG). AT&T received the most disbursements for HCMS ($153 million). Century Link received the most disbursements for IAS ($128 million) and HCLS ($75 million). Telephone and Data Systems received the most disbursements for ICLS ($124 million). Table 2.15 lists the 26 study areas with monthly disbursements per supported line exceeding $250 in 2011. High-Cost Claims High-cost claims21 are strongly correlated with disbursements. The difference is their relation to time. Disbursement dollars are aligned with the time that funds are distributed to the recipients. Claim dollars are aligned with the time period that the funds support. While disbursement dollars for a time period do not change in subsequent reports, it is possible for claim dollars in a time period to change because of subsequent true-ups especially in more recent years.22 Tables 2.16 through 2.18 and Charts 2.6 and 2.7 are claims versions of Tables 2.10 through 2.12 and Charts 2.3 and 2.4. In general, the differences between the claims and disbursements views are minor. Table 2.16 shows a steady decrease in total claim dollars (to date) since 2009; however, Chart 2.6 21 A “claim” is the distribution of funds in support of a specified time period. These funds were distributed in that period and possibly a later time period. The disbursements in later time periods are the result of true- ups to resolve differences between initial payments and disbursements necessitated by revisions to supporting data made at that later date. Claims are always positive values. The claim data used in this report does not include true-ups for 2011 and 2012. 22 Example: In December 2009, D dollars were distributed to a recipient; of these D dollars, DP dollars were distributed in support of lines in December 2009 (initial payment) and DT dollars were distributed in support of lines in November 2009 (true-up). In January 2010, J dollars were distributed to the recipient; of these J dollars, JP dollars were distributed in support of lines in January 2010 (initial payment) and JT dollars were distributed in support of lines in December 2009 (true-up). Disbursement dollars for December 2009 and January 2010 were D and J dollars respectively. Claim dollars for December 2009 and January 2010 were DP + JT and JP dollars respectively (assuming no future true-ups for December 2009 and January 2010). 2 - 15 shows a steady increase from 2009 when the reserve is included. Table 2.17 and Chart 2.7 show that ILEC claim dollars (to date) are expected to increase in 2012 after staying virtually constant since 2009 while CETC claim dollars are expected to continue their decrease since 2009. Table 2.18 lists high-cost claims within each state in 2011. Mississippi had the highest claims in 2011 ($256 million) with over 70% for HCMS ($181 million, the most of any state). Texas had claims almost as high as Mississippi ($249 million), but its support was primarily in the HCLS mechanism ($112 million, the most of any state). Alaska had the third highest total claims among states in 2011 ($216 million) with almost half for ICLS ($104 million). Kansas ($198 million), Puerto Rico ($173 million), and Oklahoma ($152 million) were fourth fifth, and sixth respectively in total claims. No other state or jurisdiction had more than $150 million dollars in claims. Additional data on the high-cost program have been posted at www.fcc.gov/wcb/iatd/monitor.html. These data include 1) high-cost disbursement and claims by mechanism, study area, and state, 2) ILEC support data by study area and state, 3) changes in local exchange carriers, and 4) nationwide pool results provided by National Exchange Carrier Association, Inc. (NECA). The website also contains further details about the history and operation of the high-cost program. 2 - 16 Year High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Long-Term Support Interstate Common Line Support Interstate Access Support Local Switching Support Frozen High-Cost Support Incremental Support Connect America Fund Intercarrier Compensation Total Support 2003 $1,085 $9 $0 $234 $504 $399 $622 $420 $0 $0 $0 $3,273 2004 1,137 12 0 273 275 727 642 422 0 0 0 3,488 2005 1,219 15 4 292 0 1,178 691 425 0 0 0 3,824 2006 1,309 29 1 358 4 1,266 681 448 0 0 0 4,096 2007 1,402 38 3 346 0 1,392 645 460 0 0 0 4,287 2008 1,457 48 2 351 0 1,621 585 416 0 0 0 4,478 2009 1,424 53 5 331 0 1,537 563 381 0 0 0 4,292 2010 1,297 76 6 310 0 1,675 545 359 0 0 0 4,268 2011 1,187 95 8 280 0 1,609 522 330 0 0 0 4,031 2012* 818 42 9 1 0 921 -8 95 1,920 115 214 4,127 Note: Detail may not appear to add to totals due to rounding. * Estimate for 2012 extrapolated from payments through August 2012. Source: Universal Service Administrative Company. Source: Universal Service Administrative Company. Total High-Cost Support Fund Disbursements and Reserve (in Millions) Table 2.10 High-Cost Support Fund Disbursement History Chart 2.3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Reserve $108 $398 $562 Total $3,273 $3,488 $3,824 $4,096 $4,287 $4,478 $4,292 $4,268 $4,031 $4,127 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 Mi llio ns of Do lla rs 2 - 17 Year Companies High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Long-Term Support Interstate Common Line Support Interstate Access Support Local Switching Support Frozen High- Cost Support Incremental Support Connect America Fund Intercarrier Compensation Total Support ILECs $1,058.2 $8.8 $0.0 $207.2 $479.1 $382.0 $604.9 $401.6 $0.0 $0.0 $0.0 $3,141.8 2003 CETCs 26.5 0.3 0.0 26.8 25.0 17.4 16.9 18.5 0.0 0.0 0.0 131.4 Total 1,084.6 9.1 0.0 234.0 504.1 399.4 621.7 420.2 0.0 0.0 0.0 3,273.2 ILECs 1,055.4 10.5 0.0 218.9 243.8 645.0 596.0 384.8 0.0 0.0 0.0 3,154.5 2004 CETCs 81.3 1.1 0.0 54.5 31.0 82.0 45.7 37.5 0.0 0.0 0.0 333.1 Total 1,136.6 11.6 0.0 273.4 274.8 727.1 641.7 422.3 0.0 0.0 0.0 3,487.6 ILECs 1,052.1 12.3 3.8 221.3 0.0 953.9 581.9 360.4 0.0 0.0 0.0 3,185.7 2005 CETCs 166.8 2.9 0.6 70.6 -0.2 224.4 109.1 64.4 0.0 0.0 0.0 638.5 Total 1,218.9 15.2 4.4 291.8 -0.2 1,178.3 691.0 424.8 0.0 0.0 0.0 3,824.2 ILECs 1,046.0 24.3 0.3 207.8 0.0 941.9 540.4 355.7 0.0 0.0 0.0 3,116.4 2006 CETCs 263.0 5.1 0.4 149.7 4.5 323.9 140.8 92.5 0.0 0.0 0.0 979.9 Total 1,309.0 29.4 0.7 357.5 4.5 1,265.8 681.2 448.2 0.0 0.0 0.0 4,096.3 ILECs 1,049.8 27.6 1.9 197.6 0.0 979.8 504.1 347.4 0.0 0.0 0.0 3,108.2 2007 CETCs 352.7 10.9 1.1 148.6 0.0 412.1 140.9 112.3 0.0 0.0 0.0 1,178.5 Total 1,402.5 38.5 3.0 346.3 0.0 1,391.9 645.0 459.7 0.0 0.0 0.0 4,286.7 ILECs 1,034.3 34.1 1.5 185.1 0.0 1,063.4 473.3 301.6 0.0 0.0 0.0 3,093.3 2008 CETCs 422.2 13.4 0.3 165.5 0.1 557.2 111.3 114.4 0.0 0.0 0.0 1,384.5 Total 1,456.6 47.5 1.8 350.6 0.1 1,620.6 584.6 415.9 0.0 0.0 0.0 4,477.8 ILECs 1,006.5 38.2 4.9 169.0 0.0 1,066.1 456.3 277.2 0.0 0.0 0.0 3,018.2 2009 CETCs 417.6 14.4 0.1 161.6 0.0 470.6 106.3 103.5 0.0 0.0 0.0 1,273.9 Total 1,424.1 52.5 5.0 330.6 0.0 1,536.6 562.6 380.7 0.0 0.0 0.0 4,292.2 ILECs 959.8 58.9 4.9 156.7 0.0 1,141.4 457.6 275.8 0.0 0.0 0.0 3,055.1 2010 CETCs 336.8 17.1 1.3 153.1 0.0 533.2 87.8 83.4 0.0 0.0 0.0 1,212.7 Total 1,296.6 76.0 6.1 309.8 0.0 1,674.6 545.4 359.2 0.0 0.0 0.0 4,267.7 ILECs 909.0 75.5 5.9 144.5 0.0 1,129.4 439.6 254.5 0.0 0.0 0.0 2,958.3 2011 CETCs 278.1 19.8 2.3 135.5 0.0 479.7 82.2 75.3 0.0 0.0 0.0 1,072.9 Total 1,187.2 95.3 8.1 280.0 0.0 1,609.1 521.8 329.8 0.0 0.0 0.0 4,031.3 ILECs 784.0 41.5 8.3 0.1 0.0 888.8 -8.4 90.2 1,034.4 114.8 214.3 3,168.0 2012* CETCs 34.3 0.7 0.4 0.8 0.0 32.2 0.6 5.1 885.2 0.0 0.0 959.3 Total 818.3 42.2 8.7 0.8 0.0 921.0 -7.8 95.4 1,919.6 114.8 214.3 4,127.4 Note: Details may not appear to add to totals due to rounding. ILECs are incumbent local exchange carriers. CETCs are competitive eligible telecommunications carriers. * Estimate for 2012 extrapolated from payments through August 2012. Source: Universal Service Administrative Company. Source: Universal Service Administrative Company. Table 2.11 (in Millions) Chart 2.4 Total High-Cost Support Fund Disbursements (ILECs and CETCs) and Reserve (in Millions) High-Cost Support Fund Disbursement History - ILECs and CETCs $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Support (Millions of Dollar s) ILECs CETCs Reserve 2 - 18 State High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Interstate Common Line Support Interstate Access Support Local Switching Support Total Support Alabama $14,479 $1,643 $0 $31,917 $20,468 $16,743 $5,091 $90,341 Alaska 77,579 1,331 0 0 96,648 0 26,959 202,518 American Samoa 4 0 0 0 1,225 0 585 1,813 Arizona 29,452 950 0 0 17,036 15,415 8,439 71,292 Arkansas 36,522 599 0 0 45,914 243 6,203 89,481 California 23,994 710 0 0 26,949 35,101 3,834 90,587 Colorado 26,605 606 0 0 22,175 17,128 4,477 70,990 Connecticut 0 0 0 0 0 453 0 453 Delaware 0 0 0 0 0 221 0 221 District of Columbia 0 0 0 0 0 0 0 0 Florida 3,806 106 0 0 9,826 38,258 2,712 54,708 Georgia 30,969 4,537 0 0 49,077 17,422 9,267 111,272 Guam 886 0 0 0 18,103 0 1,048 20,037 Hawaii 33,801 0 0 0 21,486 2,332 3,353 60,971 Idaho 19,323 158 0 0 13,700 10,843 5,637 49,662 Illinois 17,893 522 0 0 30,258 9,297 7,162 65,133 Indiana 28,622 2,980 0 0 27,655 14,331 4,828 78,417 Iowa 36,382 4,651 180 0 60,878 7,873 19,941 129,905 Kansas 99,457 1,651 7,789 0 67,838 5,634 8,311 190,681 Kentucky 28,652 4,230 0 14,350 32,654 15,858 5,423 101,168 Louisiana 60,490 1,743 0 0 36,067 12,235 3,925 114,460 Maine 3,352 756 0 1,639 17,508 18 6,731 30,004 Maryland 5 0 0 0 824 2,247 274 3,351 Massachusetts 1 40 0 0 166 1,435 446 2,088 Michigan 12,182 1,009 0 0 21,276 379 7,265 42,111 Minnesota 28,300 4,464 82 0 50,992 2,353 12,692 98,883 Mississippi 26,330 1,090 0 173,672 19,187 22,483 2,912 245,674 Missouri 44,793 1,857 0 0 36,671 10,264 4,480 98,065 Montana 35,401 1,934 0 10,447 33,562 716 5,958 88,018 Nebraska 31,300 702 0 5,906 32,499 6,146 13,796 90,350 Nevada 4,390 1,312 0 0 4,266 7,211 3,462 20,640 New Hampshire 49 380 0 0 4,447 1,429 3,076 9,381 New Jersey 0 1 0 0 428 253 819 1,501 New Mexico 36,803 1,438 0 0 26,054 9,140 8,434 81,869 New York 3,325 2,289 0 0 13,569 11,703 10,829 41,715 North Carolina 6,237 309 0 0 34,195 22,623 5,106 68,469 North Dakota 31,773 9,977 1 0 44,900 616 9,720 96,987 Northern Mariana Islands 0 0 0 0 0 259 2,646 2,905 Ohio 8,070 210 0 0 12,630 9,111 2,937 32,959 Oklahoma 59,831 9,544 0 0 56,765 3,789 14,514 144,443 Oregon 25,609 936 0 0 28,370 15,500 5,528 75,941 Pennsylvania 847 113 0 0 40,786 18,028 6,471 66,245 Puerto Rico 0 0 0 0 165,376 0 0 165,376 Rhode Island 0 0 0 0 0 29 0 29 South Carolina 34,638 9,489 0 0 51,084 8,541 7,978 111,731 South Dakota 27,981 3,199 66 1,218 27,076 69 5,248 64,856 Tennessee 12,020 5,810 0 0 32,107 8,469 5,001 63,407 Texas 112,631 4,288 0 0 81,549 35,049 13,496 247,012 Utah 5,370 294 16 0 11,394 1,975 3,242 22,290 Vermont 1,595 -2 0 5,525 5,762 1,863 3,554 18,298 Virgin Islands 3,744 0 0 0 15,200 0 0 18,944 Virginia 2,407 441 0 0 10,153 52,954 3,547 69,503 Washington 12,967 191 0 0 37,110 24,087 6,745 81,100 West Virginia 1,560 43 0 26,267 3,638 19,798 1,731 53,037 Wisconsin 33,572 6,327 -5 0 76,427 102 19,806 136,230 Wyoming 11,156 455 0 9,014 15,143 3,790 4,189 43,746 Total $1,187,157 $95,315 $8,128 $279,956 $1,609,072 $521,812 $329,828 $4,031,268 Source: Universal Service Administrative Company. Table 2.12 High-Cost Support Fund Disbursements - by Mechanism and State: 2011 (in Thousands) 2-19 Note: Gray indicates a state or jurisdiction with zero or negative disbursements. Source: Universal Service Administrative Company. Chart 2.5 Total High-Cost Support Fund Disbursements - by State: 2011 2-20 Rank Affiliated Entity Name 1 2009 2010 2011 Total CETC Share of 3 -Year Total 2 1 AT&T Inc. $435,421,362 $473,158,310 $418,943,049 $1,327,522,721 58.8% 2 Verizon Communications Inc. 3, 4 679,881,325 359,758,095 216,126,405 1,255,765,825 65.0 3 CenturyLink, Inc. 5 351,860,073 303,991,570 345,604,713 1,001,456,356 0.0 4 Telephone and Data Systems, Inc. 236,140,788 235,942,687 248,772,943 720,856,418 63.9 5 Frontier Communications Corporation 4 70,029,154 155,930,004 151,268,270 377,227,428 0.0 6 Windstream Corporation 110,335,446 114,626,457 94,590,699 319,552,602 0.1 7 Telapex, Inc. 6 77,227,146 78,765,128 83,899,889 239,892,163 91.0 8 América Móvil 28,341,587 92,006,490 80,737,851 201,085,928 53.3 9 Alaska Communications Systems Holdings, Inc. 45,629,130 55,952,788 41,929,021 143,510,939 52.9 10 Qwest Communications International, Inc. 5 66,519,241 66,566,906 - 133,086,147 0.0 11 FairPoint Communications, Inc. 48,389,394 42,090,134 39,988,208 130,467,736 0.0 12 Sprint Nextel Corporation 3 49,962,331 46,861,658 29,216,245 126,040,234 100.0 13 Rural Telephone Service Company, Inc. 40,236,855 40,679,869 45,049,551 125,966,275 40.6 14 General Communication, Inc. 14,984,868 46,787,378 51,432,111 113,204,357 90.1 4 Frontier Communications purchased study areas in 14 states from Verizon Communications on July 1, 2010. 6 Telapex, Inc. owns Cellular South. Source: Universal Service Administrative Company. 1 Affiliated entities include all commonly-controlled or commonly-owned affiliates. Affiliated entities appear on this list if they are in the top ten for any of the presented years. 2 In the USF/ICC Transformation Order , the Commission eliminated the rule providing identical support to competitive ETCs, determining the rule did not provide an "appropriate level of support for the efficient deployment of mobile services in areas that do not support a private business case for mobile voice and broadband." Connect America Fund et al. , WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17666, 17851-59, para. 502 (2011), pets. for review pending sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. Filed Dec. 8, 2011). The Commission, however, transitioned the elimination of that support over five years, beginning on July 1, 2012. See USF/ICC Transformation Order , 26 FCC Rcd at 17853, para. 513. 3 Verizon Wireless and Sprint Nextel, in separate transactions in 2008, each committed to phase down their CETC high-cost universal service support in 20 percent increments over five years, beginning in 2009. These commitments were not implemented until the Commission released an Order on August 31, 2010 providing guidance to the Universal Service Administrative Company regarding the methodology to achieve those commitments. High-Cost Universal Service Support, Federal-State Joint Board on Universal Service, Request for Review of Decision of Universal Service Administrator by Corr Wireless Communications, LLC, WC Docket No. 05-337, CC Docket No. 96-45, Order and Notice of Proposed Rulemaking, 25 FCC Rcd 12854 (2010). To the extent that Verizon Wireless received support prior to the August 31, 2010 Order that should have been surrendered under its commitment, USAC reclaimed that support in 2010 and 2011. 5 CenturyTel, Inc. offically changed their name to CenturyLink, Inc. on May 20, 2010. See http://news.centurylink.com/index.php?s=43&item=2313. CenturyLink merged with Qwest on April 1, 2011. See http://news.centurylink.com/index.php?s=43&item=2226. Table 2.13 Annual High-Cost Payments by Year-End Affiliated Entity: 2009-2011 2 - 21 Rank Affiliated Entity Name High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Interstate Common Line Support Interstate Access Support Local Switching Support Total Support Supported Lines Total Support per Line 1 AT&T Inc. $41,116 $3,520 -$9 $153,033 $98,528 $112,929 $9,826 $418,943 33,536 $12.49 2 CenturyLink, Inc. 74,765 931 2 29,868 93,484 127,738 18,817 345,605 14,022 24.65 3 Telephone and Data Systems, Inc. 61,037 12,644 235 4,330 123,867 14,722 31,939 248,773 4,387 56.71 4 Verizon Communications Inc. 38,109 4,445 957 2,396 50,450 111,069 8,699 216,126 29,867 7.24 5 Frontier Communications Corporation 1,399 1,911 0 16,164 23,285 92,877 15,632 151,268 5,269 28.71 6 Windstream Corporation 5,438 7,453 0 5,852 49,124 16,738 9,986 94,591 3,050 31.01 7 Telapex, Inc. 16,701 415 0 48,228 12,262 5,009 1,286 83,900 802 104.59 8 América Móvil 0 0 0 0 80,738 0 0 80,738 1,605 50.30 9 General Communication, Inc. 16,059 172 0 0 27,269 0 7,933 51,432 279 184.43 10 Rural Telephone Service Company, Inc. 23,932 311 4,317 0 16,144 188 157 45,050 72 626.96 11 Alaska Communications Systems Holdings, Inc. 11,346 158 0 0 24,788 0 5,637 41,929 291 144.22 12 FairPoint Communications, Inc. 6,485 408 0 6,625 18,732 3,245 4,494 39,988 1,222 32.72 13 Deutsche Telekom AG 2,680 694 0 203 27,167 6,799 965 38,507 4,145 9.29 14 American Broadband Communications et al. 16,900 148 0 72 10,481 133 5,232 32,966 52 630.08 15 Sprint Nextel Corporation 3,404 80 0 3,372 10,052 11,050 1,259 29,216 12,610 2.32 16 Farmers Telephone Cooperative, Inc. 14,321 810 0 0 13,176 0 847 29,154 76 385.96 17 Coral Wireless, LLC 15,968 0 0 0 11,030 59 1,582 28,640 56 506.91 18 EATEL Corp., Inc. 16,705 706 0 0 10,763 0 421 28,595 43 662.21 19 Consolidated Communications, Inc. 6,370 0 0 0 17,772 0 1,346 25,488 229 111.11 20 Sandwich Isles Communications, Inc. 15,071 0 0 0 8,564 0 1,473 25,108 2 10,705.76 21 Smithville Holding Company, Inc. 12,068 1,517 0 0 10,401 0 300 24,286 26 933.36 22 Matanuska Telephone Association, Inc. 12,021 0 0 0 11,045 0 1,041 24,107 62 387.93 23 Valley Telephone Cooperative, Inc. 13,032 389 0 0 7,062 54 1,623 22,161 14 1,578.26 24 Big Bend Telephone Co., Inc. 13,277 118 0 0 5,557 0 1,401 20,353 6 3,622.73 25 Golden West Telecommunications Cooperative, Inc. 9,904 1,458 0 0 7,840 0 972 20,174 38 526.77 Other Carriers 739,051 57,028 2,625 9,813 839,492 19,201 196,960 1,864,171 7,255 256.96 Total 1,187,157 95,315 8,128 279,956 1,609,072 521,812 329,828 4,031,268 119,017 33.87 1 Affiliated Entities include all commonly-controlled or commonly-owned affiliates. Source: Universal Service Administrative Company. High-Cost Support Fund Disbursements by Affiliated Entity1: 2011 (in Thousands) Table 2.14 2 - 22 Study Areas that Received $250 Per Month or More in Per-Line High-Cost Support : 2011 Rank Incumbent ETC State Holding Company1 Support2 Supported Lines3 Annual Support per Line 1 BEAVER CREEK TELEPHONE COMPANY Washington May, Bott et al. $537,546 29 $18,861 2 ADAK TEL UTILITY Alaska Adak Eagle Enterprises, LLC 2,678,285 151 17,796 3 BORDER TO BORDER Texas Border to Border Communications, Inc. 1,474,885 91 16,208 4 WESTGATE COMMUNICATIONS LLC D/B/A WEAVTEL Washington Westgate Communications LLC 294,060 19 15,477 5 SANDWICH ISLES COMM. Hawaii Sandwich Isles Communications, Inc. 25,107,678 2,345 10,706 6 ALLBAND COMMUNICATIONS COOPERATIVE Michigan Allband Communications Cooperative 1,427,412 134 10,652 7 ACCIPITER COMM. Arizona Accipiter Communications, Inc. 3,374,538 406 8,312 8 TERRAL TEL CO Oklahoma Terral Telephone Company 1,875,222 237 7,912 9 DELL TEL. CO-OP - TX Texas Dell Telephone Cooperative, Inc. 5,341,676 796 6,711 10 SOUTH PARK TEL. CO. Colorado American Broadband Communications et al. 1,090,902 173 6,306 11 S. CENTRAL TEL - OK Oklahoma South Central Telephone Association, Inc. 1,576,008 295 5,342 12 PINE TEL SYSTEM INC. Oregon Pine Communications, LLC 4,378,464 962 4,550 13 SUMMIT TEL & TEL -AK Alaska Remote Control, Inc. 1,040,472 263 3,956 14 AGATE MUTUAL TEL CO Colorado Agate Mutual Telephone Cooperative Association 459,060 116 3,949 15 MUTUAL TEL CO Kansas Mutual Telephone Company (KS) 1,727,661 446 3,874 16 LA HARPE TEL CO INC Kansas LaHarpe Telephone Company, Inc. 1,253,121 335 3,746 17 BEEHIVE TEL CO - UT Utah Beehive Telephone Companies 3,416,200 919 3,717 18 BIG BEND TEL CO INC Texas Big Bend Telephone Co., Inc. 20,353,401 5,618 3,623 19 BEEHIVE TEL CO - NV Nevada Beehive Telephone Companies 450,744 129 3,494 20 NORTH STATE TEL CO. Oregon May, Bott et al. 1,599,962 487 3,285 21 SACRED WIND New Mexico Sacred Wind Communications, Inc. 7,596,588 2,385 3,185 22 ST JOHN TEL CO Washington St. John Telephone Company 1,908,342 601 3,175 23 BACA VALLEY TEL CO New Mexico Baca Valley Telephone Company, Inc. 2,155,101 682 3,160 24 MIDVALE-AZ Arizona Midvale Telephone Exchange 3,954,642 1,275 3,102 25 PINNACLES TEL CO California Bryan Family Inc. 792,990 257 3,086 26 MESCALERO APACHE New Mexico Mescalero Apache Telecom, Inc. 3,589,215 1,179 3,046 1 Holding company name indicates common control/common ownership of carriers. 2 Calendar year disbursements include prior period adjustments. Source: Universal Service Administrative Company. 3 Supported lines is the number of lines in service that are receiving support, not the number of homes in the study area. Supported Lines is the average of the quarterly supported line figures. Table 2.15 2 - 23 Year High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Interstate Common Line Support Interstate Access Support Local Switching Support Frozen High-Cost Support Incremental Support Connect America Fund Intercarrier Compensation Total Support 2009 $1,398 $51 $5 $329 $1,594 $566 $389 $0 $0 $0 $4,332 2010 1,317 77 7 311 1,640 549 383 0 0 0 4,283 2011* 1,218 95 8 290 1,656 537 381 0 0 0 4,186 2012** 825 42 6 0 927 0 125 1,925 115 214 4,180 * Initial claims for 2011 without true-ups. ** Estimate for 2012 extrapolated from claims through August 2012. Source: Universal Service Administrative Company. Source: Universal Service Administrative Company. Total High-Cost Support Fund Claims and Reserve Table 2.16 High-Cost Support Fund Claim History (in Millions) Chart 2.6 Notes: Detail may not appear to add to totals due to rounding. 2009 2010 2011 2012 Reserve $108 $398 $562 Total $4,332 $4,283 $4,186 $4,180 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 Mi llio ns of Do llar s 2 - 24 Year Companies High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Interstate Common Line Support Interstate Access Support Local Switching Support Frozen High- Cost Support Incremental Support Connect America Fund Intercarrier Compensation Total Support ILECs $1,007.3 $37.7 $4.9 $169.3 $1,069.4 $456.1 $288.4 $0.0 $0.0 $0.0 $3,033.0 2009 CETCs 390.6 13.6 0.5 159.4 524.2 109.9 100.3 0.0 0.0 0.0 1,298.5 Total 1,397.9 51.4 5.3 328.6 1,593.6 565.9 388.7 0.0 0.0 0.0 4,331.5 ILECs 961.5 60.0 5.7 155.8 1,116.1 455.2 287.3 0.0 0.0 0.0 3,041.6 2010 CETCs 355.3 17.0 1.2 154.9 523.9 94.2 95.2 0.0 0.0 0.0 1,241.6 Total 1,316.8 77.1 6.9 310.6 1,639.9 549.4 382.6 0.0 0.0 0.0 4,283.3 ILECs 909.1 75.1 5.5 144.5 1,137.7 457.2 289.0 0.0 0.0 0.0 3,017.9 2011* CETCs 309.3 20.0 2.3 146.0 518.3 79.5 92.4 0.0 0.0 0.0 1,167.9 Total 1,218.4 95.1 7.8 290.5 1,656.0 536.7 381.4 0.0 0.0 0.0 4,185.8 ILECs 793.0 41.4 6.2 0.0 891.7 0.0 114.0 1,034.4 114.8 214.3 3,209.7 2012** CETCs 32.5 0.5 0.0 0.0 35.3 0.0 11.3 890.7 0.0 0.0 970.3 Total 825.5 41.9 6.2 0.0 927.0 0.0 125.4 1,925.1 114.8 214.3 4,180.0 Notes: Details may not appear to add to totals due to rounding. ILECs are incumbent local exchange carriers. CETCs are competitive eligible telecommunications carriers. * Initial claims for 2011 without true-ups. ** Estimate for 2012 extrapolated from claims through August 2012. Source: Universal Service Administrative Company. Source: Universal Service Administrative Company. (in Millions) Table 2.17 High-Cost Support Fund Claim History - ILECs and CETCs Chart 2.7 Total High-Cost Support Fund Claims (ILECs and CETCs) and Reserve $0 $5 00 $1 ,0 00 $1 ,5 00 $2 ,0 00 $2 ,5 00 $3 ,0 00 $3 ,5 00 20 09 20 10 20 11 20 12 Support (milliosn of dollar s) ILECs CETCs Reserve 2 - 25 State High-Cost Loop Support Safety Net Additive Support Safety Valve Support High-Cost Model Support Interstate Common Line Support Interstate Access Support Local Switching Support Total Support Alabama $14,501 $1,625 $0 $32,822 $19,461 $17,108 $5,595 $91,113 Alaska 81,218 1,323 0 0 103,577 0 29,603 215,720 American Samoa 0 0 0 0 2,769 0 1,146 3,915 Arizona 27,395 851 0 0 16,534 14,786 9,006 68,573 Arkansas 42,144 627 0 0 49,874 254 7,239 100,138 California 23,877 695 0 0 28,216 36,583 4,374 93,744 Colorado 26,851 499 0 0 22,578 17,785 4,622 72,335 Connecticut 0 0 0 0 0 476 0 476 Delaware 0 0 0 0 0 234 0 234 District of Columbia 0 0 0 0 0 0 0 0 Florida 3,693 97 0 0 10,229 44,147 3,138 61,304 Georgia 29,265 4,176 0 0 49,593 18,442 11,293 112,770 Guam 0 0 0 0 14,120 0 934 15,054 Hawaii 35,149 0 0 0 20,309 2,322 2,980 60,760 Idaho 19,253 128 0 0 13,717 11,364 5,437 49,899 Illinois 18,152 534 0 0 31,665 9,010 9,611 68,972 Indiana 28,603 2,992 0 0 27,687 14,859 6,175 80,316 Iowa 36,867 4,530 123 0 61,203 9,534 21,992 134,249 Kansas 102,184 1,805 7,616 0 70,057 5,696 10,945 198,302 Kentucky 29,264 4,253 0 14,568 34,660 15,644 5,289 103,679 Louisiana 64,960 1,780 0 0 39,982 12,061 5,359 124,141 Maine 3,325 767 0 1,646 16,909 14 7,216 29,876 Maryland 0 0 0 0 878 2,353 438 3,669 Massachusetts 0 41 0 0 193 1,498 492 2,225 Michigan 13,165 991 0 0 23,711 430 8,691 46,987 Minnesota 29,393 5,038 0 0 56,179 2,413 14,080 107,103 Mississippi 27,148 1,089 0 181,066 20,625 21,665 4,339 255,931 Missouri 47,618 1,893 0 0 38,907 10,519 5,595 104,532 Montana 35,411 1,908 0 10,950 33,530 728 6,772 89,298 Nebraska 31,934 579 0 7,133 33,848 5,866 15,324 94,683 Nevada 4,621 1,309 0 0 5,362 8,248 4,417 23,956 New Hampshire 40 380 0 0 4,461 1,486 3,448 9,816 New Jersey 0 1 0 0 405 262 845 1,512 New Mexico 36,535 1,312 0 0 24,770 8,261 7,754 78,631 New York 3,317 2,281 0 0 14,130 12,030 13,012 44,770 North Carolina 6,106 304 0 0 35,533 22,927 5,637 70,507 North Dakota 32,763 9,882 0 0 44,577 643 11,759 99,625 Northern Mariana Islands 0 0 0 0 0 119 1,483 1,602 Ohio 8,049 254 0 0 13,455 9,498 3,414 34,670 Oklahoma 60,960 9,575 0 0 59,319 3,733 18,510 152,096 Oregon 25,728 949 0 0 28,713 15,539 7,646 78,574 Pennsylvania 825 87 0 0 39,992 18,799 6,598 66,301 Puerto Rico 0 0 0 0 173,155 0 0 173,155 Rhode Island 0 0 0 0 0 31 0 31 South Carolina 34,884 9,678 0 0 52,849 8,982 8,752 115,146 South Dakota 32,421 3,360 0 1,502 29,871 46 8,507 75,708 Tennessee 11,927 5,852 0 0 31,716 8,846 5,761 64,102 Texas 112,338 4,224 0 0 80,498 35,796 16,060 248,915 Utah 5,336 286 14 0 11,285 1,975 3,971 22,869 Vermont 1,545 26 0 5,554 6,383 1,890 3,705 19,104 Virgin Islands 3,545 0 0 0 11,897 0 0 15,442 Virginia 2,462 455 0 0 10,743 55,054 4,005 72,718 Washington 15,064 196 0 0 38,878 24,154 8,282 86,574 West Virginia 1,898 40 0 26,406 3,561 18,573 2,539 53,018 Wisconsin 34,799 5,985 0 0 77,685 112 22,185 140,766 Wyoming 11,882 440 0 8,816 15,769 3,922 5,380 46,209 Total $1,218,415 $95,095 $7,753 $290,464 $1,656,015 $536,717 $381,355 $4,185,814 Source: Universal Service Administrative Company. Table 2.18 (Thousands of Dollars) High-Cost Support Fund Claims - by Mechanism and State: 2011 2 - 26 Schools and Libraries (E-rate) Program Eligible schools, school districts, libraries, and consortia that include schools and libraries may receive discounts for eligible services under the schools and libraries universal service support mechanism, also known as the E-rate program. The discounts range from 20 percent to 90 percent. The level of the discount is based on the percentage of students in the school or school district that are eligible for the national school lunch program (or a federally approved alternative mechanism) and location in a rural area. On September 28, 2010, the FCC released an order revising the E-rate program to maximize the utilization of broadband and eliminate rules that no longer serve their intended purpose. The revisions adopted by the FCC fall into three conceptual categories. First, the FCC enabled schools and libraries to better serve students, teachers, librarians, and their communities by providing more flexibility to select and make available the most cost-effective broadband and other communications services. Specifically, the FCC allowed applicants to lease fiber from the most cost-effective provider, including not-for-profit entities, so that applicants can choose the services that best meet their needs from a broad set of competitive options and in the most cost-effective manner available in the marketplace. The FCC also changed its rules to permit schools to allow community use of E-rate funded services outside of school hours and support broadband connections to the residential portion of schools that serve students with special circumstances. Additionally, the FCC established a pilot program to establish best practices to support off-campus wireless connectivity for portable learning devices outside of regular school or library operating hours.11 Further, the FCC indexed E-rate’s funding cap of $2.25 billion annually to inflation to preserve the purchasing power of the E-rate program. As a result, the cap for funding year 2011 was increased to $2,290,682,250.12 For funding year 2012, the cap was increased to $2,338,786,577.13 Table 2.19 shows commitments and disbursements by funding year since 1998. Table 2.20 summarizes commitments and disbursements by state and by type of applicant for funding years 2009 through 2011. Additional data on the E-rate program have been posted at www.fcc.gov/wcb/iatd/monitor.html. 11 Schools and Libraries Universal Service Support Mechanism, A National Broadband Plan for our Future, CC Docket No. 02-6, GN Docket No. 09-51, Sixth Report and Order, FCC 10-175 (rel. Sept. 28, 2010) (Sixth Report and Order). 12 See Wireline Competition Bureau Announces E-rate Inflation-based Cap for Funding Year 2011, CC Docket No. 02-6, Public Notice, DA 11-1345 (rel. Aug. 5, 2011), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-11-1345A1.pdf. 13 See Wireline Competition Bureau Announces E-rate Inflation-based Cap for Funding Year 2012, CC Docket No. 02-6, Public Notice, DA 12-791 (rel. May 18, 2012), available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-12-791A1.pdf 2 - 27 Table 2.19 Schools and Libraries Funding Commitments and Disbursements by Applicant Type and Service Type Funding Commitments (Dollar Amounts in Thousands) Total School Other Internal Internet Year Commitments Libraries Schools Districts Consortia Connections Access Telecom 1998 $1,694,765 $65,830 $110,223 $1,285,108 $233,603 $885,852 $134,129 $674,784 1999 2,147,079 66,061 180,580 1,597,757 302,682 1,364,861 148,723 633,496 2000 2,071,912 65,853 110,503 1,685,749 209,807 1,134,093 218,750 719,069 2001 2,185,345 57,824 164,417 1,748,596 214,508 1,183,620 224,794 776,931 2002 2,232,022 60,324 203,552 1,718,210 249,935 1,118,441 253,107 860,473 2003 2,640,303 63,278 200,619 2,114,865 261,541 1,456,530 276,040 907,733 2004 2,193,034 54,303 158,523 1,725,261 254,946 996,431 246,244 950,360 2005 2,133,566 54,385 152,793 1,711,618 214,769 885,426 259,873 988,267 2006 1,986,309 59,790 130,255 1,535,634 260,630 623,276 290,607 1,072,426 2007 2,454,098 60,627 175,116 1,975,075 243,279 959,740 308,903 1,185,454 2008 2,536,888 75,802 148,616 2,051,264 261,205 900,440 338,086 1,298,361 2009 2,858,816 84,127 196,226 2,305,260 273,204 1,145,368 351,918 1,361,531 2010 3,057,164 92,056 211,339 2,454,718 299,051 1,201,060 402,322 1,453,782 2011 2,249,846 93,607 194,754 1,683,449 278,035 423,012 446,680 1,380,153 Funding Disbursements (Dollar Amounts in Thousands) Total School Other Internal Internet Year Disbursements Libraries Schools Districts Consortia Connections Access Telecom 1998 $1,398,927 $49,870 $83,335 $1,069,681 $196,041 $796,535 $94,824 $507,567 1999 1,653,987 47,456 140,257 1,268,761 197,512 1,105,502 95,499 452,985 2000 1,649,791 43,600 88,526 1,385,340 132,325 1,035,181 133,463 481,147 2001 1,698,016 41,940 117,375 1,400,521 138,181 1,007,689 149,542 540,786 2002 1,594,248 42,088 105,951 1,281,077 165,133 809,984 171,008 613,256 2003 1,937,844 44,327 135,730 1,584,889 172,899 1,074,010 203,688 660,146 2004 1,532,619 39,723 107,168 1,205,647 180,082 650,520 192,934 689,165 2005 1,616,814 48,602 110,092 1,281,073 177,047 628,916 214,505 773,393 2006 1,553,425 46,318 96,397 1,207,734 202,976 468,307 235,862 849,256 2007 1,935,734 47,968 135,870 1,543,796 208,100 732,187 258,488 945,059 2008 1,877,763 58,024 113,119 1,487,248 219,373 561,835 276,501 1,039,428 2009 2,188,274 68,151 149,716 1,746,743 223,664 815,334 285,844 1,087,097 2010 2,030,370 70,117 142,943 1,601,086 216,223 585,634 320,807 1,123,929 2011 793,274 38,188 63,990 622,906 68,191 104,853 215,870 472,551 Source: Raw data provided by the Universal Service Administrative Company, rollups performed by Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Activity through June 30, 2012. Because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Also, disbursements may continue beyond the end of the program year in the event of delayed internal connections installation. Other adjustments and corrections may also be made. 2 - 28 Table 2.20 Funding Y ear 2009: July 1, 2009 through June 30, 2010 Library/Library Consortium Schools School Districts Other Consortium Totals Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds State/Territory Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Alabama $979,976 $732,627 $1,026,307 $720,819 $54,959,677 $46,704,260 $7,214,269 $7,158,400 $64,180,229 $55,316,105 Alaska 178,248 140,514 263,632 220,213 26,598,879 23,499,161 0 0 27,040,760 23,859,889 American Samoa 0 0 0 0 0 0 4,967,160 4,287,290 4,967,160 4,287,290 Arizona 1,019,216 853,753 10,294,361 7,158,243 67,049,037 54,166,311 1,617,962 1,452,203 79,980,576 63,630,510 Arkansas 305,276 244,911 509,940 474,860 13,665,231 9,513,275 11,833,538 7,989,260 26,313,984 18,222,306 California 7,486,147 5,363,527 12,732,093 8,717,768 392,047,301 263,915,802 16,666,240 10,661,898 428,931,780 288,658,995 Colorado 949,976 746,226 796,303 589,841 20,825,715 15,976,829 1,124,991 1,035,534 23,696,984 18,348,430 Connecticut 170,928 146,978 1,553,261 1,110,739 14,378,282 12,754,186 6,698,373 6,204,111 22,800,844 20,216,015 Delaware 296,981 296,862 170,590 141,211 786,648 710,287 1,307,702 1,299,343 2,561,921 2,447,703 District of Columbia 554,819 413,989 1,901,709 1,451,602 6,575,610 921,756 1,596,237 358,037 10,628,374 3,145,384 Florida 2,930,786 2,709,006 17,784,787 15,593,649 95,413,887 85,580,344 2,998,486 2,723,950 119,127,946 106,606,948 Georgia 4,789,355 4,297,666 2,882,380 2,521,974 90,915,559 69,697,912 10,175,961 9,289,607 108,763,255 85,807,160 Guam 13,246 0 12,242 1,834 757,840 258,361 0 0 783,328 260,196 Hawaii 236,466 221,476 2,922,949 2,081,681 1,280,314 1,186,392 0 0 4,439,730 3,489,549 Idaho 165,302 147,511 153,324 131,747 6,349,095 5,652,237 4,948,222 652,911 11,615,943 6,584,406 Illinois 2,066,212 1,822,880 5,680,810 3,978,421 84,130,935 59,530,329 2,079,623 1,949,342 93,957,580 67,280,972 Indiana 3,754,178 3,425,615 2,828,381 2,462,529 21,108,448 17,165,386 9,379,372 8,143,866 37,070,379 31,197,396 Iowa 177,341 123,599 1,084,982 891,166 8,916,416 7,134,898 4,669,649 4,119,432 14,848,388 12,269,096 Kansas 918,322 716,157 551,566 444,034 15,080,732 12,743,654 2,007,271 1,965,948 18,557,891 15,869,793 Kentucky 698,695 574,090 295,134 169,764 41,675,089 32,408,446 9,978,790 8,992,671 52,647,708 42,144,971 Louisiana 4,946,714 4,310,878 2,065,394 1,660,141 51,344,734 44,282,618 1,382,405 1,139,687 59,739,247 51,393,323 Maine 73,044 66,085 957,607 768,651 5,508,168 4,429,699 3,118,623 2,966,436 9,657,442 8,230,871 Maryland 1,076,909 253,558 1,759,194 1,154,751 22,413,288 18,229,216 724,252 668,680 25,973,642 20,306,205 Massachusetts 3,888,731 3,181,947 3,473,496 2,757,020 30,763,446 26,573,767 531,423 458,024 38,657,095 32,970,758 Michigan 1,800,861 1,635,395 3,057,955 2,413,256 43,560,997 34,456,645 8,031,848 6,425,767 56,451,661 44,931,063 Minnesota 1,333,869 1,249,931 2,446,056 1,901,250 14,053,940 11,861,098 6,276,710 5,855,579 24,110,576 20,867,859 Mississippi 1,747,187 1,560,116 2,006,333 1,834,152 26,389,710 21,846,837 5,296,410 4,819,430 35,439,640 30,060,535 Missouri 1,257,721 1,188,697 1,740,604 1,138,505 28,449,542 22,908,118 9,944,940 8,342,767 41,392,807 33,578,087 Montana 50,419 40,093 227,328 191,507 4,451,413 3,700,485 16,375 12,638 4,745,535 3,944,724 Nebraska 160,496 143,705 395,457 313,294 8,672,117 7,922,803 1,628,470 1,541,309 10,856,538 9,921,112 Nevada 291,989 257,033 838,524 795,610 7,345,465 5,860,405 0 0 8,475,979 6,913,048 New Hampshire 7,047 6,847 523,869 399,227 2,214,118 1,855,208 65,097 58,713 2,810,131 2,319,996 New Jersey 2,081,461 1,459,997 10,253,994 8,250,117 63,400,906 49,849,248 633,442 398,786 76,369,802 59,958,148 New Mexico 167,573 142,516 4,631,645 2,306,757 37,972,263 28,796,068 949,722 642,366 43,721,203 31,887,708 New York 11,078,328 8,283,259 42,056,878 32,518,315 232,323,445 128,795,374 32,808,124 26,703,243 318,266,776 196,300,190 North Carolina 1,786,665 1,660,167 2,359,165 1,714,840 63,025,859 51,369,351 3,272,896 1,408,618 70,444,584 56,152,976 North Dakota 7,754 6,562 364,279 298,233 2,942,174 2,699,341 2,461,943 2,313,874 5,776,150 5,318,011 Northern Mariana Isl 0 0 13,377 13,228 976,888 906,975 0 0 990,265 920,203 Ohio 3,420,419 3,100,277 9,710,412 7,426,560 64,483,322 54,481,677 4,166,614 3,872,802 81,780,768 68,881,315 Oklahoma 2,389,336 2,117,769 2,667,490 2,236,374 77,712,730 64,313,677 108,763 89,251 82,878,319 68,757,070 Oregon 362,658 325,017 574,754 445,170 14,549,825 12,399,149 2,341,027 1,379,383 17,828,264 14,548,718 Pennsylvania 3,164,019 2,935,394 9,920,319 6,870,892 69,463,650 58,615,965 14,261,301 13,582,894 96,809,290 82,005,145 Puerto Rico 6,484,476 4,308,189 4,636,318 3,365,187 42,708 28,241 0 0 11,163,502 7,701,617 Rhode Island 141,544 130,362 891,909 850,070 4,956,204 4,233,460 2,563,998 2,465,999 8,553,655 7,679,891 South Carolina 541,318 421,751 2,148,370 1,300,334 32,914,534 24,362,540 14,599,577 13,909,410 50,203,799 39,994,035 South Dakota 5,801 4,932 1,924,619 1,098,512 2,233,908 1,743,336 1,776,969 1,704,052 5,941,296 4,550,831 Tennessee 913,517 804,670 1,359,155 876,046 59,605,247 50,551,764 3,054,545 2,548,440 64,932,464 54,780,920 Texas 2,509,208 1,667,248 10,091,261 7,975,858 269,425,141 206,002,148 11,751,189 7,475,356 293,776,800 223,120,610 Utah 234,590 153,849 154,742 102,361 7,643,286 6,662,735 15,856,283 10,785,447 23,888,901 17,704,392 Vermont 15,915 12,147 871,592 582,662 1,566,963 1,167,811 45,864 40,091 2,500,334 1,802,710 Virgin Islands 25,980 0 2,061,355 1,597,034 43,740 43,740 6,075,391 5,733,059 8,206,466 7,373,833 Virginia 2,240,287 1,896,957 1,401,581 1,181,589 33,864,338 28,822,432 389,801 376,924 37,896,007 32,277,902 Washington 1,464,413 1,197,188 2,441,065 2,196,339 29,095,449 24,002,687 4,724,619 3,920,367 37,725,545 31,316,580 West Virginia 265,169 204,269 83,091 62,822 11,976,445 9,505,415 4,155,912 3,073,481 16,480,618 12,845,987 Wisconsin 470,574 423,135 2,411,765 2,075,527 16,188,226 13,026,069 8,552,475 8,527,867 27,623,040 24,052,598 Wyoming 29,369 23,351 259,906 181,563 1,170,665 917,178 2,373,514 2,139,740 3,833,454 3,261,832 Totals $84,126,830 $68,150,682 $196,225,609 $149,715,850 $2,305,259,549 $1,746,743,105 $273,204,366 $223,664,279 $2,858,816,354 $2,188,273,916 Source: Raw data provided by the Universal Service Administrative Company, rollups performed by Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Activity through June 30, 2012. Because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Also, disbursements may continue beyond the end of the program year in the event of delayed internal connections installation. Other adjustments and corrections may also be made. Schools and Libraries Funding Commitments and Disbursements by State and by Type of Applicant 2 - 29 Table 2.20 Funding Y ear 2010: July 1, 2010 through June 30, 2011 Library/Library Consortium Schools School Districts Other Consortium Totals Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds State/Territory Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Alabama $926,057 $786,461 $1,199,446 $719,442 $57,890,535 $41,811,428 $10,755,848 $6,397,459 $70,771,887 $49,714,789 Alaska 168,074 154,111 172,747 139,691 31,393,483 28,149,189 0 0 31,734,305 28,442,991 American Samoa 0 0 0 0 0 0 1,560,647 725,942 1,560,647 725,942 Arizona 1,286,831 1,033,608 11,258,536 7,114,462 65,686,030 45,237,091 1,413,156 672,552 79,644,553 54,057,713 Arkansas 357,837 286,616 335,333 182,697 20,606,927 14,349,247 13,423,261 7,480,164 34,723,358 22,298,723 California 8,831,496 6,326,566 15,122,098 10,196,275 362,729,645 224,968,412 22,142,737 9,538,561 408,825,976 251,029,813 Colorado 956,963 765,728 979,849 706,777 44,483,034 28,194,204 1,451,357 1,261,308 47,871,203 30,928,017 Connecticut 184,353 165,825 1,703,173 1,200,080 22,112,377 15,436,794 4,236,397 3,729,171 28,236,301 20,531,871 Delaware 301,642 298,276 176,708 124,522 1,426,274 1,012,212 1,433,214 856,917 3,337,838 2,291,928 District of Columbia 1,475,380 404,921 2,651,136 1,454,226 8,177,024 2,130,957 1,368,185 229,486 13,671,725 4,219,591 Florida 3,698,612 3,136,483 6,585,920 4,783,731 75,890,645 60,247,072 909,407 717,787 87,084,583 68,885,073 Georgia 4,408,218 4,312,235 2,597,244 1,871,992 86,876,479 63,287,043 10,072,862 9,928,811 103,954,803 79,400,080 Guam 25,033 0 21,561 15,919 0 0 0 0 46,594 15,919 Hawaii 90,275 76,430 3,382,111 1,522,771 3,563,072 614,152 0 0 7,035,458 2,213,352 Idaho 145,781 132,006 608,444 525,811 8,115,516 5,912,510 4,898,383 2,645,575 13,768,124 9,215,902 Illinois 2,125,477 1,869,764 5,221,834 3,435,972 105,832,223 79,055,625 5,550,744 4,948,135 118,730,278 89,309,496 Indiana 4,185,998 3,557,725 4,662,004 3,464,104 33,492,362 27,485,131 535,959 393,257 42,876,323 34,900,217 Iowa 163,545 117,628 1,081,229 681,759 10,291,855 7,451,767 4,398,154 4,299,442 15,934,782 12,550,596 Kansas 840,850 745,278 602,785 372,156 17,192,634 13,262,000 2,480,249 937,570 21,116,518 15,317,004 Kentucky 721,533 611,246 490,690 272,682 48,914,460 35,004,255 9,623,107 8,832,566 59,749,791 44,720,749 Louisiana 5,633,534 4,668,769 2,927,699 2,233,012 51,257,896 42,526,250 2,922,711 2,054,436 62,741,840 51,482,466 Maine 80,596 56,514 499,098 334,298 6,111,409 3,025,368 3,859,699 3,256,077 10,550,802 6,672,257 Maryland 535,117 448,111 2,164,876 1,197,953 35,165,810 19,545,537 762,860 717,233 38,628,663 21,908,834 Massachusetts 1,831,271 1,637,452 4,149,913 2,707,299 26,278,871 19,284,824 388,152 373,706 32,648,208 24,003,281 Michigan 2,259,110 1,581,665 3,216,049 2,010,542 49,487,619 34,282,909 8,680,285 6,506,379 63,643,062 44,381,494 Minnesota 1,373,582 1,318,572 2,764,136 2,024,103 24,455,560 19,171,598 6,291,936 5,213,504 34,885,214 27,727,776 Mississippi 1,939,579 1,679,339 1,229,150 1,063,750 25,447,085 21,607,598 7,415,946 1,823,121 36,031,760 26,173,808 Missouri 1,418,472 1,332,820 4,977,827 1,304,797 24,778,970 18,897,342 11,368,530 8,873,857 42,543,799 30,408,816 Montana 56,694 51,049 201,979 181,708 4,848,301 4,091,711 23,273 18,265 5,130,247 4,342,732 Nebraska 223,439 201,230 462,579 407,590 8,868,708 8,228,103 1,518,843 1,483,359 11,073,570 10,320,282 Nevada 304,318 242,765 621,859 527,933 7,348,630 5,509,018 0 0 8,274,807 6,279,716 New Hampshire 7,670 5,720 825,329 566,305 2,603,709 2,107,957 63,858 60,989 3,500,566 2,740,971 New Jersey 1,864,178 1,043,270 9,887,995 6,809,982 67,527,356 43,377,739 499,807 355,920 79,779,335 51,586,911 New Mexico 980,089 302,384 4,427,813 2,407,899 38,700,056 26,354,568 3,199,403 1,409,650 47,307,360 30,474,501 New York 9,712,481 6,881,791 47,368,882 36,299,468 201,816,114 68,177,893 33,148,723 26,203,931 292,046,200 137,563,083 North Carolina 2,053,176 1,829,111 3,325,133 2,210,882 80,385,254 61,242,779 3,260,922 1,663,890 89,024,485 66,946,662 North Dakota 9,458 8,169 440,906 325,585 1,167,502 919,408 2,399,623 2,379,140 4,017,489 3,632,301 Northern Mariana Isl 63 0 15,261 15,082 969,234 910,753 0 0 984,558 925,834 Ohio 3,572,994 3,267,908 10,293,951 7,337,581 74,493,975 57,564,488 3,807,132 2,767,795 92,168,051 70,937,772 Oklahoma 2,140,058 1,917,708 1,859,326 1,288,612 69,704,742 47,682,806 138,246 119,606 73,842,373 51,008,733 Oregon 338,897 288,849 1,148,484 792,564 19,408,230 14,144,602 1,598,964 1,373,696 22,494,575 16,599,711 Pennsylvania 3,322,399 2,946,219 14,849,255 8,673,746 55,173,882 41,273,175 14,641,853 13,031,267 87,987,389 65,924,406 Puerto Rico 11,698,723 6,474,464 5,361,621 4,128,504 30,272 18,697 90,763 28,813 17,181,380 10,650,479 Rhode Island 137,434 104,828 638,260 350,753 7,322,340 4,806,376 3,308,211 3,011,797 11,406,246 8,273,754 South Carolina 527,781 376,010 1,825,915 852,594 36,052,862 22,862,156 16,861,763 15,577,701 55,268,322 39,668,460 South Dakota 5,117 3,694 1,876,937 1,168,161 2,153,116 1,743,310 2,143,763 1,083,333 6,178,933 3,998,498 Tennessee 1,017,045 899,819 2,780,491 2,193,337 59,626,879 43,181,194 4,427,034 3,677,614 67,851,450 49,951,963 Texas 3,506,776 1,884,773 13,598,692 9,129,060 340,205,472 181,085,957 12,499,042 8,960,618 369,809,982 201,060,408 Utah 165,951 120,387 677,023 270,764 7,899,592 5,913,781 19,499,501 11,552,557 28,242,068 17,857,488 Vermont 21,196 14,664 916,613 539,582 1,946,211 1,346,505 43,632 42,167 2,927,651 1,942,918 Virgin Islands 0 0 1,161,341 782,370 0 0 9,690,868 6,998,209 10,852,209 7,780,578 Virginia 2,100,764 1,786,244 1,242,280 1,055,288 47,603,654 36,952,331 434,424 411,582 51,381,123 40,205,443 Washington 1,577,759 1,300,562 1,033,766 685,669 29,598,296 22,217,310 4,531,915 4,104,647 36,741,736 28,308,188 West Virginia 255,509 216,710 105,292 81,651 19,118,039 10,880,451 6,594,190 2,910,629 26,073,029 14,089,440 Wisconsin 462,826 421,750 3,405,970 2,119,769 19,602,322 14,328,996 14,361,059 12,393,363 37,832,177 29,263,877 Wyoming 28,236 22,852 204,011 80,000 2,885,420 2,213,755 2,320,439 2,189,667 5,438,105 4,506,273 Totals $92,056,247 $70,117,075 $211,338,561 $142,943,258 $2,454,717,964 $1,601,086,333 $299,051,038 $216,223,220 $3,057,163,810 $2,030,369,886 Source: Raw data provided by the Universal Service Administrative Company, rollups performed by Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Activity through June 30, 2012. Because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Also, disbursements may continue beyond the end of the program year in the event of delayed internal connections installation. Other adjustments and corrections may also be made. Schools and Libraries Funding Commitments and Disbursements by State and by Type of Applicant 2 - 30 Table 2.20 Funding Y ear 2011: July 1, 2011 through June 30, 2012 Library/Library Consortium Schools School Districts Other Consortium Totals Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds State/Territory Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Alabama $948,238 $293,385 $997,922 $336,338 $34,265,834 $16,455,528 $8,172,933 $2,927,639 $44,384,927 $20,012,889 Alaska 736,717 110,612 248,848 198,362 25,086,132 17,253,700 0 0 26,071,697 17,562,674 American Samoa 0 0 0 0 0 0 1,623,983 0 1,623,983 0 Arizona 1,911,801 377,374 7,719,094 2,695,338 44,279,986 14,097,895 1,507,187 148,945 55,418,068 17,319,552 Arkansas 445,288 258,126 416,662 81,688 16,309,863 6,223,471 209,777 113,932 17,381,590 6,677,217 California 10,011,774 3,810,603 16,309,547 6,196,328 336,565,099 106,257,492 17,618,703 3,363,361 380,505,124 119,627,784 Colorado 968,060 223,504 1,439,832 529,866 20,089,048 6,372,274 503,056 161,049 22,999,996 7,286,693 Connecticut 233,642 34,851 2,159,135 681,903 15,309,971 7,812,673 2,073,297 1,126,680 19,776,045 9,656,107 Delaware 310,770 220,306 302,013 57,048 1,039,246 53,146 1,323,342 0 2,975,371 330,500 District of Columbia 836,129 0 1,685,202 295,526 5,461,041 1,395,946 2,646 2,646 7,985,017 1,694,117 Florida 4,388,129 1,067,436 8,091,981 4,138,488 63,951,396 24,700,309 918,830 159,800 77,350,336 30,066,032 Georgia 5,000,010 4,206,141 2,069,651 381,779 65,578,280 31,155,960 10,148,845 3,148,199 82,796,787 38,892,079 Guam 0 0 18,027 15,976 603,417 460,024 0 0 621,444 476,000 Hawaii 188,592 27,751 2,598,503 455,926 3,610,734 339,661 0 0 6,397,829 823,339 Idaho 576,499 415,444 236,771 137,911 7,218,770 1,405,244 6,292,800 4,967,543 14,324,839 6,926,142 Illinois 2,394,236 550,981 5,239,347 1,363,401 100,120,828 38,499,941 1,366,564 577,605 109,120,975 40,991,928 Indiana 4,502,950 2,830,214 3,060,933 1,319,981 33,107,347 17,151,133 353,975 230,215 41,025,206 21,531,542 Iowa 152,768 104,106 681,272 384,325 10,544,004 5,790,479 5,852,946 4,070,663 17,230,990 10,349,573 Kansas 824,500 258,130 449,522 153,894 15,474,660 6,930,278 2,410,223 196,900 19,158,905 7,539,201 Kentucky 850,728 409,389 385,909 236,677 27,927,738 8,354,924 9,989,991 0 39,154,366 9,000,990 Louisiana 5,182,614 3,072,482 2,516,255 1,187,630 39,186,720 20,884,189 10,129,547 496,428 57,015,135 25,640,728 Maine 71,864 7,913 332,903 71,470 3,561,561 668,441 4,219,679 3,174,279 8,186,008 3,922,103 Maryland 881,992 297,140 2,173,614 436,889 23,424,982 5,531,891 718,337 330,640 27,198,924 6,596,560 Massachusetts 906,542 538,662 2,908,131 974,638 19,036,532 7,407,040 254,984 83,805 23,106,189 9,004,145 Michigan 2,421,795 897,669 3,967,156 1,055,910 35,933,923 15,483,479 7,650,336 4,102,806 49,973,210 21,539,865 Minnesota 1,320,141 489,603 2,438,371 874,723 14,533,317 2,767,009 7,042,674 4,323,377 25,334,502 8,454,711 Mississippi 2,083,418 1,088,023 383,748 75,634 27,439,649 10,731,879 742,883 149,489 30,649,698 12,045,025 Missouri 1,480,179 571,711 3,749,438 727,375 22,501,325 6,799,150 13,771,502 4,672,605 41,502,443 12,770,841 Montana 56,005 30,998 181,160 109,119 4,816,591 2,835,408 26,179 14,188 5,079,935 2,989,713 Nebraska 168,160 108,100 387,129 254,628 9,339,784 6,202,216 1,320,737 855,043 11,215,810 7,419,987 Nevada 325,898 2,519 507,309 321,167 8,013,728 792,408 0 0 8,846,935 1,116,094 New Hampshire 7,197 1,416 480,391 74,809 2,623,524 491,801 104,966 35,295 3,216,078 603,321 New Jersey 1,788,027 543,851 10,824,492 2,225,629 50,441,377 9,318,065 389,638 263,897 63,443,535 12,351,442 New Mexico 336,434 114,009 3,626,418 746,105 16,936,798 3,452,335 4,479,237 1,811,203 25,378,887 6,123,652 New York 10,204,457 3,599,936 45,914,838 14,834,829 42,673,854 9,484,254 28,003,495 3,776,306 126,796,645 31,695,325 North Carolina 2,116,916 1,052,685 2,620,414 857,008 56,169,523 22,656,169 4,683,719 3,962 65,590,572 24,569,824 North Dakota 9,126 4,655 375,220 167,173 1,070,754 552,463 3,695,418 2,412,564 5,150,518 3,136,855 Northern Mariana Isl 36,248 2,647 17,111 12,401 639,797 537,136 0 0 693,156 552,183 Ohio 3,614,880 766,919 14,992,620 4,735,349 62,948,882 27,304,323 3,100,674 1,391,620 84,657,057 34,198,211 Oklahoma 2,292,256 1,162,146 1,831,719 819,435 53,217,002 25,069,730 154,683 95,584 57,495,661 27,146,895 Oregon 293,284 29,801 589,145 205,854 13,885,639 4,746,307 1,451,874 85,803 16,219,942 5,067,765 Pennsylvania 3,803,356 1,501,574 14,216,908 3,683,650 45,031,434 14,373,095 10,983,561 4,542,495 74,035,260 24,100,813 Puerto Rico 8,624,770 4,284,722 4,897,558 3,021,731 22,731 20,559 32,617 0 13,577,675 7,327,012 Rhode Island 315,129 143,371 965,478 235,160 3,383,318 1,377,947 0 0 4,663,924 1,756,477 South Carolina 595,039 181,756 677,258 139,168 17,015,754 4,183,312 20,090,762 0 38,378,815 4,504,236 South Dakota 9,029 3,888 1,248,935 401,236 2,341,640 1,099,141 2,298,947 15,063 5,898,551 1,519,329 Tennessee 1,516,750 526,129 863,194 519,375 51,917,706 31,126,756 3,646,514 2,496,282 57,944,163 34,668,542 Texas 2,493,907 855,964 8,875,707 3,119,638 134,119,754 43,308,715 11,539,766 5,858,232 157,029,134 53,142,548 Utah 61,491 28,189 219,255 34,321 5,006,235 388,610 22,546,906 0 27,833,887 451,120 Vermont 51,270 7,084 861,475 284,509 2,110,181 647,558 50,371 21,146 3,073,297 960,297 Virgin Islands 0 0 2,254,211 330,294 0 0 5,190,133 2,583,128 7,444,344 2,913,422 Virginia 2,176,488 557,315 1,044,647 299,257 32,325,949 13,106,612 500,634 34,145 36,047,718 13,997,330 Washington 1,988,751 368,649 830,169 388,868 24,527,565 7,742,716 5,655,216 0 33,001,701 8,500,234 West Virginia 206,901 79,472 102,247 46,075 12,281,959 3,262,572 7,387,802 3,217,362 19,978,910 6,605,481 Wisconsin 860,762 61,993 2,394,892 881,923 16,991,681 7,439,181 23,023,038 148,823 43,270,373 8,531,919 Wyoming 25,480 6,636 374,294 176,018 1,434,721 403,410 2,779,341 0 4,613,837 586,064 Totals $93,607,387 $38,187,979 $194,753,984 $63,989,752 $1,683,449,282 $622,905,956 $278,035,271 $68,190,746 $2,249,845,923 $793,274,434 Source: Raw data provided by the Universal Service Administrative Company, rollups performed by Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Activity through June 30, 2012. Because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Also, disbursements may continue beyond the end of the program year in the event of delayed internal connections installation. Other adjustments and corrections may also be made. Schools and Libraries Funding Commitments and Disbursements by State and by Type of Applicant 2 - 31 Rural Health Care Support The portion of the 1996 Telecommunications Act that covers universal service support for rural health care providers states that “[a] telecommunications carrier shall . . . provide telecommunications services . . . to any public or non-profit health care provider . . . at rates that are reasonably comparable to rates charged for similar services in urban areas in that state.”13 The Commission's universal service rules permit eligible health care providers to receive support for any telecommunications service.14, 15 Additionally, the 1996 Act directs the Commission to establish competitively neutral rules – to enhance, to the extent technically feasible and economically reasonable, access to advanced telecommunications and information services for all public and nonprofit . . . health care providers.16 Table 2.21 shows rural health care disbursements by service speed for each funding year from 1998 through 2011.17 Table 2.22 shows commitments and disbursements on a state-by-state basis for 2009, 2010, and 2011. The figures in these tables do not include any of the commitments or disbursements made under the rural health care pilot program discussed below. Additional rural health care data, including disbursements by speed and by state and disbursements per person in rural areas, have been posted at www.fcc.gov/wcb/iatd/monitor.html. In September 2006, the FCC established the rural health care pilot program to provide funding to stimulate deployment of the broadband infrastructure necessary to support innovative telehealth and telemedicine services to those areas of the country where the need for these benefits is most acute.18 Specifically, the pilot program provides funding to support the design and construction of state or regional broadband networks dedicated to health care and the advanced services provided over those networks, as well as connecting those networks to Internet2, National LambdaRail, Inc. (both dedicated nationwide backbones), or the public Internet.19 13 47 U.S.C. § 254(h)(1)(A). 14 47 C.F.R. § 54.601. 15 A 1.544 Mbps (T1) maximum bandwidth cap was employed in Funding Years 1 and 2. See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 9101-04 (1997), paras. 620-624. The Commission removed the bandwidth cap for year three and beyond. See Federal- State Joint Board on Universal Service, CC Docket Nos. 97-21 and 96-45, Sixth Order on Reconsideration in CC Docket No. 97-21, Fifteenth Order on Reconsideration in CC Docket No. 96-45, 14 FCC Rcd 18756, 18767-72, paras. 17 – 24 (1999) (Fifteenth Order on Reconsideration). 16 47 U.S.C. § 254(h)(2)(A). 17 Because of the appeals process, funding commitments and disbursements may be made after the funding year ended. 18 Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 21 FCC Rcd 11111 (2006) (Rural Health Care Pilot Program Order). 19 Rural Health Care Support Mechanism, WC Docket No. 02-60, Order, 22 FCC Rcd 20360, 20361 (2007) (Rural Health Care Pilot Program Selection Order). 2 - 32 In 2007, the Commission selected 69 applicants covering 42 states and three U.S. territories to participate in the pilot program.20 The Commission made available to these participants approximately $139 million in rural health care support per funding year for three years.21 Rural health care pilot program commitments and disbursements by speed and by state have been posted at www.fcc.gov/wcb/iatd/monitor.html. In 2012, the FCC released a staff report on the rural health care pilot program summarizing key observations from the Pilot Program. It is available at http://www.fcc.gov/document/rural-health-care-pilot- program-evaluation-staff-report. For more information on the pilot program, visit the pilot program website.22 In December 2012, the Commission released a Report and Order that created the Healthcare Connect Fund to reform, expand, and modernize the Rural Health Care Program. The Healthcare Connect Fund, which will be implemented in 2013, will provide support for high-capacity broadband connectivity to eligible health care providers (HCPs).23 20 Rural Health Care Pilot Program Selection Order. Following mergers, there are now 61 projects in the pilot program. See www.fcc.gov/encyclopedia/rural-health-care-pilot-program. 21 See RHCPP Selection Order at 20372-73, paras. 32-33. USAC did not issue a pilot program funding commitment for the first funding year (Funding Year 2007 of the existing rural health care program). Unused pilot program support, however, was carried over to the next pilot program funding year. See Letter from Dana Shaffer, FCC, to Scott Barash, USAC, CC Docket No. 02-60 (Jan. 17, 2008). USAC reported that it rolled forward the Funding Year 2007 demand estimate and commitment cap of $139.26 million to Funding Year 2008, except for $0.53 million, which was committed and invoiced for Funding Year 2007. Universal Service Administrative Company, Federal Universal Service Support Mechanisms Fund Size Projections for the Fourth Quarter 2009 at 21. 22 See Rural Health Care Pilot Program at www.fcc.gov/encyclopedia/rural-health-care-pilot-program. 23 Rural Health Care Support Mechanism, WC Docket No. 02-60, FCC 12-150, Report and Order (rel. Dec. 21, 2012). 2 - 33 Table 2.21 Rural Health Care Funding Disbursements by Funding Year Voice Grade Broadband Other Service Funding 56K to 200K to 1.5Mb to 4.0Mb or Speed Year 199K 1.49Mb 3.99Mb and faster Unknown Total 1998 $98,339 $201,476 $3,075,590 $0 $0 $3,375,405 1999 178,433 778,169 3,289,825 0 58,132 4,304,559 2000 242,640 451,643 9,559,894 59,994 0 10,314,172 2001 288,619 204,066 17,964,276 98,382 0 18,555,343 2002 406,711 146,886 20,492,887 573,644 0 21,620,128 2003 440,617 760,318 23,189,835 1,473,855 7,559 25,872,184 2004 570,681 2,741,730 25,265,034 2,283,207 141,133 31,001,784 2005 874,374 3,061,965 32,608,427 3,054,174 527,767 40,126,707 2006 1,059,618 3,101,332 34,029,394 2,918,913 4,169,755 45,279,013 2007 1,247,809 3,052,342 44,555,019 5,301,065 811,323 54,967,558 2008 1,509,074 2,690,625 51,456,004 8,995,383 513,589 65,164,676 2009 1,700,058 2,776,906 52,989,821 10,975,804 3,006,421 71,449,009 2010 2,711,143 5,981,325 46,433,595 12,341,770 13,867,317 81,335,150 2011 458,700 524,703 7,965,895 4,167,180 8,684,740 21,801,218 Note: Disbursements through June 30, 2012. Because of the appeals process, funding commitments and disbursements may be made after the program year ended. Figures do not include any commitments or disbursements made under the Rural Health care Pilot Program. Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. 2 - 34 Table 2.22 Rural Health Care Funding Commitments and Disbursements by State Funding Year 2009: July 1, 2009 through June 30, 2010 Total Providers Total Providers Funds Receiving Funds Receiving State Committed Commitments Disbursed Support Alabama $354,564 87 $340,713 86 Alaska 38,244,709 248 37,895,141 248 American Samoa 220,158 1 220,158 1 Arizona 1,486,437 67 1,456,336 67 Arkansas 726,908 107 718,715 107 California 1,106,803 118 1,053,070 116 Colorado 251,624 24 251,624 24 Connecticut 0 0 0 0 Delaware 0 0 0 0 District of Columbia 0 0 0 0 Florida 356,659 23 356,659 23 Georgia 2,073,247 121 2,032,856 121 Guam 14,333 1 14,333 1 Hawaii 164,653 18 164,653 18 Idaho 384,794 42 378,873 42 Illinois 1,147,085 99 1,124,074 97 Indiana 852,010 65 821,151 65 Iowa 529,885 92 521,198 92 Kansas 341,380 63 330,119 60 Kentucky 586,051 71 571,638 71 Louisiana 58,298 24 58,298 24 Maine 66,039 9 60,995 9 Maryland 0 0 0 0 Massachusetts 130,624 2 130,624 2 Michigan 1,960,705 101 1,936,875 100 Minnesota 3,067,618 222 2,969,689 221 Mississippi 190,369 34 189,050 34 Missouri 616,711 60 612,134 60 Montana 765,072 82 758,862 82 Nebraska 1,594,238 120 1,560,708 119 Nevada 48,711 14 48,711 14 New Hampshire 15,003 6 15,003 6 New Jersey 0 0 0 0 New Mexico 795,514 52 774,757 52 New York 114,136 31 111,736 29 North Carolina 359,753 58 357,503 58 North Dakota 1,042,275 108 1,031,992 108 Northern Mariana Is. 0 0 0 0 Ohio 720,431 42 720,431 42 Oklahoma 767,805 69 746,444 68 Oregon 329,072 22 329,072 22 Pennsylvania 59,726 20 56,126 19 Puerto Rico 0 0 0 0 Rhode Island 0 0 0 0 South Carolina 20,717 11 20,717 11 South Dakota 1,067,265 73 978,165 73 Tennessee 396,636 44 385,547 44 Texas 1,635,426 88 1,601,486 86 Utah 851,084 54 846,526 54 Vermont 62,043 18 60,777 16 Virgin Islands 56,451 11 56,451 11 Virginia 743,676 146 743,676 146 Washington 107,816 37 103,199 37 West Virginia 210,088 25 210,068 25 Wisconsin 5,651,474 302 5,617,893 302 Wyoming 115,870 15 104,183 14 Totals $72,461,949 3,147 $71,449,009 3,127 Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Disbursements through June 30, 2012. Because of the appeals process, funding commitments and disbursements may be made after the program year ended. Figures do not include any commitments or disbursements made under the Rural Health care Pilot Program. 2 - 35 Table 2.22 Rural Health Care Funding Commitments and Disbursements by State Funding Year 2010: July 1, 2010 through June 30, 2011 Total Providers Total Providers Funds Receiving Funds Receiving State Committed Support Disbursed Support Alabama $612,147 85 $452,940 31 Alaska 46,489,267 247 43,133,451 247 American Samoa 351,250 1 262,500 1 Arizona 1,779,930 70 988,321 51 Arkansas 889,401 121 756,583 99 California 4,780,883 160 4,114,365 104 Colorado 301,043 29 251,197 24 Connecticut 0 0 0 0 Delaware 0 0 0 0 District of Columbia 0 0 0 0 Florida 302,503 24 279,709 24 Georgia 2,269,933 127 2,181,726 118 Guam 147,141 2 145,870 2 Hawaii 105,629 17 85,042 14 Idaho 513,650 44 265,781 33 Illinois 1,982,724 132 1,712,448 116 Indiana 923,893 68 835,270 66 Iowa 654,041 96 546,327 84 Kansas 481,863 69 453,108 55 Kentucky 759,664 117 729,578 106 Louisiana 95,040 36 85,482 30 Maine 48,752 6 42,186 3 Maryland 7,845 4 7,689 4 Massachusetts 131,647 2 128,502 1 Michigan 2,124,179 122 1,835,062 115 Minnesota 3,370,975 206 3,056,687 192 Mississippi 220,275 41 189,830 37 Missouri 785,382 86 582,562 62 Montana 772,421 87 682,736 71 Nebraska 1,618,393 122 1,561,419 118 Nevada 52,676 17 25,085 9 New Hampshire 15,037 2 15,037 2 New Jersey 0 0 0 0 New Mexico 789,298 51 565,450 37 New York 81,807 15 56,042 12 North Carolina 485,696 69 447,793 65 North Dakota 1,361,744 110 1,049,157 101 Northern Mariana Is. 0 0 0 0 Ohio 920,942 65 823,988 49 Oklahoma 1,242,418 80 1,082,248 48 Oregon 343,638 25 235,057 14 Pennsylvania 135,118 35 125,968 34 Puerto Rico 0 0 0 0 Rhode Island 0 0 0 0 South Carolina 50,691 25 25,985 18 South Dakota 628,750 50 579,699 43 Tennessee 444,269 40 422,882 38 Texas 2,682,959 140 2,450,312 137 Utah 916,585 47 463,433 32 Vermont 55,531 17 50,784 15 Virgin Islands 66,890 12 66,890 12 Virginia 1,657,145 159 660,112 64 Washington 145,957 32 73,601 11 West Virginia 165,959 21 147,347 20 Wisconsin 6,823,736 340 6,393,063 336 Wyoming 221,699 18 208,845 17 Totals $91,808,417 3,491 $81,335,150 2,922 Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Disbursements through June 30, 2012. Because of the appeals process, funding commitments and disbursements may be made after the program year ended. Figures do not include any commitments or disbursements made under the Rural Health care Pilot Program. 2 - 36 Table 2.22 Rural Health Care Funding Commitments and Disbursements by State Funding Year 2011: July 1, 2011 through June 30, 2012 Total Providers Total Providers Funds Receiving Funds Receiving State Committed Support Disbursed Support Alabama $499,905 23 $442,157 17 Alaska 29,361,908 156 10,799,635 74 American Samoa 310,200 1 310,200 1 Arizona 464,172 36 181,161 19 Arkansas 1,164,182 61 771,487 32 California 5,050,497 87 864,181 24 Colorado 227,943 15 82,338 4 Connecticut 0 0 0 0 Delaware 0 0 0 0 District of Columbia 0 0 0 0 Florida 263,423 18 171,513 9 Georgia 2,219,164 91 1,034,285 38 Guam 18,000 1 0 0 Hawaii 0 0 0 0 Idaho 80,572 13 42,892 8 Illinois 1,355,345 63 412,709 24 Indiana 553,413 39 180,878 23 Iowa 248,864 24 24,887 8 Kansas 428,742 30 280,875 14 Kentucky 732,512 73 147,346 14 Louisiana 123,194 19 96,429 8 Maine 0 0 0 0 Maryland 0 0 0 0 Massachusetts 99,817 1 0 0 Michigan 606,117 29 61,130 9 Minnesota 1,237,198 73 264,672 22 Mississippi 252,670 28 168,742 19 Missouri 389,330 46 141,760 19 Montana 548,311 56 77,090 11 Nebraska 1,429,083 90 787,477 65 Nevada 10,347 2 9,524 1 New Hampshire 0 0 0 0 New Jersey 0 0 0 0 New Mexico 574,886 28 391,416 9 New York 37,137 10 29,983 5 North Carolina 182,256 22 129,592 10 North Dakota 716,529 32 453,318 24 Northern Mariana Is. 0 0 0 0 Ohio 145,665 12 77,295 2 Oklahoma 816,706 38 289,330 17 Oregon 240,281 7 179,995 7 Pennsylvania 25,907 6 18,819 2 Puerto Rico 0 0 0 0 Rhode Island 0 0 0 0 South Carolina 4,602 7 1,227 1 South Dakota 299,285 17 237,618 16 Tennessee 425,331 30 185,254 18 Texas 2,669,136 90 1,529,906 55 Utah 289,438 12 235,634 8 Vermont 30,166 5 0 0 Virgin Islands 47,943 12 36,555 12 Virginia 811,510 124 38,953 4 Washington 70,695 10 10,734 5 West Virginia 137,697 19 51,762 12 Wisconsin 2,055,715 133 247,807 27 Wyoming 363,048 12 302,654 4 Totals $57,618,843 1,701 $21,801,218 701 Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Disbursements through June 30, 2012. Because of the appeals process, funding commitments and disbursements may be made after the program year ended. Figures do not include any commitments or disbursements made under the Rural Health care Pilot Program. 3 - 1 3. Subscribership and Penetration Sources of Data Continuing analysis of telephone penetration statistics allows one to examine the aggregate effects of Commission actions and industry evolution on households' decisions to maintain, acquire or drop telephone service. This chapter presents comprehensive data on telephone penetration statistics collected by the Bureau of the Census primarily through the American Community Survey (ACS) and the Current Population Survey (CPS). Along with telephone penetration statistics for the nation and each of the states, data are provided on penetration for various demographic characteristics. In particular, attention is given to penetration rates for lower income households given the Commission’s various low income programs such as Lifeline. To provide regular, high-quality data on telephone penetration, the Commission requested that the Census Bureau include questions on telephone availability as part of its CPS, which monitors demographic trends between decennial censuses. The CPS is a staggered panel survey in which the people residing at particular addresses are included in the survey for four consecutive months in one year and the same four months in the following year. Use of the CPS has several advantages: it is conducted every month by an independent and expert agency, the sample is large, and the questions are consistent. Thus, changes in the results can be compared over time with a reasonable degree of confidence. In addition to the CPS, the ACS also provides data for calculating a measure of telephone penetration. The ACS has replaced the decennial census long form and thus also provides a wealth of data and large sample sizes, though on a less frequent basis than the CPS. Whereas the CPS reports household penetration, the ACS follows the design of past decennial censuses and reports telephone penetration for occupied housing units. In this chapter, penetration measures from the CPS, the ACS, and decennial censuses (prior to the ACS) are reported as complements to each other.1 The specific questions regarding telephone availability asked in the CPS are: "Does this house, apartment, or mobile home have telephone service from which you can both make and receive calls? Please include cell phones, regular phones, and any other type of telephone." And, if the answer to the first question is "no," this is followed up with: "Is there a telephone elsewhere on which people in this household can be called?" If the answer to the first question is "yes," the household is counted as having a telephone "in unit." If the answer to either the first or second question is "yes," the household is counted as having a telephone "available." In contrast to the CPS, the ACS simply asks: “Does this house, apartment, or mobile home have telephone service from which you can both make and receive calls? Include cell phones.” Thus, the ACS question is most similar to the CPS’s “in unit” rather than “available” penetration rate. Although the CPS is conducted every month, not all questions are asked every month. The telephone questions are asked once every four months, in the month that a household is first included in the sample and in the month that the household re-enters the sample a year later. Since the sample is 1 Penetration statistics derived from the CPS cannot be directly compared with the penetration estimates based on the responses to the long forms of the 1990 and 2000 decennial censuses or the ACS. This is due to differences in sampling techniques and survey methodologies as well as differences in the context in which the questions are asked. For example, the 2011 ACS reported 97.4% of all occupied housing units in the United States had telephone service available, whereas the March 2011 CPS data showed a household penetration rate of 96.0%. This difference is statistically significant and may indicate that the CPS value is on the low side and the ACS value is on the high side, with the most probable value lying somewhere in between. 3 - 2 staggered, the reported information for any given month actually reflects responses over the preceding four months. Aggregated summaries of the responses are reported to the Commission, based on the surveys conducted through March, July, and November of each year. The ACS provides annual telephone penetration statistics based on data collected monthly throughout the year. The CPS data are based on a nationwide sample of about 50 to 60 thousand households in the 50 states and the District of Columbia. The CPS does not cover outlying areas that are not states, such as Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Northern Mariana Islands.2 The ACS form is sent to approximately 250 thousand addresses per month, for a total of about 3 million addresses per year. The ACS covers the states, the District of Columbia, and Puerto Rico. Statistical Tables and Charts Table 3.1 provides a general overview of the national penetration rate since November 1983 using March, July, and November CPS statistics. The national penetration rate has tended to increase and the absolute number of households without a telephone available has declined. Table 3.2 provides national telephone penetration rates over time for each income category since 1997, the year before the current Lifeline mechanism was in place. Chart 3.1 plots these same data. Between 1997 and 2012, there was a statistically significant increase in the penetration rate for all households. There also were statistically significant increases in penetration rates in the two lowest income categories over this time period. For other income categories, the penetration rates have remained roughly flat since 1997. Note that the increases in the national telephone penetration rate for the lower income categories cannot be attributed primarily to increases in real income, because real-income increases are reflected in the movement of households between categories. Thus, penetration changes within each income category represent changes while holding real income constant. For reference, Table 3.3 shows the nominal dollar equivalents for each 1984 dollar amount used in classifying income categories. Chart 3.2 provides an alternative look at lower income telephone penetration. Here, penetration rates are plotted for households at or below various multiples of the Federal Poverty Guidelines (FPG). Not surprisingly, penetration rates are higher as households below higher multiples of the FPGs are included. Similarly to Chart 3.1, low income household telephone penetration has tended to increase over time. Note that in both Charts 3.1 and 3.2, a change in the CPS question is noted for March 2005. Through November 2004, this question had been worded: "Is there a telephone in this house/apartment?" Because of the increasing number of households that have wireless only, there was some concern that some of these households may not think of their mobile phones when asked if they have a telephone. Consequently, beginning in December 2004, CPS changed its telephone question to the current wording, discussed above. The values since March 2005 reflect the new question. While there is an apparent drop in the penetration rate between November 2004 and March 2005, at least some of this drop may be attributable to households that responded to the previous form of the question by reporting phones that were not in service. 2 Annual data for Puerto Rico have been available from the ACS starting with 2005. The latest available value for Puerto Rico from that survey is 93.8% for 2011, compared to a national average (for the 50 states and the District of Columbia) of 97.4% using the ACS. 3 - 3 Table 3.4 combines several data sources to show longer-term telephone penetration rates as far back as 1920. In this table, ACS (using occupied housing units) and CPS (using households) results are compared for more recent years. Table 3.5 uses CPS data to show penetration rates for households with various demographic characteristics such as the number of persons in the household, the age of the householder, and the race of the householder. Tables 3.6 and 3.7 complement each other by reporting, for the states and District of Columbia, penetration rates using ACS (3.6) and CPS (3.7) data. Note, however, that only the ACS provides a penetration rate for Puerto Rico. In Table 3.6, rates are reported since 2006. Refer to previous monitoring reports for earlier state-level ACS results. In Table 3.7, only selected years are shown. The Wireline Competition Bureau’s Telephone Subscribership in the United States provides similar statistics for each year. Table 3.8 reports for each state and the District of Columbia the most recent penetration rates by income category. 3 - 4 Households Percentage Households Percentage with with without without Households Telephones Telephones Telephones Telephones (millions) (millions) (millions) November 1983 85.8 78.4 91.4 % 7.4 8.6 % November 1984 87.4 79.9 91.4 7.5 8.6 November 1985 88.8 81.6 91.9 7.2 8.1 November 1986 89.9 83.1 92.4 6.8 7.6 November 1987 91.3 84.3 92.3 7.0 7.7 November 1988 92.6 85.7 92.5 6.9 7.5 November 1989 93.9 87.3 93.0 6.6 7.0 November 1990 94.7 88.4 93.3 6.3 6.7 November 1991 95.7 89.4 93.4 6.3 6.6 November 1992 97.0 91.0 93.8 6.0 6.2 November 1993 98.8 93.0 94.2 5.8 5.8 November 1994 99.8 93.7 93.8 6.2 6.2 November 1995 100.4 94.2 93.9 6.2 6.1 November 1996 101.3 95.1 93.9 6.2 6.1 November 1997 102.8 96.5 93.8 6.3 6.2 November 1998 104.1 98.0 94.2 6.1 5.8 November 1999 105.4 99.1 94.1 6.3 5.9 November 2000 106.5 100.2 94.1 6.3 5.9 November 2001 107.7 102.2 94.9 5.5 5.1 March 2002 108.3 103.4 95.5 4.8 4.5 July 2002 108.5 103.2 95.1 5.3 4.9 November 2002 109.0 104.0 95.3 5.1 4.7 March 2003 112.1 107.1 95.5 5.0 4.5 July 2003 112.1 106.8 95.2 5.3 4.8 November 2003 113.1 107.1 94.7 6.0 5.3 March 2004 112.9 106.4 94.2 6.5 5.8 July 2004 113.5 106.5 93.8 7.1 6.2 November 2004 113.8 106.4 93.5 7.4 6.5 March 2005 114.5 105.8 92.4 8.7 7.6 July 2005 114.4 107.5 94.0 6.8 6.0 November 2005 115.2 107.0 92.9 8.2 7.1 March 2006 115.5 107.2 92.8 8.4 7.2 July 2006 116.2 109.9 94.6 6.3 5.4 November 2006 116.4 108.8 93.4 7.6 6.6 March 2007 117.1 110.8 94.6 6.4 5.4 July 2007 117.7 111.7 95.0 5.9 5.0 November 2007 118.2 112.2 94.9 6.0 5.1 March 2008 117.8 112.2 95.2 5.6 4.8 July 2008 118.0 112.6 95.4 5.5 4.6 November 2008 118.6 112.7 95.0 5.9 5.0 March 2009 118.4 113.2 95.6 5.2 4.4 July 2009 118.4 113.3 95.7 5.1 4.3 November 2009 119.2 114.0 95.7 5.1 4.3 March 2010 118.3 113.6 96.0 4.7 4.0 July 2010 118.3 113.5 96.0 4.8 4.0 November 2010 119.4 114.0 95.5 5.4 4.5 March 2011 119.8 114.9 95.9 4.9 4.1 July 2011 119.3 114.1 95.6 5.2 4.4 November 2011 119.7 114.4 95.6 5.3 4.4 March 2012 121.9 117.0 96.0 4.9 4.0 July 2012 121.7 117.0 96.1 4.7 3.9 Table 3.1 Household Telephone Subscribership in the United States Date Source: U.S. Census Bureau, Current Population Survey. 3 - 5 82 84 86 88 90 92 94 96 98 100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Te lep ho ne Pe ne tra tio n R ate Chart 3.1 Household Telephone Penetration by Income, 1997-2012 Income Groups in 1984 Dollars $9,999 or less $10,000 - $19,999 $20,000 - $29,999 $30,000 - $39,999 $40,000 or more All Households Mar. 2005: Revised CPS Question 3 - 6 82 84 86 88 90 92 94 96 98 100 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 Te lep ho ne Pe ne tra tio n R ate Chart 3.2 Telephone Penetration for Single-Family Households at or below Multiples of the Federal Poverty Guidelines (FPG), 1996-2012 1 x FPG 1.35 x FPG 1.5 x FPG 2 x FPG All Households Mar. 2005: Revised CPS Question 3 - 7 Year $9,999 or Less $10,000 - $19,000 $20,000 - $29,999 $30,000 - $39,999 $40,000 or Greater All Households 1997 86.0% 93.0% 96.5% 97.6% 98.2% 94.0% 1998 85.7 93.7 96.1 97.4 98.2 94.1 1999 85.5 92.9 96.0 97.2 98.2 94.0 2000 87.5 93.3 96.1 97.3 98.0 94.5 2001 87.6 93.4 95.9 97.1 97.8 94.4 2002 89.1 94.3 96.9 98.1 98.8 95.5 2003 89.2 94.6 97.0 98.1 98.8 95.5 2004 88.0 93.2 95.3 96.7 97.7 94.2 2005 86.4 91.2 94.1 95.2 96.0 92.5 2006 86.3 91.8 94.4 95.4 96.5 92.9 2007 88.4 94.1 95.9 96.8 97.9 94.6 2008 89.7 94.3 96.2 97.4 98.3 95.2 2009 90.4 95.2 96.6 97.3 98.3 95.6 2010 91.9 95.8 96.9 97.7 98.6 96.1 2011 91.5 95.9 96.8 97.8 98.3 95.9 2012 92.0 95.3 96.9 97.8 98.3 95.9 Year $10,000 $20,000 $30,000 $40,000 1997 $15,595 $31,190 $46,785 $62,380 1998 15,809 31,618 47,427 63,236 1999 16,082 32,164 48,246 64,328 2000 16,686 33,372 50,058 66,744 2001 17,173 34,346 51,519 68,692 2002 17,427 34,854 52,281 69,708 2003 17,953 35,906 53,859 71,812 2004 18,265 36,530 54,795 73,060 2005 18,840 37,680 56,520 75,360 2006 19,474 38,948 58,422 77,896 2007 20,015 40,030 60,045 80,060 2008 20,812 41,624 62,436 83,248 2009 20,732 41,464 62,196 82,928 2010 21,212 42,423 63,635 84,846 2011 21,780 43,561 65,341 87,122 2012 22,358 44,716 67,074 89,432 Note: All numbers based on CPI non-adjusted series, March 1984 base of 102.6 Source: U.S. Census Bureau, Current Population Survey (March CPS Supplement). Note: Income groups classified by 1984 dollars. Total penetration rates may differ slightly from those in Table 3.1 due to sampling differences between the March CPS and the March CPS Supplement. Table 3.2 Household Telephone Penetration by Income, 1997-2012 Table 3.3 (in 1984 Dollars) Nominal Dollar Equivalents by Year 3 - 8 1920 % 1930 1940 1950 1960 1970 1980 1990 % 2000 2001 2002 2003 2004 2005 2006 2007 20083 2009 2010 2011 2012 2 Household penetration data (1990 - 2012) are annual averages from the U.S. Census based on the Current Population Survey. For 2012, July CPS data are used. 4 At the time of publication, 2012 ACS statistics were not available. 3 Errata #53: released April 12, 2010, regarding 2008 ACS 1-year and 2006-2008 ACS 3-year estimates for household kitchen facilities and telephone service. Two errors were found affecting the 2008 ACS 1-year data and the 2006-2008 ACS 3- year data for telephone service. The errors involve the last two items in Question 8 on the housing section of the 2008 ACS questionnaire which asks whether the housing unit has telephone service (including cell phones). The error involved the incorrect capture of the responses to those items. It affected the estimates of householders who reported no telephone service, resulting in an underestimate of "no" responses and an increased imputation rate for both items. At the national level, the percent of households reporting no telephone service in 2008 was 1.8 percent; however, after correcting the data capture error, the percent reporting no telephone service is approximately 2.8 percent. 97.4 NA4 96.1 Percentage of Occupied Housing Units with Telephone Service1 Percentage of Households with Telephone Service2 Year 95.8 95.7 1 Housing Unit penetration statistics are from the U.S. Census Bureau's Historical Statistics of the United States, Colonial Times to 1970 , Part 2, page 783 (1920 - 1970); the decennial censuses (1980 - 2000); and the Census Bureau's American Community Survey (ACS) 1-year estimates (2001 - 2012). 97.7 95.7 97.5 94.1 93.6 94.6 94.8 98.2 95.2 96.2 95.1 95.7 93.8 94.8 93.1 97.6 94.4 96.9 94.9 96.6 95.3 90.5 92.9 94.8 93.3 36.9 61.8 78.3 Table 3.4 Historical Telephone Penetration Estimates 35.0 40.9 3 - 9 Characteristic 2009 2010 2011 2012 Persons in Household 1 93.5% 93.9% 93.7% 94.0% 2 - 3 96.4 96.5 96.5 96.8 4 - 5 96.9 96.6 96.7 97.0 6 + 96.1 95.8 95.6 96.2 Age of Householder 15 - 24 Yrs Old 92.0 93.5 93.4 94.3 25 - 54 Yrs Old 95.2 95.5 95.5 95.9 55 - 59 Yrs Old 96.6 96.6 95.9 96.3 60 - 64 Yrs Old 97.0 96.2 96.4 96.4 65 - 69 Yrs Old 97.2 96.8 96.6 96.7 70 - 99 Yrs Old 96.9 96.7 96.5 96.6 Race of Householder White 96.3 96.4 96.3 96.6 Black 92.1 92.7 92.5 93.2 Hispanic Origin 92.6 93.1 92.7 93.1 United States Total 95.7 95.8 95.7 96.1 Source: U.S. Census Bureau, Current Population Survey. Note that 2009 to 2011 values are annual averages. For 2012, values are July 2012 figures since complete 2012 figures were unavailable at the time of publication. Table 3.5 Telephone Penetration by Selected Demographic Characterisitcs (Percentage of Households with Telephone Service) 3 - 10 State Alabama 92.6 % 93.9 % 98.0 % 97.5 % 97.4 % 97.2 % Alaska 96.3 97.7 98.1 98.1 98.3 98.1 Arizona 93.6 93.7 97.0 96.4 97.0 97.0 Arkansas 90.3 91.3 97.6 97.1 96.9 96.6 California 96.6 96.7 98.7 98.3 97.9 97.9 Colorado 94.6 94.3 98.2 97.7 97.7 97.5 Connecticut 96.5 96.8 99.1 98.8 98.3 98.5 Delaware 97.0 95.8 98.7 98.6 98.2 98.2 District of Columbia 94.5 92.6 97.8 96.7 96.7 96.7 Florida 92.4 93.4 97.9 97.6 97.2 96.6 Georgia 90.9 92.7 97.1 97.1 96.9 96.4 Hawaii 95.7 94.9 98.1 97.6 97.5 97.4 Idaho 94.2 94.2 99.0 98.3 97.4 96.5 Illinois 93.7 94.8 98.6 97.9 97.7 97.7 Indiana 93.4 94.2 98.4 97.2 97.1 96.6 Iowa 94.9 95.3 98.9 98.2 97.4 96.9 Kansas 92.7 93.8 98.9 97.9 97.5 97.6 Kentucky 91.9 93.1 97.8 96.8 96.9 96.9 Louisiana 91.6 92.5 97.3 96.5 96.8 97.2 Maine 95.7 95.9 98.8 98.5 97.8 98.2 Maryland 95.3 95.6 99.0 98.5 97.6 97.5 Massachusetts 95.5 96.1 98.8 98.7 98.4 98.3 Michigan 92.1 93.0 98.6 97.5 97.2 97.0 Minnesota 95.8 95.4 99.2 98.6 98.2 98.0 Mississippi 88.4 91.2 96.9 97.2 96.9 96.9 Missouri 93.6 94.3 98.5 97.7 97.3 97.3 Montana 93.6 93.7 97.5 97.2 97.0 97.1 Nebraska 94.4 94.5 99.0 98.3 98.0 97.8 Nevada 94.6 94.3 97.6 97.7 97.7 97.8 New Hampshire 97.0 97.5 98.6 98.5 98.3 98.2 New Jersey 95.3 95.1 97.9 97.9 97.9 97.6 New Mexico 91.7 92.4 95.7 94.7 95.3 94.9 New York 94.8 95.0 97.9 97.4 97.2 97.2 North Carolina 93.2 93.4 98.1 97.6 97.6 97.5 North Dakota 94.7 94.8 99.2 98.0 98.4 98.1 Ohio 94.2 94.6 98.1 97.1 97.2 97.1 Oklahoma 92.9 93.2 98.0 97.8 97.8 97.5 Oregon 95.2 94.9 98.7 97.9 97.7 97.2 Pennsylvania 95.9 95.9 98.8 98.2 98.0 97.8 Rhode Island 95.6 96.0 97.8 97.9 97.2 97.5 South Carolina 92.0 93.2 97.2 96.6 97.1 97.2 South Dakota 96.0 95.3 98.6 98.2 98.0 97.3 Tennessee 92.8 93.7 98.1 97.6 97.2 97.1 Texas 92.6 93.5 98.0 97.7 97.4 97.2 Utah 96.2 96.0 99.3 98.3 97.8 97.6 Vermont 97.2 96.9 98.8 98.0 97.8 98.2 Virginia 95.2 95.2 98.3 97.6 97.4 97.5 Washington 96.2 96.3 99.0 98.1 97.8 97.9 West Virginia 93.8 93.6 96.9 96.4 96.3 96.0 Wisconsin 95.6 96.1 99.0 98.4 98.0 97.7 Wyoming 93.4 95.0 98.7 98.0 97.7 97.8 Total United States 94.1 % 94.6 % 98.2 % 97.7 % 97.5 % 97.4 % Puerto Rico 73.6 % 80.6 % 91.9 % 92.4 % 93.5 % 93.8 % * See footnote 3 on Table 3.4. Source: U.S. Census Bureau, American Community Survey. US Total does not include Puerto Rico. 20102008* (Percentage of Occupied Housing Units with Telephone Service) Telephone Penetration by State, 2006-2011 Table 3.6 201120092006 2007 3 - 11 Table 3.7 Telephone Penetration by State, Selected Years (Percentage of Households with a Telephone in Unit) State Alabama 88.4 % 92.2 % 91.9 % 90.4 % 96.2 % Alaska 86.5 94.4 94.3 95.7 96.2 Arizona 86.9 93.1 93.9 92.5 95.6 Arkansas 86.6 86.9 88.6 90.0 95.2 California 92.5 95.0 95.8 95.6 95.7 Colorado 93.2 95.5 96.3 94.7 97.3 Connecticut 95.5 97.5 96.4 95.2 97.8 Delaware 94.3 96.1 96.3 93.5 97.2 District of Columbia 94.9 93.0 93.2 91.2 93.1 Florida 88.7 93.1 92.1 92.7 93.2 Georgia 86.2 89.7 91.1 90.5 93.5 Hawaii 93.5 94.8 94.7 95.5 94.9 Idaho 90.7 92.9 93.9 95.5 95.9 Illinois 94.2 93.0 91.5 90.8 95.3 Indiana 91.6 93.7 94.5 89.3 92.5 Iowa 96.2 96.6 96.2 96.1 98.2 Kansas 94.3 93.9 94.8 94.3 97.9 Kentucky 88.1 92.3 93.3 91.3 94.8 Louisiana 89.7 91.1 92.6 93.9 97.9 Maine 93.4 96.5 97.9 96.3 98.2 Maryland 95.7 96.7 95.0 95.4 95.8 Massachusetts 95.9 95.7 94.6 95.3 97.5 Michigan 92.8 95.0 95.0 94.2 97.2 Minnesota 95.8 97.1 97.4 97.6 97.8 Mississippi 82.4 87.5 89.2 90.5 95.6 Missouri 91.5 95.3 95.8 94.9 96.4 Montana 91.0 94.3 94.6 93.3 95.5 Nebraska 95.7 96.0 97.3 93.5 97.5 Nevada 90.4 93.5 94.0 93.0 97.3 New Hampshire 94.3 96.1 97.7 96.4 98.1 New Jersey 94.8 93.6 94.6 94.9 95.4 New Mexico 82.0 86.2 91.2 88.5 92.9 New York 91.8 93.4 95.1 91.6 94.1 North Carolina 88.3 93.5 93.9 93.3 96.0 North Dakota 94.6 96.3 95.8 96.5 98.2 Ohio 92.4 94.5 94.8 94.7 96.6 Oklahoma 90.3 91.3 91.2 92.2 95.8 Oregon 90.6 96.0 94.8 96.7 97.8 Pennsylvania 94.9 96.9 96.6 96.3 97.8 Rhode Island 93.6 95.7 94.9 94.4 97.4 South Carolina 83.7 91.3 93.2 92.5 95.4 South Dakota 93.2 93.3 94.3 96.4 97.7 Tennessee 88.5 94.0 95.5 92.5 92.8 Texas 88.4 91.0 93.5 91.5 95.1 Utah 92.5 96.7 95.9 96.6 97.1 Vermont 92.3 95.9 95.6 96.0 98.1 Virginia 93.1 94.9 95.4 94.1 95.4 Washington 93.0 94.5 94.9 96.9 98.4 West Virginia 87.7 92.9 94.0 93.0 95.9 Wisconsin 95.2 97.0 94.8 95.6 97.1 Wyoming 89.9 95.0 94.7 96.1 97.7 Total United States 91.6 % 93.9 % 94.4 % 93.6 % 95.7 % Source: U.S. Census Bureau, Current Population Survey. 20111984 1996 2000 2006 3 - 12 State $9,999 or Less $10,000 to $19,999 $19,999 to $29,999 $30,000 to $39,999 $40,000 or More All Households Alabama 92.4 % 95.1 % 96.4 % 99.2 % 99.3 % 95.9 % Alaska 93.7 94.3 97.5 99.2 98.0 96.5 Arizona 85.5 96.6 99.3 98.9 99.8 95.6 Arkansas 91.2 97.0 97.7 96.3 97.5 95.5 California 92.5 94.6 96.9 96.9 98.4 95.9 Colorado 94.6 96.9 98.1 99.5 99.8 97.9 Connecticut 95.2 99.5 97.6 98.2 99.6 98.3 Delaware 97.1 96.5 97.7 98.5 98.5 97.6 District of Columbia 92.1 96.7 97.7 96.0 96.0 95.4 Florida 90.9 93.9 94.7 97.5 93.8 93.7 Georgia 89.3 92.4 93.7 99.5 97.4 93.7 Hawaii 92.1 91.5 97.4 94.5 99.3 95.4 Idaho 93.9 96.3 98.1 97.1 99.7 97.0 Illinois 91.0 94.1 94.7 96.4 97.7 94.7 Indiana 89.2 91.0 94.2 95.6 97.1 92.9 Iowa 95.5 97.1 98.2 99.6 98.7 97.7 Kansas 92.9 97.1 99.3 98.2 99.7 97.2 Kentucky 90.2 95.6 96.7 98.0 99.2 95.2 Louisiana 93.4 97.3 98.4 98.3 97.7 96.5 Maine 97.4 98.6 99.1 97.9 99.1 98.5 Maryland 93.3 96.3 93.8 99.0 99.1 96.9 Massachusetts 93.7 97.1 99.6 100.0 98.8 97.8 Michigan 93.5 96.2 98.9 100.0 98.8 97.1 Minnesota 92.4 97.0 98.7 99.1 100.0 97.6 Mississippi 94.5 97.0 97.4 96.0 99.4 96.7 Missouri 93.0 97.2 98.6 98.4 98.9 96.8 Montana 91.5 93.3 97.4 96.0 98.2 94.7 Nebraska 96.1 97.5 97.7 99.2 98.3 97.7 Nevada 94.3 94.9 98.8 97.4 98.5 96.5 New Hampshire 93.9 96.4 97.9 99.6 99.7 97.9 New Jersey 93.0 96.1 97.8 96.5 98.8 96.9 New Mexico 91.3 90.2 91.9 97.0 98.5 93.2 New York 89.1 92.0 94.8 97.0 96.9 93.6 North Carolina 94.0 97.2 98.9 98.9 99.8 97.5 North Dakota 94.9 97.7 98.3 100.0 98.1 97.7 Ohio 92.0 96.3 97.4 97.4 99.4 96.2 Oklahoma 97.9 96.6 95.9 96.0 97.4 96.9 Oregon 97.1 98.6 99.3 100.0 99.5 98.9 Pennsylvania 96.9 98.7 99.4 98.5 99.6 98.6 Rhode Island 92.2 96.7 97.2 99.5 98.5 96.4 South Carolina 90.5 95.8 97.7 96.2 98.9 95.2 South Dakota 93.9 97.6 98.9 99.6 99.4 97.6 Tennessee 84.6 93.0 92.6 91.1 94.9 90.8 Texas 92.0 95.5 97.0 97.6 97.8 95.8 Utah 98.4 97.3 98.4 99.4 97.9 98.1 Vermont 94.9 97.1 99.7 98.3 98.9 97.8 Virginia 89.1 95.0 99.0 99.2 99.2 96.6 Washington 95.6 95.9 98.5 98.9 99.2 97.7 West Virginia 91.6 93.9 95.4 98.0 96.1 94.4 Wisconsin 90.5 94.3 99.0 98.8 98.6 96.1 Wyoming 95.2 98.2 97.7 100.0 100.0 98.2 United States 92.0 % 95.3 % 96.9 % 97.8 % 98.3 % 95.9 % Source: U.S. Census Bureau, Current Population Survey (March CPS Supplement). Table 3.8 Household Penetration by State and Income, 2012 4 - 1 4. Price Indices This section contains information on telephone price indices using data from the Consumer Price Index (CPI) maintained by the Bureau of Labor Statistics (BLS). The BLS collects information on telephone service as part of the CPI. Monthly CPI data can be found on the Internet at www.bls.gov/cpi/. The monthly price indices represent prices sampled in the middle of the month. A CPI for telephone services was first published in 1935.1 Since then, telephone prices have tended to increase at a slower pace than most other prices. Table 4.1 shows long-term changes in the indices for all items, all services, telephone services, each of the seven major categories that currently constitute the overall CPI, and several services that are often characterized as public utilities. The price of telephone service has increased less rapidly than the prices of most of these categories when viewed over a long period of time. Chart 4.1 shows the levels of the overall CPI and the CPI for telephone services over time. The CPI for telephone services is based on a "market basket" intended to represent the telephone-related expenditures of a typical urban household. It includes both land-line telephone service and wireless telephone service. The annual rate of change during recent years is shown in Table 4.2 for the overall CPI (which measures the impact of inflation on consumers), and the CPI for telephone services. Chart 4.2 shows the changes in the overall CPI and the CPI for telephone services since 1999. For 2011, the nation's overall level of prices (measured by the CPI for all items) rose by 3.0% and the CPI for telephone services declined by 0.3%. The land-line telephone service index increased by 1.9% during 2011, while the wireless telephone index decreased by 2.3%. Monthly data for these indices are shown in Table 4.3. In January 2010, BLS discontinued collecting four land-line telephone indices, including local charges, long distance charges, interstate toll calls, and intrastate toll calls. These four indices were combined into a single land-line telephone service index, which began in December 2009. The Producer Price Index (PPI), also published by BLS, continues to release sub-indices for telephone services. We no longer include them in this report because they have become less meaningful as the bundling of telephone services has become more common in the land-line telephone industry.2 1 BLS publishes two sets of Consumer Price Indices. The CPI-U, used herein, is based on expenditures of all urban consumers. The CPI-W series is based on expenditures of urban wage earners and clerical workers. 2 PPI data are available on the BLS website at www.bls.gov/ppi/. 4 - 2 1961-2011 2001-2011 CPI All Items (SA0) 4.1 % 2.4 % CPI All Services (SAS) 4.9 2.8 CPI Telephone Services (SEED) 1.6 0.3 CPI Major Categories: - Food & Beverages (SAF) * 2.8 - Housing (SAH) * 2.4 - Apparel (SAA) 2.0 -0.5 - Transportation (SAT) 4.0 3.1 - Medical Care (SAM) 5.9 4.0 - Recreation (SAR) * 0.9 - Other Goods & Services (SAG) * 3.5 CPI Public Transportation (SETG) 5.1 2.4 CPI Utility (Piped) Gas Service (SEHF02) 5.1 4.0 CPI Electricity (SEHF01) 3.9 4.0 CPI Water & Sewerage Maint. (SEHG01) 5.7 5.3 CPI Postage (SEEC01) 4.8 3.4 * Series not established until after 1960. Note: The CPI Telephone Services index was revised in December of 1997. To calculate values in this table, Series MUUR0000SE270A is used for periods prior to this revision and CUUR0000SEED is used for periods after the revision. After each row, the series ID is provided and should be preceeded by CUUR0000 when referencing the series. Source: Bureau of Labor Statistics. Table 4.1 Long-Term Changes for Various Price Indices (Average Annual Rates of Change) 0 20 40 60 80 100 120 140 160 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 CPI Leve l Year Chart 4.1 CPI All Goods and Services and CPI Telephone Services, 1961-2011 Base Period: 1997 = 100 CPI - All Goods and Services CPI - Telephone Services 4 - 3 1999 2.7 0.4 2000 3.4 -2.3 2001 1.6 1.3 2002 2.4 0.2 2003 1.9 -2.7 2004 3.3 -2.5 2005 3.4 0.4 2006 2.5 1.7 2007 4.1 2.1 2008 0.1 2.9 2009 2.7 1.0 2010 1.5 -0.9 2011 3.0 -0.3 Note: Values report the percent change from December of the previous year through December of the year shown. Sources: Bureau of Labor Statistics and Bureau of Economic Analysis. Table 4.2 Annual Changes in CPI Telephone Services and All Items Indices All Goods and Services Telephone Services -10 -5 0 5 10 1999 2001 2003 2005 2007 2009 2011Perce nt Change from Prior Ye ar Year Chart 4.2 Annual Changes in CPI All Goods and Services and CPI Telephone Services All Goods and Services Telephone Services 4 - 4 All Goods and Services Telephone Services Land-line Telephone Services Wireless Telephone Services CUUR0000SA0 CUUR0000SEED CUUR0000SEED04 CUUR0000SEED03 2009 January 97.8 99.2 * 101.1 February 98.3 99.2 * 101.2 March 98.5 99.3 * 101.2 April 98.7 99.4 * 101.2 May 99.0 99.6 * 101.2 June 99.9 99.5 * 101.2 July 99.7 99.9 * 101.2 August 99.9 100.0 * 101.2 September 100.0 100.3 * 101.2 October 100.1 100.2 * 101.2 November 100.2 99.8 * 100.0 December 100.0 100.0 100.0 100.0 2010 January 100.3 100.0 101.0 99.2 February 100.4 99.6 101.1 98.3 March 100.8 99.6 101.1 98.3 April 101.0 99.7 101.4 98.3 May 101.0 99.7 101.4 98.2 June 100.9 99.6 101.4 98.1 July 101.0 99.8 101.6 98.2 August 101.1 99.8 101.8 98.2 September 101.2 99.9 102.0 98.2 October 101.3 99.8 102.1 97.8 November 101.3 99.6 102.2 97.5 December 101.5 99.1 102.2 96.4 2011 January 102.0 98.7 103.0 95.2 February 102.5 98.6 103.0 95.0 March 103.5 98.6 103.1 94.8 April 104.1 98.5 102.9 94.9 May 104.6 98.5 102.9 94.8 June 104.5 98.5 103.0 94.8 July 104.6 98.3 103.3 94.1 August 104.9 98.3 103.4 94.1 September 105.1 98.4 103.6 94.1 October 104.8 98.6 103.9 94.1 November 104.8 98.6 103.9 94.1 December 104.5 98.7 104.1 94.2 2012 January 105.0 99.0 104.9 94.2 February 105.4 99.0 105.0 94.2 March 106.2 99.1 105.2 94.2 April 106.5 99.2 105.4 94.2 May 106.4 99.3 105.5 94.3 June 106.3 99.4 105.7 94.3 July 106.1 98.9 105.6 93.6 Notes: Series values for All Goods and Services are converted from the 1982-1984 base index series reported by the Bureau of Labor Statistics (BLS). Series values for Telephone Services and Wireless Telephone Services are converted from the December 1997 base index series reported by BLS. Land-line Telephone Services index began in December 2009. Series are not seasonally adjusted. Series may be referenced via the BLS website with the Series ID listed at the top of each column. Table 4.3 Monthly Consumer Price Indices (December 2009 = 100) BLS Series ID 5 - 1 5. Network Usage To monitor use of the public switched telephone network, the National Exchange Carrier Association (NECA) provides quarterly reports to the Commission on the volume of interstate access minutes of use (MOU) passing through the local switches. The data reported in this section include new annual data for 2011 as well as revisions of the data that were contained in our previous reports.1 The minutes reported here are those minutes that pass through the incumbent local exchange carriers' switches. The following descriptions of minutes of use measures are based on information provided by NECA: Access MOU are "earned MOU" which are derived by dividing the earned revenues by the corresponding rate. Access minutes of use generating revenues have been discounted, which can produce distortions in revenue amounts. Further, revenues are normalized to account for differences in terminating/originating and percent interstate use factors, billing adjustments, and the imputations of access charges (where applicable). Revenues are also calendarized, which will change derived minutes. Access MOU include only the domestic portion of international calls. Similarly, WATS and toll- free (800/888/877/866) calls are counted only on one end of the call.2 Finally, minutes include time for incomplete calls and setup time. Chart 5.1 and Table 5.1 present NECA information on local access minutes for interstate traffic that pass through the incumbent LECs’ switches. In Table 5.1, data are shown for totals of the tier 1 carriers, the non-tier 1 carriers, and the industry.3 These figures do not include the minutes from the closed end of WATS or toll-free calls. Table 5.2 presents interstate access minutes of use data by state from 2007-2011. Annual study area data for the years 2007 through 2011 are posted at www.fcc.gov/wcb/iatd/monitor.html. 1 The FCC routinely posts quarterly MOU data at www.fcc.gov/wcb/iatd/neca.html. 2 WATS calls usually generate access minutes only at the terminating end of the call and toll-free calls usually generate access minutes only at the originating end of the call; both types of minutes are counted in the terminating minutes. 3 Tier 1 carriers are non-NECA pool incumbent local exchange carriers with annual operating revenues of $148 million or more in 2011. 5 - 2 0 100 200 300 400 500 600 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Chart 5.1 Interstate Switched Access Minutes of Use for Incumbent Local Exchange Carriers (in Billions) Source: National Exchange Carrier Association, various filings. 5 - 3 Table 5.1 Interstate Switched Access Minutes of Use Tier 1 Non Tier 1 Industry Year Total Total Total 1987 203,204 12,508 215,712 1988 230,398 14,211 244,609 1989 259,529 17,530 277,058 1990 287,442 20,006 307,448 1991 306,376 21,661 328,036 1992 327,172 22,577 349,749 1993 347,021 24,220 371,240 1994 374,173 27,230 401,403 1995 401,536 30,389 431,925 1996 434,718 33,378 468,097 1997 461,461 35,837 497,299 1998 481,078 37,749 518,828 1999 512,729 39,585 552,314 2000 523,928 42,990 566,917 2001 495,491 44,200 539,691 2002 442,684 43,958 486,642 2003 399,579 44,384 443,963 2004 377,832 44,531 422,363 2005 356,992 43,953 400,945 2006 335,651 43,560 379,211 2007 308,924 39,937 348,861 2008 280,110 35,857 315,968 2009 246,226 32,081 278,307 2010 212,214 27,760 239,974 2011 183,874 24,668 208,542 Source: National Exchange Carrier Association, various filings. Incumbent Local Exchange Carriers by Tier (in Millions) 5 - 4 Table 5.2 ILEC Interstate Switched Access Minutes of Use by State (in Millions) State 2007 2008 2009 2010 2011 Alabama 5,699 5,562 4,971 4,256 3,612 Alaska 1,135 1,344 958 723 604 American Samoa 19 19 18 19 19 Arizona 6,573 6,059 5,286 4,629 4,013 Arkansas 3,434 3,099 2,791 2,346 1,988 California 35,521 31,441 27,664 23,588 20,212 Colorado 6,695 6,116 5,371 4,563 4,086 Connecticut 5,425 4,795 4,178 3,718 3,133 Delaware 1,487 1,392 1,216 1,010 911 District of Columbia 1,857 1,720 1,616 1,444 1,343 Florida 24,812 22,234 19,039 15,892 13,351 Georgia 11,757 10,992 9,672 8,270 7,133 Guam 262 221 166 149 134 Hawaii 1,594 1,927 1,887 1,999 1,628 Idaho 2,050 1,860 1,629 1,402 1,247 Illinois 14,860 13,699 11,931 10,083 8,205 Indiana 6,968 6,459 5,477 4,694 3,941 Iowa 4,200 3,120 2,729 2,386 2,126 Kansas 3,264 2,816 2,431 2,016 1,790 Kentucky 4,555 4,092 3,645 3,303 2,893 Louisiana 4,654 4,250 3,714 3,224 2,687 Maine 1,573 1,394 1,336 1,133 1,003 Maryland 8,615 7,729 7,043 6,296 5,583 Massachusetts 7,356 6,514 5,726 5,044 4,646 Michigan 8,855 7,930 6,758 5,735 4,662 Minnesota 5,039 4,624 4,031 3,539 3,183 Mississippi 3,500 3,230 2,860 2,521 2,106 Missouri 7,293 6,674 5,904 5,169 4,594 Montana 1,362 1,244 1,119 953 860 Nebraska 1,929 1,796 1,614 1,437 1,397 Nevada 4,130 3,475 2,907 2,301 1,902 New Hampshire 1,916 1,649 1,462 1,052 940 New Jersey 12,478 10,742 9,856 8,007 7,058 New Mexico 2,571 2,297 1,972 1,712 1,517 New York 19,369 17,185 15,360 13,540 12,277 North Carolina 10,900 10,090 8,738 7,733 6,874 North Dakota 728 685 609 549 548 Northern Mariana Islands 52 48 47 37 32 Ohio 11,632 10,549 9,104 7,889 6,617 Oklahoma 3,579 3,185 2,901 2,539 2,169 Oregon 4,277 3,786 3,270 2,721 2,329 Pennsylvania 13,896 12,686 11,172 9,698 8,825 Puerto Rico 3,419 3,426 3,214 3,177 3,131 Rhode Island 896 814 734 660 604 South Carolina 5,603 5,143 4,518 3,983 3,470 South Dakota 1,119 848 639 555 496 Tennessee 7,075 6,453 5,630 4,834 3,985 Texas 21,985 20,184 17,607 15,169 13,119 Utah 2,548 2,323 1,915 1,619 1,503 Vermont 1,167 1,028 960 789 663 Virgin Islands 379 372 354 332 297 Virginia 10,456 9,560 9,111 8,031 7,294 Washington 6,905 6,174 5,382 4,447 3,832 West Virginia 2,903 2,760 2,490 2,272 1,860 Wisconsin 5,662 5,407 4,951 4,245 3,635 Wyoming 875 746 626 543 477 Total 348,861 315,968 278,307 239,974 208,542 Source: National Exchange Carrier Association, March 2012 filing Customer Response Publication: 2012 Universal Service Monitoring Report You can help us provide the best possible information to the public by completing this form and returning it to the Industry Analysis and Technology Division of the FCC's Wireline Competition Bureau. 1. 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