UNIVERSAL SERVICE MONITORING REPORT CC Docket No. 96-45 WC Docket No. 02-6 WC Docket No. 02-60 WC Docket No. 06-122 WC Docket No. 10-90 WC Docket No. 11-42 WC Docket No. 13-184 WC Docket No. 14-58 2016 (Data Received Through September 2016) Prepared by Federal and State Staff for the Federal-State Joint Board on Universal Service 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 FCC’s Federal-State Joint Board Monitoring Reports website at http://www.fcc.gov/encyclopedia/federal-state-joint-board-monitoring-reports. Table of Contents Introduction and Summary .......................................................................................................... 4 to 5 2016 Monitoring Report Supplementary Material ............................................................... 6 1. Revenues and Contributions .................................................................................................. 7 to 21 2. Lifeline (Low Income) ........................................................................................................... 22 to 30 3. Connect America Fund (High Cost) ...................................................................................... 31 to 38 4. E- rate (Schools and Libraries) ................................................................................................ 39 to 41 5. Rural Health Care ................................................................................................................... 42 to 44 6. Subscribership & Penetration ................................................................................................. 45 to 57 7. Price Indices ........................................................................................................................... 58 to 61 Appendix: Additional Information Regarding Universal Service High -Cost Support .............. A-1 to A- 36 1 Report Tables Table 1.1 Filer Revenues by Service Type: 2005 - 2015 .......................................................... 8 Table 1.2 Filer Revenues, Wholesale vs. Retail: 2005 - 2015 ................................................. 10 Table 1.3 2015 Filer Revenues by Service Type: Top 5 Affiliated Entities vs. Other Companies .................................................................................................... 12 Table 1.4 Telecommunications Revenue Reported on FCC Form 499-Q: 2014 - 2016 ............................................................................................................. 13 Table 1.5 USF Contribution Base by Year: 2005 - 2015 ......................................................... 14 Table 1.6 Universal Service Fund Contribution Factor ........................................................... 15 Table 1.7 Billed Interstate and International Retail Telecommunications Revenues by Top 5 Affiliated Entit ies vs. Other Companies: 201 3 - First Half of 2016 ............ 16 Table 1.8 End User Telecommunications Revenues by State: 2014 ....................................... 17 Table 1.9 Universal Service Support Mechanism by State: 2015 ........................................... 18 Table 1.10 Universal Service Disbursements 2001 - 2015 ...................................................... 19 Table 1.11 Universal Service Program Requirements and Con tribution Factors for 2016 ..... 20 Table 1.12 Universal Service Contributions Divided by Number of Households .................. 21 Table 2.1 Lifeline Subscribers and Link Up Beneficiaries ...................................................... 23 Table 2.2 Low-Income Claims ................................................................................................. 24 Table 2.3 Low-Income Claims by State: 2015 ........................................................................ 25 Table 2.4 Low-Income Claims Received by ILECs and CETCs ............................................ 26 Table 2.5 Low-Income Claims by Program and by Affiliated Entities: 2015 ......................... 27 Table 2.6 Total Monthly Lifeline Subscribers Since January 2012 ........................................ 28 Table 2.7 Lifeline De-Enrollment or Scheduled to be De-Enrolled by State in 2015 ............. 29 Table 2.8 Non-Facilities Based Low-Income Subscribers by State in 2015 ........................... 30 Table 3.1 High -Cost Support Fund Claim History .................................................................. 32 Table 3.2 High -Cost Support Fund Claim History – ILECs and CETCs ................................ 33 Table 3.3 Hi gh-Cost Support Fund Claim History – Price Cap and Rate of Return ILECs ... 34 Table 3.4 High -Cost Support Fund Claims – by Mechanism and State: 2015 ........................ 35 Table 3.5 Annual High -Cost Claims by Year-En d 2014 Affiliate Structure: 2 012 - 2015 ..... 37 Table 3.6 High -Cost Support Fund Claims by Affiliate: 2015 ................................................ 38 Table 4.1 Schools and Libraries Funding Commitments and Disbursements by Applicant Type and Year ........................................................................................................ 40 Table 4.2 Schools and Libraries Funding Commitments and Disbursements from Program Inception through June 30, 2016 by State and Applicant Type ............................. 41 Table 5.1 Rural Health Care Funding Commitments and Disbursements by Program and Year ......................................................................................................................... 43 Table 5.2 Rural Health Care Funding Commitments and Disbursements from Program Inception through June 30, 2016 by State and Program ........................................ 44 2 Table 6.1 Household Voice Subscribership in the United States, 1983 - 2016 ....................... 47 Table 6.2 Household Voice Penetration by Income, 1997 - 2016 ........................................... 48 Table 6.3 Nominal Dollar Equivalents by Year ....................................................................... 48 Table 6.4 Historical Voice Penetration Estimates.................................................................... 49 Table 6.5 Voice Penetration by Selected Demographic Characteristics, 2012 - 2016 (Percentage of Households with Voice Service) .................................................... 50 Table 6.6 Voice P enetration by State, 2010 - 2015 (Percentage of Occupied Housing Units with Voice Service) ............................... 51 Table 6.7 Voice Penetration by State, Selected Years (Percentage of Households with a Telephone in Unit) .......................................... 52 Table 6.8 Household Voice Penetration by State and Income, 2016 ...................................... 53 Table 6.9 Internet Use by Selected Characteristics, 2015 ........................................................ 54 Table 6.10 High -Speed Internet Penetration for Households by State .................................... 55 Table 6.11 Residential Fixed Connections per Household by Speed Tier as of December 31, 2015 ................................................................................................. 56 Table 6.12 Telephone and Internet Subscribership and Expenses in Low-Income Households ............................................................................................................. 57 Table 7.1 Long-Term Changes for Various Price Indices ....................................................... 59 Table 7.2 Annual Changes in CPI Telephone Service and All Items Indices ......................... 60 Table 7.3 Monthly Consumer Price Indices ............................................................................. 61 3 Universal Service Monitoring Report 2016 Introduction and Summary This is the nineteenth report in a series prepared by federal and state staff members for the Federal-State Joint Board on Universal Service (Universal Service Joint Board).1 This report is generally based on information available to us as of September 2016. These reports contain information designed to monitor the impact of various universal service support mechanisms and the method used to finance them. These reports are part of a monitoring program created by the Federal Communications Commission in 1997 in CC Docket No. 96-45 to replace a similar program in CC Docket No. 87-339 that previously resulted in a series of nineteen Monitoring Reports.2 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 both contributors and beneficiaries of the Universal Service Fund, including incumbent local exchange carriers (ILECs), competitive eligible telecommunications carriers (CETCs), schools, libraries and health care providers. NECA, at the direction of the Commission, provides information to USAC that is utilized in administering certain aspects of the high-cost program. The following is the organization of this report: Section 1 provides an update on industry revenues, universal service program funding requirements, and contribution factors. Sections 2 through 5 provide the latest data on the low-income, high-cost, schools and libraries, and rural health care support mechanisms. Section 6 presents recent Census and Bureau of Labor Statistics data on voice telephony subscribership and expenses from the Current Population Survey, the American Community Survey and the Consumer Expenditure Survey as well as data on telephone penetration by income by state. It also includes data on residential Internet subscribership and expenses. Section 7 includes updated Consumer Price Index data. An Appendix provides additional information regarding the high-cost program. This entire report is available electronically in page image (.pdf) format through the FCC’s Federal- State Joint Board Monitoring Reports website, located at http://www.fcc.gov/encyclopedia/federal-state- joint-board-monitoring-reports. The tables of the report are available separately as spreadsheet files in a single compressed (.zip) format file at this site also. The Monitoring Report is published once a year. 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 http://www.fcc.gov/encyclopedia/federal-state-joint-board-monitoring-reports. The supplementary material includes tables too extensive to be practical for a printed report. A table listing the files available when this file is unzipped is provided at the end of this introduction. 1 The last report was released in December 2015. Universal Service Monitoring Report, 2015 (Data Received Through September 2015). 2 In 1997, the Commission adopted rules to implement section 254 largely based on the recommendations of the Universal Service Joint Board and delegated to the Common Carrier Bureau (the predecessor to the Wireline Competition Bureau), in consultation with the state staff, the creation of a new monitoring program. 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). 4 We continue to look for ways to present universal service data in a way that is useful for the public. Section 3 tables now include a separate category showing the Remote Alaska and Standing Rock support. Table 6.12 now presents telephone and internet subscribership in low-income households, as well as telephone and internet expenses in low-income households. In the 2016 report, we also have eliminated certain tables.3 We invite questions or comments on this report via email at IATDreports@fcc.gov with subject: December 2016 Monitoring Report. 3 The following tables have been deleted: former Supplementary Material tables HCL Benchmarks - by Study Area and Max Subject to Rate Floor - by PC Study Area. 5 2016 Monitoring Report Supplementary Material This list provides the names of files provided in the 2016 Monitoring Report Supplementary Material zip file available at http://www.fcc.gov/encyclopedia/federal-state-joint-board-monitoring-reports. Underlined names are folders containing those files after unzipping the file. Revenues and Contributions S.1.1. Detailed Telecommunications Revenue - 2015 S.1.2. Estimating End -User Revenue by State - 2014 Technical Appendix S.1.3. Estimating End -User Revenue by State - 2014 Tables S.1.4. Contribution Base Revenues by Program - 2015 Low Income S.2.1. LI Support - by State S.2.2. LI Support - by Study Area S.2.3. LI Subscribers and Beneficiaries - by State S.2.4. ETCs Receiving Lifeline Support 201 5 S.2.5. 2013 and 2014 Updated Table 2.7 High Cost Claims S.3.1. HC Claims - by State S.3.2. HC Claims - by Study Area S.3.3. HC RoR Claims per Line - by Study Area S.3.4. HC Support Study Areas - 2015 S.3.5. 2016 Rate Floor Report S.3.6. Support Reduction Waiver Requests S.3.7. HC Rate Floor Reductions – by Study Area Disbursements S.3.8. HC Disbursements - by State S.3.9. HC Disbursements - by Study Area S.3.10. HC RoR Disbursements per Line - by Study Area S.3.11. HC Penalties Schools and Libraries S.4.1. SL Funds - by Service Type, State, and Funding Year S.4.2. SL Cumulative Funds - by Service Type and State S.4.3. SL Disbursements - by Service Provider Type S.4.4. SL Funds per Student - by State S.4.5. SL Funds - by Applicant Type, State, and Funding Year Rural Health Care S.5.1. RHC Funds - by State, Program, and Year S.5.2. RHC Disbursements - by Speed, Year, and State S.5.3. RHC Disbursements - by Speed, Year, and HCP Type S.5.4. RHC Disbursements per Person - by State S.5.5. RHC Funds - by HCP Type, Program, and Year Subscribership, Penetration, and S.6.1. Broadband Penetration by County and Congressional District Minutes of Use S.6.2. ILEC Interstate Switched Access Minutes of Use - by Study Area S.6.3. ILEC Interstate Switched Access Minutes of Use - by Tier S.6.4. ILEC Interstate Switched Access Minutes of Use - by State S.6.5. NECA Pool Results 6 Section 1 - Revenu es an d Contrib u tion s Overvi ew – Revenues and Contri but ions In response to the Telecommunications Act of 1996, the Commission established several universal service mechanisms to help ensure that all Americans have access to affordable telecommunications service. Congress mandated that these programs be supported by contributions from every telecommunications carrier that provides interstate telecommunications, and other providers of telecommunications if the Commission finds contributions from such providers to be in the public interest. The tables in this section provide 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 tables are based on information filed with the Commission in FCC Forms 499-A and 499-Q. To the extent that certain telecommunications industry revenues are not subject to contributions, such revenues may not be fully captured in these tables. Additional information about the revenues collected to support universal service can be found on the Commission’s website at http://www.fcc.gov/encyclopedia/contribution-methodology-administrative-filings and on USAC’ s website at http://www.usac.org/cont/default.aspx . Please note that that the information provided in this report is based upon Commission rules in effect in 2015. 7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Local Exchange and Federal/State USF Support 1 $66,506 $63,264 $62,790 $60,721 $56,839 $56,993 $52,718 $50,598 $49,016 $47,495 $46,515 Pay Telephone 2 924 659 470 379 268 197 136 362 359 327 286 Local Private Line 3 25,673 25,448 24,307 26,314 27,098 26,809 28,243 29,101 29,632 31,194 32,191 Other Local 4 3,331 3,884 3,227 3,321 3,531 3,032 3,145 2,408 1,746 1,456 1,493 Subscriber Line Charges 5 11,113 10,827 10,141 9,283 8,363 7,481 6,703 6,195 5,968 5,507 5,175 Access 6 11,822 11,392 10,543 9,776 8,778 8,336 7,368 6,759 6,384 5,016 4,836 Total Local Service and Pay ph on e Reven u es 119,368 115,474 111,478 109,795 104,876 102,847 98, 313 95, 422 93,105 90,994 90,495 Total Mobile Service Reven u es 7 104,489 112,442 117,939 120,934 114,625 111,643 107,393 105,183 98,160 86,998 75,263 Operator 8 6,631 5,577 5,874 5,444 4,340 3,585 3,162 3,092 3,064 2,785 2,351 Non-Operator Switched Toll 9 44,876 41,570 42,518 39,329 34,943 27,132 27,557 25,340 23,345 22,518 21,499 Long Distance Private Line 10 13,264 12,739 12,080 11,683 11,649 14,344 11,443 12,262 12,542 12,362 12,778 Other Long Distance 11 2,021 2,154 1,661 2,071 2,708 4,945 4,186 3,929 3,886 3,891 3,050 Total Toll Service Reven u es 66,792 62,039 62,133 58, 527 53,640 50,006 46,347 44,624 42,837 41,555 39,678 Total Local, Mobile, and Toll Revenu es 290,649 289, 954 291,549 289,255 273,141 264,496 252,052 245,229 234,102 219,547 205,436 7,273 7,314 7,902 8,110 7,911 8,662 8,986 10,012 8,986 9,084 9,041 Total Telecommu n ication s Reven u es 14 297,921 297,269 299, 451 297,365 281,052 273,158 261,038 255,242 243,088 228,631 214,477 86,764 101,061 131,615 151,494 158,859 173,228 214,538 224,487 251,892 268,260 301,121 Total Reported Reven u es $384,685 $398, 329 $431,066 $448, 860 $439, 911 $446,386 $475, 576 $479, 729 $494, 981 $496,892 $515,598 Universal Service Surcharges 12,13 Total Non-Telecommunications Revenues 15 Table 1.1 Filer Revenu es by Serv ice Type: 2005 -2015 ( i n Millions of Dollar s ) Local Service and Pay ph on e Reven u es Mobile Revenu es Toll Service Reven u es 8 Source: FCC Form 499-A based on filings as of September 19, 2016. 15 Dollar amounts are calculated using Line 418a from Form 499-A. 14 Subtotal includes surcharge. 13 Dollar amounts are calculated using Line 403a from Form 499-A. Note: Detail may not add to totals due to rounding. 3 Dollar amounts are calculated using the sum of Lines 305a and 406a from Form 499-A. 2 Dollar amounts are calculated using the sum of Lines 306a and 407a from Form 499-A. 1 Dollar amounts are calculated using the sum of Lines 303a, 308a (Federal and State USF Support Revenues), and Line 404a from Form 499-A. Fo o tno tes to Table 1.1 12 The 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. 11 Dollar amounts are calculated using the sum of Lines 313a, 314a, 416a, and 417a from Form 499-A. 10 Dollar amounts are calculated using the sum of Lines 312a and 415a from Form 499-A. 9 Dollar amounts are calculated using the sum of Lines 311a and 414a from Form 499-A. 8 Dollar amounts are calculated using the sum of Lines 310a, 411a, 412a, and 413a from Form 499-A. 7 Dollar amounts are calculated using the sum of Lines 309a, 409a, and 410a from Form 499-A. 6 Dollar amounts are calculated using Line 304a from Form 499-A. 5 Dollar amounts are calculated using Line 405a from Form 499-A. As of 2012, includes Access Recovery Charge (ARC). 4 Dollar amounts are calculated using the sum of Lines 307a and 408a from Form 499-A. 9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Local Service 3,4 $39,213 $39,392 $38,383 $39,200 $38,285 $37,955 $39,807 $39,783 $39,101 $37,974 $38,976 Mobile Service 5 6,334 5,187 5,360 5,630 4,284 5,006 5,512 5,587 5,384 5,334 5,025 Toll Service 6 16,892 15,101 16,093 13,843 13,003 15,549 11,921 11,425 10,911 10,472 9,955 Total Wholesa le Revenues 62,43 9 5 9 ,679 5 9 ,8 36 58,672 55,5 71 58,510 57,240 56,796 55,3 96 53,7 80 53,9 5 5 Intrastate 7 27,486 24,848 22,566 21,836 20,173 22,484 20,379 18,860 17,236 16,182 15,775 Interstate and International 8,9 34,953 34,831 37,270 36,837 35,399 36,026 36,861 37,936 38,160 37,598 38,180 56% 58 % 62% 63% 64% 62% 64% 67% 69% 70% 71% Local Service 3,10 $80,155 $76,082 $73,095 $70,598 $66,591 $64,892 $58,506 $55,639 $54,004 $53,020 $51,519 Mobile Service 11 98,156 107,255 112,579 115,304 110,341 106,637 101,881 99,596 92,776 81,664 70,238 Toll Service 12 49,900 46,938 46,040 44,681 40,637 34,457 34,426 33,198 31,927 31,083 29,724 Universal Service Surcharges 13 7,272 7,314 7,902 8,110 7,911 8,662 8,986 10,012 8,986 9,084 9,041 Total Retail Revenues $235,4 82 $237,5 8 9 $239,615 $238,693 $225,4 81 $214,648 $203,7 9 8 $198,4 46 $187,693 $174,8 51 $160,522 Intrastate 14 154,310 157,653 158,380 157,737 149,493 142,356 133,475 128,409 119,294 107,909 96,592 Interstate and International 1,8, 15 81,173 79,937 81,235 80,956 75,988 72,292 70,323 70,037 68,399 66,942 63,930 3 4 % 3 4 % 3 4 % 3 4 % 3 4 % 3 4 % 3 5 % 3 5 % 36% 38 % 40% Local Service 3 $119,368 $115,474 $111,478 $109,798 $104,876 $102,847 $98,313 $95,422 $93,105 $90,994 $90,495 Mobile Service 104,489 112,442 117,939 120,934 114,625 111,643 107,393 105,183 98,160 86,998 75,263 Toll Service 66,792 62,039 62,133 58,523 53,640 50,006 46,347 44,624 42,837 41,555 39,678 Universal Service Surcharges 13 7,272 7,314 7,902 8,110 7,911 8,662 8,986 10,012 8,986 9,084 9,041 Total Telecom m unica ti ons Revenues $297,921 $297,268 $299,4 51 $297,365 $281,052 $273,158 $261,038 $255,242 $243,088 $228,631 $214,4 7 7 Intrastate 181,796 182,501 180,946 179,573 169,666 164,840 153,854 147,269 136,530 124,091 112,367 Interstate and International 8 116,125 114,768 118,505 117,793 111,387 108,318 107,184 107,972 106,559 104,540 102,110 3 9 % 3 9 % 40% 40% 40% 40% 41% 42% 44 % 46% 48 % $86,764 $101,061 $131,615 $151,494 $158,859 $173,228 $214,538 $224,487 $251,892 $268,260 $301,121 $384,685 $398,329 $431,066 $448,859 $439,911 $446,386 $475,576 $479,729 $494,981 $496,892 $515,598Total Reported Revenues Table 1.2 Filer Reven u es 1 , Wh o lesa le vs. Retail: 2005-2015 ( in Million s of Dollar s) Wholesa le (Carrier's Carrier) Telecom m unica ti ons Revenues 2 Percenta g e Intersta te/Interna ti ona l Reta il (End User) Telecom m unica ti ons Revenues Percenta g e Intersta te/Interna ti ona l Tota l Telecom m unica ti ons Revenues (Wholesa le + Retail ) Percenta g e Intersta te/Interna ti ona l Tota l Non-Telecom m unica ti ons Revenues 10 1 Data include revenues for de minimis filers as well as for other carriers that are exempt from universal service contribution requirements. 3 Payphone revenues and interconnected Voice over Internet Protocol (VoIP) revenues are included with local service revenues in this table. 4 Dollar amounts are calculated using the sum of Lines 303a to 308a from Form 499-A. 5 Dollar amounts are calculated using Line 309a from Form 499-A. 6 Dollar amounts are calculated using the sum of Lines 310a to 314a from Form 499-A. 9 Dollar amounts are calculated using the sum of Lines 303d to 314d, plus the sum of Lines 303e to 314e from Form 499-A. 10 Dollar amounts are calculated using the sum of Lines 404a to 408a from Form 499-A. 11 Dollar amounts are calculated using the sum of Lines 409a and 410a from Form 499-A. 12 Dollar amounts are calculated using the sum of Lines 411a to 417a from Form 499-A. 13 Dollar amounts are calculated using Line 403a from Form 499-A. Surcharges are contribution amounts passed through to end users. Note: Detail may not add to totals due to rounding. F ootnote s to Table 1.2 2 Wholesale 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, government-only providers, international-only providers, 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 and international revenues. See Table 1.5 for further details on the USF contribution base. 8 Revenues from calls that both originate and terminate in foreign points are reported as end-user revenues and are included in this table, but are not included in the universal service 15 This line best represents the USF contribution base, which is further described in Table 1.5. Dollar amounts are calculated using the sum of Lines 403d to 417d, plus the sum of Lines 403e to 417e from Form 499-A. This is different from billed interstate and international end user revenue, which does not include international-to- international revenues and uncollected revenues. Source: FCC Form 499-A based on filings as of September 19, 2016. 7 Dollar 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. 14 Dollar 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. 11 Top 5 Affiliated Entities 1 Other Companies Total Local Exchange 2 $23,184 $17,194 $40,377 Pay Telephone 3 7 279 286 Local Private Line 4 22,140 10,051 32,191 Other Local 5 885 608 1,493 Federal and State USF Support 6 1,672 4,465 6,138 Subscriber Line Charges 7 2,913 2,262 5,175 Access 8 2,790 2,046 4,836 Total Local Service and Payphon e Revenues 53, 590 36,905 90,495 Total Mobile Service Revenues 9 67,257 8,006 75,263 Operator 10 174 2,177 2,351 Non-Operator Switched Toll 11 9,115 12,384 21,499 Long Distance Private Line 12 7,439 5,339 12,778 Other Long Distance 13 530 2,519 3,050 Total Toll Service Revenues 17,258 22,420 39,678 Total Local, Mobile, and Toll Revenues 138,105 67,331 205,436 Universal Service Surcharges 14 6,577 2,465 9,041 Total Telecommunications Revenues 144,682 69,795 214,477 Total Non-Telecommunications Revenues 15 200,440 100,680 301,121 Total Reported Revenues $345,122 $170,476 $515,598 15 Dollar amounts are calculated using Line 418a from Form 499-A. Toll Service Revenues Table 1.3 2015 Filer Reven u es by Serv ice Type: Top 5 Affiliated Entities v s. Other Compan ies (in Millions of Dollars) Local Service and Payphon e Revenues Mobile Revenues Note: Detail may not add to totals due to rounding. Source: FCC Form 499-A based on filings as of September 19, 2016. 2 Dollar amounts are calculated using the sum of Lines 303a and 404a from Form 499-A. 1 The "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 alphabetical order): AT&T Inc., CenturyLink, Deutsche Telekom AG, SoftBank Corporation, and Verizon Communications. Affiliated entity structure is as of year-end 2015. 3 Dollar amounts are calculated using the sum of Lines 306a and 407a from Form 499-A. 4 Dollar amounts are calculated using the sum of Lines 305a and 406a from Form 499-A. 5 Dollar amounts are calculated using the sum of Lines 307a and 408a from Form 499-A. 6 Dollar amounts are calculated using Line 308a from Form 499-A. 7 Dollar amounts are calculated using Line 405a from Form 499-A. As of 2012, includes Access Recovery Charge. 8 Dollar amounts are calculated using Line 304a from Form 499-A. 9 Dollar amounts are calculated using the sum of Lines 309a, 409a, and 410a from Form 499-A. 10 Dollar amounts are calculated using the sum of Lines 310a, 411a, 412a, and 413a from Form 499-A. 11 Dollar amounts are calculated using the sum of Lines 311a and 414a from Form 499-A. 12 Dollar amounts are calculated using the sum of Lines 312a and 415a from Form 499-A. 14 Dollar amounts are calculated using Line 403a from Form 499-A. 13 Dollar amounts are calculated using the sum of Lines 313a, 314a, 416a, and 417a from Form 499-A. 12 All Filer s LIRE Exemptio n 1 Total Less LIRE Retail (End User) Billed 3 $68,042 Retail Net of Uncollectibles 4 67,005 (2,868) 64,137 Implied Uncollectible Rate 1.5% Wholesale (Carrier's Carrier) Billed 5 53,148 Retail (End User) Billed 174,520 Total Revenue 227,668 Interstate and International Retail (End User) Billed 66,091 Retail (End User) Billed 64,691 Retail Net of Uncollectibles 64,066 (2,881) 61,185 Implied Uncollectible Rate 1.0% Wholesale (Carrier's Carrier) Billed 52,382 Retail (End User) Billed 160,970 Total Revenue 213,352 Interstate and International Retail (End User) Billed 63,447 Retail (End User) Billed 6 61,506 Retail Net of Uncollectibles 7,8 60,955 (2,446) 58,509 Implied Uncollectible Rate 0.90% Wholesale (Carrier's Carrier) Billed 9 25,393 Retail (End User) Billed 10 75,450 Total Revenue 100,843 Interstate and International Retail (End User) Billed 11 30,592 Table 1.4 Telec ommunic at ions Revenue Repor t e d on FCC Form 499- Q: 2014-2016 (in Millio ns of Do lla r s) Da ta f ro m FCC Form 49 9 -Q Proje c te d Revenue s f o r 2014 Interstate and International 2 H isto r ica l Revenue s Repor te d f o r 2014 Intrastate, Interstate, and International Projec te d Revenue s f o r 2015 Interstate and International H isto r ica l Revenue s Repor te d f o r 2015 Intrastate, Interstate, and International 8 Dollar amounts for projected LIRE exempt revenues are calculated using the sum of Lines 120b and 120c in the Form 499Q filings from those filers who are LIRE-exempt. 7 Dollar amounts for projected revenues collected from end users are calculated using the sum of Lines 120b and 120c from Form 499-Q. 6 Dollar amounts for projected revenues billed to end users are calculated using the sum of Lines 119b and 119c from Form 499-Q. Projec te d Revenue s f o r 2016 Interstate and International H isto r ica l Revenue s Repor te d f o r Fir st Ha lf of 2016 Intrastate, Interstate, and International 2 Projected intrastate revenues are not reported on FCC Form 499-Q. 3 Prior to 2014, line was referred to as "Billed to End Users". 4 Prior to 2014, line was referred to as "Collected from End Users". 5 Prior to 2014, line was referred to as "Billed to Resellers". 1 A provider receives the Limited International Revenue Exemption (LIRE) and its international revenues are 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. Affiliated filer entities who do not pass the 12% rule, but whose USF obligation exceeds its interstate revenue may be considered for the LIRE exemption on a case by case basis. See 47 C.F.R. § 54.706(c). In addition, filers that provide only international services are exempt regardless of services offered by affiliates. Source: FCC Form 499-Q. Note: Detail may not add to totals due to rounding. 11 Dollar 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. 10 Dollar amounts for historical revenues billed to retail is calculated using Line 116a from Form 499-Q. 9 Dollar amounts for historical revenues billed to wholesaler is calculated using Line 115a from Form 499-Q. 13 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues Subj ect to USF Contribu t ion Billed interstate and international retail (end-user) revenues (includes Universal Service Surcharge) [Line 403 to Line 417, parts (d) and (e)] $81,173 $79,937 $81,235 $80,956 $75,988 $72,292 $70,323 $70,037 $68,399 $66,942 $63,930 less revenues for international-to-international services [ Line 412(e) ] 873 708 886 862 576 469 452 444 589 673 362 less international revenues of international-only filers and international revenues that were excluded because of the LIRE Exemption 2 3,742 3,598 3,978 4,148 3,393 3,326 3,079 2,653 3,086 2,827 2,616 less interstate and other international revenues for filers who are de minimis or otherwise exempt from universal service support requirements 54 57 50 51 49 34 31 28 31 31 31 less uncollectible contribution base revenues [Line 422(d) + Line 422(e) ] 3 1,231 1,073 1,301 1,131 1,075 960 787 709 610 527 470 equal s $75,272 $74,499 $75,020 $74,764 $70,895 $67,503 $65,971 $66,203 $64,083 $62,884 $60,451 Table 1.5 USF Contribu t ion Base by Year 1 : 2005-2015 ( i n Millions of Dol l ars ) 3 Does not include uncollectible amounts associated with filers who are de minimis or LIRE exempt. Note: Detail may not add to totals due to rounding. Revisions have been made for 2007. Source: FCC Form 499-A based on filings as of September 19, 2016. 2 A provider receives the Limited International Revenue Exemption (LIRE) and its international revenues are excluded from the contribution base if the total amount of interstate end-user revenues fo 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. Affiliated filer entities who do not pass the 12% rule, but whose USF obligation exceeds its interstate revenue may request to be considered for the LIRE exemption on a case by case basis. See 47 C.F.R. § 54.706(c). In addition, filers that provide only international services are exempt regardless of services offered by affiliates. 1 This table shows the contribution base for the Universal Service Fund (USF), but the actual amounts used for determining contributions may differ due to the following factors. Adjustments are made by the Administrator to account for additional and corrected filings received. 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 Administrator 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 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. As a result of these factors, actual contribution bases have been based on different amounts than those shown. 14 Y e a r Quarter Factor 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 2013 First Quarter 16.1 Second Quarter 15.5 Third Quarter 15.1 Fourth Quarter 15.6 2014 First Quarter 16.4 Second Quarter 16.6 Third Quarter 15.7 Fourth Quarter 16.1 2015 First Quarter 16.8 Second Quarter 17.4 Third Quarter 17.1 Fourth Quarter 16.7 2016 First Quarter 18.2 Second Quarter 17.9 Third Quarter 17.9 Fourth Quarter 17.4 Table 1.6 Universa l Service Fun d Contrib u tio n Facto r 1 1 Carriers contribute based on projected, collected, end-user interstate and international telecommunications revenues. Source: Quarterly Public Notices on universal service contribution factors are in CC Docket 96-45. See http://www.fcc.gov/encyclopedia/contribution-factor-quarterly-filings-universal-service-fund-usf- management-support. 15 Preliminary 3 Fi rst Half 2016 Top 5 Affili ated Entiti es 2 $48,530 $46,870 $43,682 $20,738 Other Companies 19,870 20,072 20,247 9,854 Total $68,3 9 9 $66,942 $63,9 30 $30,592 3 Preliminary revenues are calculated using Line 116b plus Line 116c for each quarter in FCC Form 499-Q. Source: Data for 2013 are based on filings as of May 5, 2014. Data for 2014 are based on filings as of June 3, 2015. Data for 2015 are based on filings as of September 19, 2016. Data for 2016 are based on FCC Form 499-Q. Table 1.7 Bil l e d Inter state and Inter nati onal Retail Telecommuni c ati ons Revenue s 1 by Top 5 Affiliate d Entiti e s vs. Other Compani e s: 2013 - First Half 2016 (in Million s of Dollars) 1 Revenues for 2013-2015 are calculated as the sum of Lines 403d to 417d (interstate end user revenue) and 403e to 417e (international end user revenue). The method for calculating revenue figures has been adjusted from previous years. 2 The "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, and is determined as of each year-end affiliate structure. These companies for 2012 are (in alphabetical order): AT&T Inc., CenturyLink, Deutsche Telekom AG, Sprint Nextel Corporation, and Verizon Communications. These companies for 2013 - 2015 are (in alphabetical order): AT&T Inc., CenturyLink, Deutsche Telekom AG, SoftBank Corporation (which acquired Sprint Nextel Corporation in June 2013), and Verizon Communications. Note: Detail may not add to totals due to rounding. Figures include VoIP revenues. 2013 2014 2015 16 Intrastate Interstate and International Total % Intrastate % Interstate and International % Total Alabama $1,506 $931 $2,437 1.40 % 1.39 % 1.39 % Alaska 245 169 414 0.23 0.25 0.24 American Samoa 9 6 14 0.01 0.01 0.01 Arizona 2,045 1,358 3,403 1.89 2.03 1.95 Arkansas 917 578 1,495 0.85 0.86 0.86 California 13,114 7,216 20,329 12.15 10.78 11.63 Colorado 1,781 1,274 3,055 1.65 1.90 1.75 Connecticut 1,334 946 2,280 1.24 1.41 1.30 Delaware 345 247 591 0.32 0.37 0.34 District of Columbia 545 359 903 0.50 0.54 0.52 Florida 6,570 4,130 10,700 6.09 6.17 6.12 Georgia 3,319 2,098 5,417 3.08 3.13 3.10 Guam 50 35 85 0.05 0.05 0.05 Hawaii 466 328 794 0.43 0.49 0.45 Idaho 460 316 229 0.43 0.47 0.13 Illinois 4,384 2,691 7,074 4.06 4.02 4.05 Indiana 2,037 1,272 3,309 1.89 1.90 1.89 Iowa 959 638 1,597 0.89 0.95 0.91 Kansas 932 570 1,502 0.86 0.85 0.86 Kentucky 1,357 879 2,236 1.26 1.31 1.28 Louisiana 1,534 895 2,429 1.42 1.34 1.39 Maine 454 302 756 0.42 0.45 0.43 Maryland 2,229 1,458 3,687 2.07 2.18 2.11 Massachusetts 2,600 1,601 4,201 2.41 2.39 2.40 Michigan 3,279 1,914 5,193 3.04 2.86 2.97 Minnesota 1,910 1,221 3,131 1.77 1.82 1.79 Mississippi 848 530 1,378 0.79 0.79 0.79 Missouri 1,942 1,257 3,199 1.80 1.88 1.83 Montana 328 234 563 0.30 0.35 0.32 Nebraska 613 464 1,077 0.57 0.69 0.62 Nevada 934 582 1,516 0.87 0.87 0.87 New Hampshire 460 317 776 0.43 0.47 0.44 New Jersey 3,418 2,193 5,611 3.17 3.28 3.21 New Mexico 618 424 1,042 0.57 0.63 0.60 New York 7,554 4,444 11,997 7.00 6.64 6.86 North Carolina 3,115 1,980 5,095 2.89 2.96 2.91 North Dakota 245 169 414 0.23 0.25 0.24 N. Mariana Islands 12 7 19 0.01 0.01 0.01 Ohio 4,008 2,408 6,417 3.71 3.60 3.67 Oklahoma 1,201 717 1,918 1.11 1.07 1.10 Oregon 1,232 801 2,033 1.14 1.20 1.16 Pennsylvania 4,587 2,871 7,459 4.25 4.29 4.27 Puerto Rico 910 715 1,626 0.84 1.07 0.93 Rhode Island 364 222 586 0.34 0.33 0.33 South Carolina 1,507 972 2,479 1.40 1.45 1.42 South Dakota 283 189 471 0.26 0.28 0.27 Tennessee 2,125 1,289 3,413 1.97 1.93 1.95 Texas 8,284 4,797 13,082 7.68 7.17 7.48 Utah 800 548 1,348 0.74 0.82 0.77 Vermont 227 166 393 0.21 0.25 0.22 Virgin Islands 46 52 99 0.04 0.08 0.06 Virginia 2,967 1,955 4,922 2.75 2.92 2.81 Washington 2,278 1,436 3,713 2.11 2.14 2.12 West Virginia 588 452 1,041 0.55 0.68 0.60 Wisconsin 1,846 1,187 3,033 1.71 1.77 1.73 Wyoming 190 133 323 0.18 0.20 0.18 Total $107,909 $66,942 $174,851 100.00 % 100.00 % 100.00 % Table 1.8 End User Telec ommunic at ions Revenue by State : 2014 (in Millio ns of Do lla r s) Note: Figures may not add to totals due to rounding. Source: FCC/WCB staff estimates. For methodology end-user revenue per state, see the Technical Appendix at http://www.fcc.gov/encyclopedia/federal-state-joint-board-monitoring-reports. 17 Amount % of Total Amount % of Total Alabama $87,616 $22,662 $37,499 $2,634 $150,411 1.80 % $118,386 1.39 % $32,025 Alaska 195,911 13,206 57,810 97,921 364,848 4.36 21,534 0.25 343,314 American Samoa 2,998 109 1,809 0 4,916 0.06 716 0.01 4,200 Arizona 73,224 48,724 46,407 2,502 170,857 2.04 172,815 2.03 -1,958 Arkansas 115,936 12,440 21,853 9,971 160,200 1.91 73,510 0.86 86,690 California 134,263 223,252 302,143 22,466 682,124 8.15 917,956 10.78 -235,831 Colorado 66,943 9,729 20,278 3,845 100,795 1.20 162,013 1.90 -61,218 Connecticut 461 12,950 15,912 16 29,339 0.35 120,367 1.41 -91,028 Delaware 228 3,627 1,703 0 5,557 0.07 31,398 0.37 -25,841 District of Columbia 0 4,645 5,636 0 10,281 0.12 45,613 0.54 -35,332 Florida 64,604 86,593 68,089 896 220,182 2.63 525,405 6.17 -305,224 Georgia 118,016 51,891 68,992 9,321 248,220 2.96 266,928 3.13 -18,708 Guam 11,967 177 229 108 12,480 0.15 4,431 0.05 8,050 Hawaii 16,388 2,991 3,154 76 22,609 0.27 41,773 0.49 -19,164 Idaho 45,001 1,785 7,975 1,403 56,164 0.67 40,157 0.47 16,007 Illinois 108,785 55,686 86,682 6,037 257,190 3.07 342,293 4.02 -85,103 Indiana 113,919 22,139 51,656 3,623 191,337 2.29 161,843 1.90 29,494 Iowa 175,365 6,414 15,517 1,670 198,966 2.38 81,164 0.95 117,802 Kansas 173,296 7,223 18,052 2,578 201,150 2.40 72,518 0.85 128,632 Kentucky 147,437 26,601 32,065 4,428 210,531 2.51 111,785 1.31 98,746 Louisiana 94,385 25,746 47,747 1,814 169,692 2.03 113,806 1.34 55,886 Maine 28,953 4,837 7,441 2,814 44,046 0.53 38,404 0.45 5,641 Maryland 3,584 21,456 25,540 210 50,791 0.61 185,440 2.18 -134,650 Massachusetts 2,289 25,434 30,057 544 58,324 0.70 203,691 2.39 -145,367 Michigan 84,470 60,540 40,140 3,609 188,759 2.25 243,485 2.86 -54,726 Minnesota 172,381 11,347 29,450 3,666 216,844 2.59 155,384 1.82 61,461 Mississippi 185,395 17,055 23,282 6,921 232,654 2.78 67,411 0.79 165,242 Missouri 164,843 18,402 49,638 4,314 237,197 2.83 159,874 1.88 77,323 Montana 94,911 1,675 5,189 1,143 102,918 1.23 29,822 0.35 73,096 Nebraska 92,575 1,090 11,174 1,928 106,767 1.28 59,012 0.69 47,755 Nevada 21,799 14,413 5,989 808 43,009 0.51 74,006 0.87 -30,997 New Hampshire 12,414 2,004 3,037 266 17,721 0.21 40,306 0.47 -22,585 New Jersey 1,107 26,838 56,449 0 84,394 1.01 278,922 3.28 -194,528 New Mexico 83,418 17,831 24,114 4,962 130,325 1.56 53,919 0.63 76,406 New York 49,298 99,825 100,846 3,817 253,786 3.03 565,274 6.64 -311,489 North Carolina 80,638 36,732 78,161 6,668 202,198 2.42 251,923 2.96 -49,725 North Dakota 109,713 1,716 3,355 1,988 116,772 1.39 21,462 0.25 95,310 N. Mariana Islands 3,209 269 737 0 4,215 0.05 862 0.01 3,353 Ohio 84,698 62,168 75,440 2,696 225,002 2.69 306,331 3.60 -81,330 Oklahoma 129,511 113,521 49,259 9,562 301,853 3.61 91,217 1.07 210,636 Oregon 76,974 7,967 16,200 3,749 104,890 1.25 101,950 1.20 2,940 Pennsylvania 79,464 50,132 63,814 2,723 196,132 2.34 365,290 4.29 -169,157 Puerto Rico 114,776 60,601 21,912 0 197,289 2.36 90,998 1.07 106,292 Rhode Island 30 5,563 6,395 0 11,988 0.14 28,245 0.33 -16,257 South Carolina 108,351 24,818 39,443 1,903 174,515 2.08 123,669 1.45 50,847 South Dakota 90,180 1,011 3,112 1,811 96,114 1.15 24,017 0.28 72,097 Tennessee 91,221 34,349 39,556 4,186 169,312 2.02 163,931 1.93 5,382 Texas 274,574 80,707 201,931 17,812 575,025 6.87 610,277 7.17 -35,253 Utah 27,034 4,006 19,570 1,271 51,880 0.62 69,768 0.82 -17,888 Vermont 20,622 1,282 3,567 148 25,618 0.31 21,171 0.25 4,447 Virgin Islands 16,428 380 2,419 0 19,227 0.23 6,623 0.08 12,603 Virginia 81,780 19,629 35,764 4,558 141,731 1.69 248,655 2.92 -106,924 Washington 76,977 18,729 33,505 786 129,997 1.55 182,621 2.14 -52,624 West Virginia 53,573 8,749 18,993 2,098 83,413 1.00 57,562 0.68 25,851 Wisconsin 192,904 19,760 41,847 10,205 264,716 3.16 150,988 1.77 113,728 Wyoming 42,581 92 1,853 485 45,011 0.54 16,928 0.20 28,084 Total $4,499,415 $1,513,520 $2,080,387 $278,960 $8,372,282 100.00 % $8,515,850 100.00 % -$143,568 4 Net dollar flow is positive when payments from USF to carriers exceed contributions to USF. Total is negative because of administrative expenses. Hi g h-Cost Support Low -Incom e Support School s & Libra ri es Rura l Hea l th Care 2 Notes: Figures may not add due to rounding. USF is an abbreviation for the Universal Service Fund. 1 Data are from USAC. 2 Includes both the primary and pilot programs. Total 3 Contributions include administrative cost of approximately $144 million, as shown in USAC's Annual Report. Allocation of contributions among states is an FCC estimate. See the Technical Appendix at http://www.fcc.gov/encyclopedia/federal-state-joint-board-monitoring-reports. Table 1.9 Estim a ted Contri buti ons 3 Estim a ted Net Dol l a r Fl ow 4 Universal Service Support Mechan isms by State: 2015 (Annual Pay ment s and Contribu t ion s in Thousand s of Dollars) Payments f rom USF to Provi ders 18 Y ear H i gh-Cost Support Low -Incom e Support Rural Heal t h Care Schools and Librari es Total 2001 $2,602 $584 $8 $1,464 $4,659 2002 2,978 673 16 1,683 5,350 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 2012 4,147 2,189 155 2,218 8,710 2013 4,165 1,798 159 2,204 8,326 2014 3,733 1,660 193 2,269 7,855 2015 4,499 1,514 279 2,080 8,372 Source: Universal Service Administration Company (USAC). 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 Sections 4 and 5, 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. Table 1.10 Univers a l Servi ce Dis burs ements 2001-2015 (in Million s of Dollars) 19 First Quarter Second Quarter Third Quarter Fourth Quarter Full Year High Cost High Cost Loop Support $181.57 $181.59 $177.51 $170.85 $711.52 Interstate Common Line Support $241.00 $241.02 $250.15 $237.86 $970.03 CAF - Phase I Frozen Support 1 $43.54 $43.15 $43.14 $41.69 $171.52 Frozen Competitive ETC Support 2 $148.60 $149.11 $148.66 $147.21 $593.58 CAF - Intercarrier Compensation Support $106.35 $106.75 $107.00 $106.99 $427.09 Change to High-Cost Account 3 $7.26 $6.83 $0.38 $11.07 $25.54 CAF - Phase II Cost Model $396.40 $395.85 $397.41 $408.58 $1,598.24 Rural Broadband Experiments $0.28 $0.70 $0.75 $0.75 $2.48 Prior Period Adjustment $27.06 -$10.33 -$9.12 $5.77 $13.38 USAC Administrative Costs $10.58 $9.25 $11.46 $9.25 $40.54 Interest Income 4 -$2.65 -$2.56 -$3.30 -$3.92 -$12.43 Program Total $1,159.99 $1,121.36 $1,124.04 $1,136.10 $4,541.49 Low Income Lifeline Assistance $395.46 $400.47 $229.00 $391.62 $1,570.56 Link-Up $0.11 $0.11 $0.17 $0.08 $0.47 Prior Period Adjustment -$0.26 -$0.40 -$22.24 -$7.54 -$30.44 USAC Administrative Costs $5.60 $5.04 $6.06 $7.81 $24.51 Interest Income 4 -$0.16 -$0.11 -$0.10 -$0.14 -$0.51 Program Total $400.75 $405.11 $212.89 $391.83 $1,564.59 Rural Health Rural Health Care Support $72.79 $67.97 $72.19 $147.80 $360.75 Prior Period Adjustment $1.14 -$0.80 -$0.52 $0.32 $0.14 USAC Administrative Costs $3.10 $3.00 $3.24 $4.75 $14.09 Interest Income 4 -$0.42 -$0.44 -$0.59 -$0.61 -$2.06 Program Total $76.61 $69.73 $74.32 $152.26 $372.92 Schools & Librari es Schools and Libraries Support $603.45 $603.45 $603.45 $380.03 $2,190.38 Prior Period Adjustment $17.17 -$5.55 -$5.69 $1.36 $7.29 Interest Income 4 -$6.00 -$6.17 -$8.06 -$9.60 -$29.83 Administrative expenses $24.83 $23.46 $29.20 $31.61 $109.10 Program Total $639.45 $615.19 $618.90 $403.40 $2,276.94 Grand Total $2,276.80 $2,211.39 $2,030.15 $2,083.59 $8,755.94 Applicable interstate and international end-user revenues Reported contribution base revenues $14,928.53 $14,737.05 $14,555.86 $14,215.13 Circulatory Adjustment Amount carriers will contribute to USF in this quarter -$2,276.80 -$2,211.39 -$2,184.16 -$2,083.59 Subtotal $12,651.73 $12,525.66 $12,371.70 $12,131.54 Adjustment factor for uncollectibles 1.0% 1.0% 1.0% 1.0% Contribution base at the time the factor was calculated $12,525.21 $12,400.41 $12,247.98 $12,010.22 Contribution factor 18.2% 17.9% 17.9% 17.4% Contribution factor times contribution base $2,279.59 $2,219.67 $2,192.39 $2,089.78 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. Table 1.11 Universa l Service Progra m Requirem en ts and Contrib u tio n Facto rs f or 2016 (i n Millions of Dol l ar s) 4 Interest income is shown as negative because it is subtracted from expenses to yield the total. 1 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 CAF Phase I Frozen Support. USF/ICC Transformation Order , paras. 128-57. 3 In the USF/ICC Transformation Order , the Commission created the Connect America reserve to be used to manage fluctuations in high-cost demand. Id ., paras. 547- 56. Subsequently, in 2016, in the Rate-of-Return Reform Order, para. 60 n.130, the Commission directed USAC to eliminate the CAF reserve and to combine those funds with the high-cost account. 2 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. 20 H i gh-Cost Support Low -Incom e Support Rural Heal t h Care Schools and Librari es Total Per-H ousehol d Low Estimat e Per-H ousehol d High Estimat e 2011 $3.34 $1.25 $0.07 $1.75 $6.41 $2.88 $3.52 2012 3.28 1.74 0.09 1.74 6.85 3.08 3.77 2013 3.12 1.12 0.12 1.62 5.98 2.69 3.29 2014 3.05 1.13 0.16 1.60 5.94 2.67 3.26 2015 2.99 0.98 0.18 1.61 5.76 2.59 3.17 2016 2.96 1.02 0.24 1.48 5.70 2.56 3.13 Source: Universal service contributions in 2011 from Table 1.10 of the 2011 Monitoring Report and for 2012 from Table 1.9 of the 2012 Monitoring Report and for 2013 from Table 1.9 and for 2014 from Table 1.11 and for 2015 from Table 1.11. Inflation adjusted using CPI values reported for July of each year in Table 7.3. Household data as reported in Table 6.1 were used to calculate per household amount. 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 amount to be calculated accurately. FCC staff, using data from FCC Forms 477 and 499, Access filings with the FCC and a third party report, estimates that contributions based on services typically sold to residential users represent roughly one-half of overall contributions; the third party data source used in creating these estimates is the 2015 Telecommunications Industry Association (TIA) Market Forecast and Review. FCC staff believe that the residential portion of the total contribution is between 45% (low estimate) and 55% (high estimate). Table 1.12 Monthly Univers a l Servi ce Contri buti o ns per Hous eho l d Inflation Adjusted 2015 Dollars Total Contri but i ons Residenti al Contri but i ons 21 Section 2 – Lifelin e (Low Income) Overvi ew – Lifeli ne Program for Low-Incom e Consume rs Since 1985, the Universal Service Lifeline program has provided a discount on phone service for qualifying low-income consumers to ensure that all Americans have the opportunities and security that phone service brings, including being able to connect to jobs, family and emergency services. Recently, the Commission has made ensuring the availability of broadband service for low-income Americans a goal of the Lifeline program. In 2016, the Commission adopted the Lifeline Modernization Order, which sets forth a comprehensive reform and modernization of the Lifeline program. In that Order, the Commission included broadband as a supported service in the Lifeline program, set out minimum service standards for Lifeline-supported services to ensure maximum value for the universal service dollar, and established a National Eligibility Verifier to make independent subscriber eligibility determinations. Many of the reforms in the Lifeline Modernization Order take effect on December 2, 2016. The Lifeline program is available to eligible low-income consumers in every state, territory, commonwealth, and on Tribal lands. Consumers with proper proof of eligibility may be qualified to enroll. To participate in the program, consumers must have an income that is at or below 135% of the federal Poverty Guidelines or participate in a qualifying assistance program. The Lifeline program is administered by the Universal Service Administrative Company (USAC). Additional information about the Lifeline program can be found on the Commission ’s website at http://www.fcc.gov/lifeline and on USAC’ s website at http://www.usac.org/li/. Please note that the information provided in this report is based upon the program rules through September 15, 2016. 22 Table 2.1 Lifelin e Subscri b ers and Link Up Benefi ci a ri es Yea r Non-Triba l Triba l Total Non-Triba l Triba l 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 7,661 371 8,032 1,751 111 1,862 2010 9,883 382 10,265 2,510 126 2,636 2011 13,301 463 13,764 4,014 285 4,300 2012 16,405 761 17,166 1,228 180 1,408 2013 13,834 650 14,484 0 17 17 2014 12,944 503 13,447 0 29 29 2015 12,090 418 12,509 0 20 20 1 Subscriber data were not collected in 1997. Lifeline subscribership data were estimated by USAC. Source: Universal Service Administrative Company. Lifeline Link Up (in Thousa n d s ) Note: The Lifeline subscribers and Link Up beneficiaries represent USAC data for the time period January through December, including true-ups reported through August 2016. Data for 2009-2014 were revised. NA - Not available. 23 Table 2.2 Low-Inco me Claims ( i n Thousan d s of Doll ars) Tota l Yea r Genera l Addi ti ona l Triba l 2 TLS 3 PICC 4 Total Non-Triba l Triba l Tota l 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 695,015 80,914 8,634 0 784,563 30,682 6,578 37,260 821,823 2009 867,541 88,061 8,959 0 964,561 40,807 7,485 48,291 1,012,852 2010 1,125,630 92,877 22,214 0 1,240,721 67,296 9,798 77,094 1,317,815 2011 1,521,906 118,119 10,872 0 1,650,897 108,577 21,528 130,104 1,781,001 2012 1,919,838 210,393 6,646 0 2,136,878 34,770 11,940 46,710 2,183,588 2013 1,607,205 179,894 2,690 0 1,789,789 0 567 567 1,790,356 2014 1,492,371 137,366 0 0 1,629,737 0 640 640 1,630,377 2015 1,388,442 119,006 0 0 1,507,448 0 447 447 1,507,895 2 Tribal Lifeline subscribers also receive General support which is currently $9.25 per subscriber. This amount is not included in Additional Tribal support. 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. Lifel i ne Link Up Note: Data for 2009-2014 were updated to account for true-ups. 1 Effective in 1998, the federal Lifeline support mechanism was expanded so that a basic level of assistance would be provided in all states. Further, the basic level of federal support was increased in 1998. 24 Lifeli ne Link Up Genera l Additi o na l Triba l Non-Triba l Triba l Alabama $21,685 $99 $0 $0 $0 $21,784 Alaska 3,869 9,483 0 16 0 13,368 American Samoa 82 0 0 0 0 82 Arizona 32,507 16,015 0 205 0 48,728 Arkansas 11,874 2 0 0 0 11,876 California 229,207 32 0 0 0 229,239 Colorado 9,366 8 0 0 0 9,374 Connecticut 12,913 0 0 0 0 12,913 Delaware 3,593 0 0 0 0 3,593 District of Columbia 4,636 0 0 0 0 4,636 Florida 94,599 0 0 0 0 94,599 Georgia 50,438 0 0 0 0 50,438 Guam 177 0 0 0 0 177 Hawaii 2,627 555 0 0 0 3,181 Idaho 1,509 146 0 0 0 1,655 Illinois 53,765 0 0 0 0 53,765 Indiana 21,768 0 0 0 0 21,768 Iowa 6,364 14 0 0 0 6,378 Kansas 6,549 14 0 0 0 6,564 Kentucky 26,360 0 0 0 0 26,360 Louisiana 25,440 0 0 0 0 25,440 Maine 4,748 13 0 0 0 4,761 Maryland 21,696 0 0 0 0 21,696 Massachusetts 25,167 0 0 0 0 25,167 Michigan 59,681 50 0 0 0 59,732 Minnesota 10,551 981 0 0 0 11,532 Mississippi 16,453 18 0 0 0 16,471 Missouri 17,197 2 0 0 0 17,199 Montana 685 927 0 16 0 1,628 Nebraska 969 64 0 0 0 1,033 Nevada 13,716 452 0 0 0 14,168 New Hampshire 1,992 0 0 0 0 1,992 New Jersey 27,105 0 0 0 0 27,105 New Mexico 9,426 8,543 0 147 0 18,117 New York 98,989 0 0 0 0 98,989 North Carolina 35,743 36 0 0 0 35,778 North Dakota 965 787 0 9 0 1,761 Northern Mariana Islands 267 0 0 0 0 267 Ohio 59,530 0 0 0 0 59,530 Oklahoma 30,356 78,294 0 36 0 108,687 Oregon 7,461 24 0 0 0 7,485 Pennsylvania 50,235 0 0 0 0 50,235 Puerto Rico 61,434 0 0 0 0 61,434 Rhode Island 5,539 0 0 0 0 5,539 South Carolina 23,811 19 0 0 0 23,830 South Dakota 806 216 0 9 0 1,030 Tennessee 33,286 0 0 0 0 33,286 Texas 82,184 0 0 0 0 82,184 Utah 3,470 381 0 7 0 3,857 Vermont 1,282 0 0 0 0 1,282 Virgin Islands 419 0 0 0 0 419 Virginia 19,458 0 0 0 0 19,458 Washington 16,915 1,299 0 0 0 18,214 West Virginia 8,809 0 0 0 0 8,809 Wisconsin 18,685 527 0 1 0 19,214 Wyoming 83 5 0 0 0 88 Total $1,388,442 $119,006 $0 $447 $0 $1,507,895 (in Thousa n d s of Do lla rs) Table 2.3 Low-Inco me Claims by State: 2015 Source: Universal Service Administrative Company. Notes: These dollars represent submitted claims to USAC for the time period January 2015 through December 2015, including true-ups reported through August 2016. Tribal Lifeline subscribers also receive General support which is currently $9.25 per subscriber. This amount is not included in Tribal support. For Link Up, the payments and subscribers for the two categories of recipients are kept separate. TLS Total State or Jur i sdi c ti o n 25 Table 2.4 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 674,805 147,017 821,823 17.9 2009 642,644 370,208 1,012,852 36.6 2010 595,604 722,211 1,317,815 54.8 2011 532,227 1,248,774 1,781,001 70.1 2012 450,656 1,732,931 2,183,588 79.4 2013 296,046 1,494,311 1,790,356 83.5 2014 224,067 1,406,310 1,630,377 86.3 2015 165,768 1,342,127 1,507,895 89.0 Low-Income Claims Receiv ed by ILECs and CETCs (in Thousan d s of Doll ars ) Percent CETCs Source: Universal Service Administrative Company. 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. Data for 2009-2014 were updated to account for true-ups. 26 Rank Affiliat ed Entit y Name 1 Lifelin e Support Link Up Support Total Low -Income Support Percen t of Total Cumulat i ve Percen t of Total 1 América Móvil 2 $444,795 $0 $444,795 29.5% 29.5% 2 SoftBank Corp. 3 235,834 0 235,834 15.6 45.1 3 I-Wireless, LLC 98,015 0 98,015 6.5 51.6 4 Budget PrePay, Inc. 91,902 1 91,903 6.1 57.7 5 Telrite Corporation 89,892 0 89,892 6.0 63.7 6 AT&T Inc. 81,468 1 81,469 5.4 69.1 7 Assist Wireless, LLC 38,816 0 38,816 2.6 71.7 8 Quadrant Holdings Group LLC 37,169 0 37,169 2.5 74.1 9 Verizon Communications Inc. 33,879 0 33,879 2.2 76.4 10 TSC Acquisition Corporation 32,081 0 32,081 2.1 78.5 11 KDDI America, Inc. 29,487 0 29,487 2.0 80.5 12 Smith Bagley, Inc. 25,151 333 25,484 1.7 82.2 13 American Broadband and Telecommunications Company 23,659 0 23,659 1.6 83.7 14 Nexus Communications, Inc. 20,946 0 20,946 1.4 85.1 15 Blue Jay Wireless, LLC 18,983 0 18,983 1.3 86.4 16 TerraCom/YourTel America 18,925 0 18,925 1.3 87.6 17 Easy Telephone Services Company 17,043 0 17,043 1.1 88.8 18 CenturyLink, Inc. 16,695 0 16,695 1.1 89.9 19 Boomerang Wireless, LLC 13,008 0 13,008 0.9 90.7 20 True Wireless, LLC 11,838 0 11,838 0.8 91.5 21 General Communication, Inc. 11,514 3 11,517 0.8 92.3 22 Amvensys Telecom Holdings 10,106 0 10,106 0.7 92.9 23 Cox Communications, Inc. 8,598 0 8,598 0.6 93.5 24 PR Wireless LLC 7,265 0 7,265 0.5 94.0 25 Global Connection Inc. of America 7,051 0 7,051 0.5 94.5 26 Atlantic Tele-Network 6,296 0 6,296 0.4 94.9 27 PlatinumTel Communications LLC 5,996 0 5,996 0.4 95.3 28 Frontier Communications Corporation 5,981 1 5,981 0.4 95.7 29 Windstream Holdings, Inc. 4,657 0 4,657 0.3 96.0 30 Head Start Telecom, Inc. 4,247 0 4,247 0.3 96.3 Other Carriers 56,153 109 56,262 3.7 100.0 All Affiliated Entities $1,507,448 $447 $1,507,895 100.0% 100.0% Source: Universal Service Administrative Company. Table 2.5 Low-Income Claims by Program and by Affiliat ed Entit ies: 2015 (in Thousands of Dol l ar s ) 2 América Móvil owns TracFone Wireless. 3 SoftBank Corp. owns Sprint and Virgin Mobile USA. 1 Affiliated entities include all commonly-controlled or commonly-owned affiliates as of year-end 2015. 27 Month Tribal Lifeline Subscribers Non-Tribal Lifeline Subscribe r s Total Lifeline Subscribe r s January-12 549,258 15,908,572 16,457,830 February-12 575,873 16,238,084 16,813,957 March-12 662,135 16,534,059 17,196,194 April-12 722,144 16,848,841 17,570,985 May-12 782,131 17,317,869 18,100,000 June-12 815,448 17,320,169 18,135,617 July-12 846,735 16,864,804 17,711,539 August-12 843,864 16,515,337 17,359,201 September-12 842,986 16,233,523 17,076,509 October-12 831,010 16,019,555 16,850,565 November-12 858,420 15,780,413 16,638,833 December-12 804,793 15,276,872 16,081,665 January-13 687,500 13,303,601 13,991,101 February-13 717,866 12,944,960 13,662,826 March-13 740,955 13,107,807 13,848,762 April-13 717,869 13,230,187 13,948,056 May-13 708,103 13,602,507 14,310,610 June-13 695,699 14,016,431 14,712,130 July-13 628,293 14,220,097 14,848,390 August-13 611,198 14,445,164 15,056,362 September-13 576,375 14,522,851 15,099,226 October-13 578,042 14,498,009 15,076,051 November-13 577,593 14,291,510 14,869,103 December-13 555,234 13,825,919 14,381,153 January-14 534,297 13,440,283 13,974,580 February-14 534,514 13,500,445 14,034,959 March-14 521,050 13,451,544 13,972,594 April-14 518,193 13,353,226 13,871,419 May-14 496,124 13,195,365 13,691,489 June-14 497,065 12,960,680 13,457,745 July-14 501,207 12,768,490 13,269,697 August-14 499,504 12,760,942 13,260,446 September-14 491,794 12,850,377 13,342,171 October-14 490,887 12,738,688 13,229,575 November-14 481,829 12,377,023 12,858,852 December-14 463,711 11,937,157 12,400,868 January-15 435,069 11,185,755 11,620,824 February-15 428,917 11,232,909 11,661,826 March-15 426,328 11,365,933 11,792,261 April-15 421,320 11,528,461 11,949,781 May-15 412,426 11,807,905 12,220,331 June-15 417,384 12,025,179 12,442,563 July-15 421,869 12,323,680 12,745,549 August-15 415,091 12,544,240 12,959,331 September-15 416,913 12,709,537 13,126,450 October-15 411,406 12,815,696 13,227,102 November-15 405,301 12,786,852 13,192,153 December-15 407,253 12,756,858 13,164,111 January-16 390,984 12,320,964 12,711,948 February-16 391,732 12,293,281 12,685,013 March-16 397,651 12,369,189 12,766,840 April-16 372,256 12,494,820 12,867,076 May-16 375,290 12,533,397 12,908,687 June-16 299,965 12,473,765 12,773,730 Source: Univeral Service Administration Company. Table 2.6 Total Monthly Lif elin e Subscrib ers Since Ja n u a ry 2012 28 State As a res u lt of ETC recertification attemp t 1 As a res u lt of attemp t by State Admin is trator, ETC Access to Eligib ility Data, or USAC 2 Total Alabama 23 0 23 Alaska 7 0 8 American Samoa 0 0 0 Arizona 32 5 37 Arkansas 7 1 9 California 0 508 508 Colorado 12 0 12 Connecticut 6 1 7 Delaware 1 2 2 District of Columbia 1 2 3 Florida 31 23 54 Georgia 24 9 33 Guam 0 0 0 Hawaii 5 0 5 Idaho 3 0 3 Illinois 32 7 39 Indiana 14 3 17 Iowa 6 0 7 Kansas 5 1 6 Kentucky 20 0 20 Louisiana 17 2 19 Maine 5 0 5 Maryland 5 3 8 Massachusetts 10 11 21 Michigan 35 8 44 Minnesota 10 1 11 Mississippi 7 6 13 Missouri 30 2 32 Montana 1 0 2 Nebraska 0 1 1 Nevada 14 2 16 New Hampshire 1 1 1 New Jersey 4 5 9 New Mexico 5 2 7 New York 18 20 38 North Carolina 13 9 22 North Dakota 2 0 2 Northern Mariana Islands 0 0 0 Ohio 40 12 52 Oklahoma 33 5 39 Oregon 0 4 4 Pennsylvania 21 4 25 Puerto Rico 60 11 71 Rhode Island 5 1 6 South Carolina 16 7 22 South Dakota 1 0 1 Tennessee 9 5 14 Texas 25 19 43 Utah 2 1 3 Vermont 0 0 0 Virgin Islands 1 0 1 Virginia 7 7 14 Washington 6 4 9 West Virginia 6 0 6 Wisconsin 5 4 8 Wyoming 0 0 0 Total 643 721 1,364 Note: Table 2.7 has been updated for 2013 and 2014. See supplemental table S.2.5. 2013 and 2014 Updated Table 2.7.xlsx. Source: Universal Service Administrative Company. Table 2.7 Lifelin e De-Enrollmen ts or Sched u led to be De-Enrolled by State in 2015 (in Thousands) 1 Column J of FCC Form 555. 2 Column L of FCC Form 555. 29 All No Yes No Yes No Yes Alabama 133 62 195 # # # 134 62 195 Alaska 0 0 0 0 35 35 0 35 35 American Samoa 0 1 1 0 0 0 0 1 1 Arizona 197 40 238 6 50 55 203 90 293 Arkansas 88 19 107 0 # # 88 19 107 California 1,093 972 2,065 0 # # 1,093 972 2,065 Colorado 61 23 84 # 0 # 62 23 84 Connecticut 82 34 116 0 0 0 82 34 116 Delaware 24 8 32 0 0 0 24 8 32 District of Columbia 36 6 42 0 0 0 36 6 42 Florida 603 249 852 0 0 0 603 249 852 Georgia 395 60 454 0 0 0 395 60 454 Guam 0 2 2 0 0 0 0 2 2 Hawaii 19 3 22 2 # 2 20 3 24 Idaho 2 11 13 0 1 1 2 12 14 Illinois 472 13 484 0 0 0 472 13 484 Indiana 141 55 196 0 0 0 141 55 196 Iowa 34 23 57 # 0 # 34 23 57 Kansas 43 16 59 # # # 43 16 59 Kentucky 188 49 238 0 0 0 188 49 238 Louisiana 197 32 229 0 0 0 197 32 229 Maine 28 15 43 0 # # 28 15 43 Maryland 156 40 196 0 0 0 156 40 196 Massachusetts 138 89 227 0 0 0 138 89 227 Michigan 458 80 537 # # # 458 80 538 Minnesota 55 37 92 3 # 4 58 37 95 Mississippi 117 31 148 # # # 117 31 148 Missouri 127 28 155 0 # # 127 28 155 Montana 0 3 3 0 4 4 0 6 6 Nebraska 1 8 8 0 # # 1 8 9 Nevada 91 31 122 1 1 2 92 32 124 New Hampshire 13 5 18 0 0 0 13 5 18 New Jersey 125 119 244 0 0 0 125 119 244 New Mexico 27 28 55 0 30 30 27 58 85 New York 482 410 892 0 # # 482 410 892 North Carolina 200 122 322 0 # # 200 122 322 North Dakota 1 5 5 2 2 3 2 6 9 Northern Mariana Islands 0 2 2 0 0 0 0 2 2 Ohio 414 122 536 0 0 0 414 122 536 Oklahoma # 1 1 223 50 273 223 51 274 Oregon 20 47 67 0 # # 20 47 67 Pennsylvania 331 122 453 0 0 0 331 122 453 Puerto Rico 417 137 554 0 0 0 417 137 554 Rhode Island 32 18 50 0 0 0 32 18 50 South Carolina 166 48 214 # # # 166 48 215 South Dakota 2 4 6 0 1 1 2 5 7 Tennessee 218 82 300 0 0 0 218 82 300 Texas 495 245 740 0 # # 495 245 741 Utah 20 10 30 # 1 1 20 11 31 Vermont # 11 12 0 0 0 # 11 12 Virgin Islands 2 2 4 0 0 0 2 2 4 Virginia 113 62 175 0 0 0 113 62 175 Washington 68 80 148 2 2 4 70 82 152 West Virginia 69 10 79 0 0 0 69 10 79 Wisconsin 135 31 167 1 1 2 136 32 168 Wyoming # 1 1 0 # # # 1 1 Total 8,328 3,763 12,090 239 179 418 8,567 3,942 12,509 Source: Universal Service Administrative Company. Table 2.8 Non-Tribal Tribal F acilities -Bas ed F acilities -Bas ed F acilities -Bas ed Non-Facilities Bas ed Low-Income Subscrib ers by State in 2015 (in Thousands) # Indicates > 0 subscribers and less than 500 Total TotalTotal Non-facilities based carriers have either submitted a compliance plan with the FCC that they are not a facilities-based provider or have been approved to be a non-facilities-based provider by the FCC. Other carriers are assumed to be facilities-based. State 30 Section 3 – Connect America Fun d (High Cost) Overvi ew – Connect Ameri ca Fund Program The federal universal service Connect America Fund program (formerly High -Cost Support) is designed to ensure that consumers in rural, insular, and high-cost areas have access to modern communications networks capable of providing voice and broadband service, both fixed and mobile, at rates that are reasonably comparable to those in urban areas. The program fulfills this universal service goal by allowing eligible carriers who serve these areas to recover some of their costs from the federal Universal Service Fund (USF). As in the 2015 Report, all support dollar values in these tables are for claims1 as opposed to disbursements.2 Claim dollars are subject to true-ups. For example, claims for support in 2012 may be trued-up in 2014; such a true -up is reflected in the year supported (2012), not in the year the true-up was disbursed (2014). Additional information regarding the Connect America Fund program is available in the Appendix. Data on changes in local exchange carriers and High -Cost ILEC support data by study area are available at http://www.fcc.gov/encyclopedia/neca-usac-data-0. Please note that the information provided in this report is based upon the program rules through June 30, 2016. 1 A ³claim´ Ls WKe dLsWrLEXWLRQ RI IXQds 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 positive values with the possible exceptions of CAF Intercarrier Compensation (CAF ICC ) support and Connect America Cost Model (CACM) support. C$F ,CC FlaLPs FaQ Ee QeJaWLYe ZKeQ a sWXd\ area’s actual access recovery charge revenues in the prior two years substantially exceed the forecasted amount. Some CACM initial claims were negative as a result of true-ups when Frozen High Cost support exceeded CACM support. 2 $ ³dLsEXrsePeQW´ Ls WKe dLsWrLEXWLRQ RI IXQds 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. Some negative disbursements are penalties see WKe ILle ³+C 3eQalWLes´ LQ WKe 6XSSlePeQWar\ 0aWerLal . Penalties are not included in claims. 31 H i gh -Cost Loop Support Safet y Net Addit ive Support Safet y Valve Support H i gh -Cost Model Support Interst at e Common Line Support Interst at e Access Support Local Switch i n g Support ILEC Froz en High -Cost Support CETC Froz en High -Cost Support Remot e Alaska Support 1 CAF Phase I CAF ICC Mobilit y Fun d Phase I Support Connect America Cost Model Phase II Remot e Broad b an d Experimen t s Total Support 2009 $1,398 $51 $5 $329 $1,594 $566 $389 $0 $0 $0 $0 $0 $0 $0 $0 $4,332 2010 1,320 77 7 311 1,631 549 383 0 0 0 0 0 0 0 0 4,278 2011 1,213 97 9 291 1,640 521 370 0 0 0 0 0 0 0 0 4,142 2012 791 48 6 0 845 0 110 1,037 889 78 114 213 0 0 0 4,134 2013 767 31 6 0 871 0 0 1,034 629 79 307 430 74 0 0 4,229 2014 745 28 5 0 894 0 0 1,035 525 79 17 427 4 0 0 3,759 2015 718 20 5 0 920 0 0 641 514 78 0 421 16 1,159 8 4,500 2016* 696 12 5 0 938 0 0 167 510 79 0 428 26 1,662 3 4,527 Source: Universal Service Administrative Company. Table 3.1 Hig h-Cost Suppo rt Fund Claim His to ry ( i n Million s of Doll ars) * Estimate for 2016 extrapolated from claims through June 2016. Notes: Detail may not appear to add to totals due to rounding. CAF ICC stands for Connect America Fund Intercarrier Compensation Support. CAF Phase I is Phase I Incremental Support. 1 The 2012-2016 Remote Alaska Support is composed of competitive ETC support in Alaska that was frozen on a per-line basis in the USF/ICC Transformation Order. Further details are provided in Table 3.2. It also includes competitive ETC support for Standing Rock. 32 Compa nies Hi g h -Cost Loop Support Safety Net Additive Support Safety Valve Support Hi g h -Cost Model Support Inters ta te Common Line Support Inters ta te Acces s Support Loca l Switchi n g Support F roz en Hig h- Cost Support Remote Alaska Support 1 CAF Phase I CAF ICC Mobility F und Phase I Support Connect America Cost Model Phase II Remote B roa dba n d Experimen ts Tota l Support ILEC $1,007.3 $37.7 $4.9 $169.3 $1,069.4 $456.1 $288.4 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $3,033.0 CETC 390.6 13.6 0.5 159.4 524.2 109.9 100.3 0.0 0.0 0.0 0.0 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 0.0 0.0 0.0 0.0 4,331.5 ILEC 961.9 60.0 5.7 155.7 1,110.1 455.2 287.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3,035.9 CETC 358.2 17.1 1.2 155.0 521.1 94.2 95.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,242.1 Total 1,320.1 77.1 6.9 310.7 1,631.2 549.3 382.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4,278.0 ILEC 905.8 76.2 6.5 144.6 1,131.4 440.7 280.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2,985.8 CETC 307.4 21.0 2.5 146.4 508.3 80.5 89.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,155.7 Total 1,213.2 97.2 8.9 291.0 1,639.8 521.2 370.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4,141.5 ILEC 791.3 48.4 6.3 0.0 845.4 0.0 109.8 1,037.5 0.0 114.3 213.2 0.0 0.0 0.0 3,166.1 CETC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 888.9 78.5 0.0 0.0 0.0 0.0 0.0 967.4 Total 791.3 48.4 6.3 0.0 845.4 0.0 109.8 1,926.4 78.5 114.3 213.2 0.0 0.0 0.0 4,133.6 ILEC 767.3 31.4 6.1 0.0 870.8 0.0 0.0 1,033.8 0.0 307.2 430.2 0.0 0.0 0.0 3,446.9 CETC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 629.2 78.7 0.0 0.0 74.1 0.0 0.0 782.0 Total 767.3 31.4 6.1 0.0 870.8 0.0 0.0 1,663.0 78.7 307.2 430.2 74.1 0.0 0.0 4,229.0 ILEC 745.4 28.2 5.5 0.0 894.2 0.0 0.0 1,034.8 0.0 16.7 426.5 0.0 0.0 0.0 3,151.3 CETC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 525.5 78.6 0.0 0.0 3.6 0.0 0.0 607.6 Total 745.4 28.2 5.5 0.0 894.2 0.0 0.0 1,560.3 78.6 16.7 426.5 3.6 0.0 0.0 3,758.9 ILEC 717.9 20.4 4.6 0.0 920.1 0.0 0.0 641.1 0.0 0.0 420.8 0.0 1,159.2 0.0 3,884.1 CETC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 513.9 78.2 0.0 0.0 16.0 0.0 7.7 615.8 Total 717.9 20.4 4.6 0.0 920.1 0.0 0.0 1,155.0 78.2 0.0 420.8 16.0 1,159.2 7.7 4,499.9 ILEC 696.4 12.1 4.9 0.0 938.4 0.0 0.0 166.8 0.0 0.0 428.0 0.0 1,661.9 0.0 3,908.3 CETC 0.0 0.0 0.0 0.0 0.0 0.0 0.0 510.4 79.3 0.0 0.0 26.1 0.0 3.0 618.9 Total 696.4 12.1 4.9 0.0 938.4 0.0 0.0 677.2 79.3 0.0 428.0 26.1 1,661.9 3.0 4,527.2 2011 2009 Table 3.2 Hig h-Cost Suppor t Fund Claim His t or y - ILECs and CETCs (in Millions of Dolla rs ) 2010 CETCs are competitive eligible telecommunications carriers. * Estimate for 2016 extrapolated from claims through June 2016. 1 The 2012-2015 Remote Alaska Support is support that was frozen on a per-line basis for 11 study areas in Alaska and one in North Dakoda. In 2011, the Commission decided that carriers in these areas would have their support per line frozen. Consequently, the sum of CETC support for these mechanisms in each of the years 2012-2015 represents their per-line frozen high-cost support. Details on support for these areas may be found in the Supplementary Material file “High Cost Claims – by Study Area”. Source: Universal Service Administrative Company. 2012 2013 2014 2015 2016* Notes: Details may not appear to add to totals due to rounding. ILECs are incumbent local exchange carriers. CAF ICC refers to Connect America Fund Intercarrier Compensation Support. CAF Phase I is Phase I Incremental Support. 33 Regula to r y Type H ig h-Cost Loop Suppo r t Saf e ty Net Additive Suppo r t Saf e ty Valve Suppo r t H ig h-Cost Model Suppo r t Inte r s ta te Commo n Line Suppo r t Inte r s ta te Access Suppo r t Loca l Switc hing Suppo r t Fr o z e n Hig h- Cost Suppo r t CAF Phase I CAF ICC Connec t Americ a Cost Model Phase II Total Suppo r t Price Cap $209.1 $8.4 $0.2 $169.3 $292.8 $456.1 $48.1 $0.0 $0.0 $0.0 $0.0 $1,184.0 Rate-of-Return 798.2 29.3 4.7 0.0 776.6 0.0 240.2 0.0 0.0 0.0 0.0 1,849.1 Total 1,007.3 37.7 4.9 169.3 1,069.4 456.1 288.4 0.0 0.0 0.0 0.0 3,033.0 Price Cap 145.1 10.0 0.0 155.7 283.0 455.2 59.5 0.0 0.0 0.0 0.0 1,108.4 Rate-of-Return 816.8 50.0 5.7 0.0 827.1 0.0 227.8 0.0 0.0 0.0 0.0 1,927.4 Total 961.9 60.0 5.7 155.7 1,110.1 455.2 287.3 0.0 0.0 0.0 0.0 3,035.9 Price Cap 99.8 10.7 0.0 144.6 272.6 440.7 60.8 0.0 0.0 0.0 0.0 1,029.2 Rate-of-Return 806.0 65.5 6.5 0.0 858.9 0.0 219.7 0.0 0.0 0.0 0.0 1,956.6 Total 905.8 76.2 6.5 144.6 1,131.4 440.7 280.5 0.0 0.0 0.0 0.0 2,985.8 Price Cap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,037.5 114.3 44.2 0.0 1,196.0 Rate-of-Return 791.3 48.4 6.3 0.0 845.4 0.0 109.8 0.0 0.0 169.0 0.0 1,970.1 Total 791.3 48.4 6.3 0.0 845.4 0.0 109.8 1,037.5 114.3 213.2 0.0 3,166.1 Price Cap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,033.8 307.2 86.2 0.0 1,427.3 Rate-of-Return 767.3 31.4 6.1 0.0 870.8 0.0 0.0 0.0 0.0 344.0 0.0 2,019.6 Total 767.3 31.4 6.1 0.0 870.8 0.0 0.0 1,033.8 307.2 430.2 0.0 3,446.9 Price Cap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,034.8 16.7 68.1 0.0 1,119.6 Rate-of-Return 745.4 28.2 5.5 0.0 894.2 0.0 0.0 0.0 0.0 358.4 0.0 2,031.7 Total 745.4 28.2 5.5 0.0 894.2 0.0 0.0 1,034.8 16.7 426.5 0.0 3,151.3 Price Cap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 641.1 0.0 44.4 1,159.2 1,844.7 Rate-of-Return 717.9 20.4 4.6 0.0 920.1 0.0 0.0 0.0 0.0 376.4 0.0 2,039.4 Total 717.9 20.4 4.6 0.0 920.1 0.0 0.0 641.1 0.0 420.8 1,159.2 3,884.1 Price Cap 0.0 0.0 0.0 0.0 0.0 0.0 0.0 166.8 0.0 38.2 1,661.9 1,866.8 Rate-of-Return 696.4 12.1 4.9 0.0 938.4 0.0 0.0 0.0 0.0 389.8 0.0 2,041.5 Total 696.4 12.1 4.9 0.0 938.4 0.0 0.0 166.8 0.0 428.0 1,661.9 3,908.3 Table 3.3 High -Cost Support Fund Claim History - Price Cap and Rate-of -Return ILECs (in Millions of Doll ars) * Estimate for 2016 extrapolated from claims through June 2016. Claims for CAF Phase I Incremental Support and Mobility Fund Phase I Support were not extrapolated. Source: Universal Service Administrative Company. 2015 2016* 2012 2013 2014 2009 2010 2011 Notes: Details may not appear to add to totals due to rounding. ILECs are incumbent local exchange carriers. CAF ICC refers to Connect America Fund Intercarrier Compensation Fund. CAF Phase I is Phase I Incremental Support. Price cap carriers include their Rate-of-Return affiliates. The designation of price cap versus Rate-of-Return carriers for 2009-2012 is based on their regulatory status in 2012. 34 State High -Cost Loop Support Safety Net Additive Support Safety Valve Support Interstate Common Line Support Frozen High- Cost Support 1 Remote Alask a Support* CAF ICC Mobility Fund Phase I Support Connect America Cost Model Phase II Rural Broad b an d Experimen ts Total Support CETC Share of Support Alabama $8,610 $404 $0 $14,767 $31,126 $0 $11,608 $0 $20,539 $0 $87,054 5.8 % Alaska 21,516 58 0 24,965 47,034 77,980 10,689 13,805 0 0 196,046 60.8 American Samoa 0 0 0 1,159 1,619 0 283 0 0 0 3,062 52.9 Arizona 23,308 281 0 15,236 13,383 0 6,010 0 15,455 0 73,672 7.1 Arkansas 17,547 429 0 16,197 25,412 0 10,224 0 46,040 0 115,850 2.5 California 24,765 165 0 21,248 23,961 0 3,011 0 61,291 0 134,441 0.0 Colorado 12,703 220 0 8,771 28,792 0 1,853 0 14,533 0 66,872 9.0 Connecticut 0 0 0 0 193 0 0 0 268 0 461 0.0 Delaware 0 0 0 0 228 0 0 0 0 0 228 0.0 District of Columbia 0 0 0 0 0 0 0 0 0 0 0 0.0 Florida 1,488 94 0 4,049 34,154 0 8,072 0 16,872 0 64,729 4.9 Georgia 17,707 1,179 0 29,798 18,384 0 16,267 0 35,137 0 118,472 0.2 Guam 0 0 0 5,930 5,405 0 110 0 0 0 11,445 47.2 Hawaii 3,483 29 0 1,915 6,312 0 2,714 0 3,276 0 17,730 29.1 Idaho 7,960 0 0 9,816 10,297 0 5,563 0 11,485 137 45,257 9.3 Illinois 16,403 817 0 20,530 17,923 0 10,250 0 40,883 1,600 108,407 9.4 Indiana 28,899 1,063 0 27,090 7,379 0 5,802 0 43,807 0 114,040 0.1 Iowa 25,701 3,104 216 42,477 35,559 0 17,889 0 47,671 2,067 174,686 18.7 Kansas 60,984 629 4,316 44,110 25,533 0 8,439 0 30,853 295 175,158 11.8 Kentucky 20,311 178 0 28,657 30,834 0 27,683 0 39,994 0 147,657 11.0 Louisiana 11,299 32 0 11,723 42,645 0 2,086 0 30,150 0 97,935 25.9 Maine 561 44 0 6,092 11,233 0 2,792 0 8,717 0 29,438 22.6 Maryland 0 0 0 1,046 2,303 0 191 0 0 0 3,540 0.0 Massachusetts 0 0 0 212 1,467 0 611 0 0 0 2,291 0.0 Michigan 3,756 0 0 10,656 9,450 0 6,019 0 55,470 0 85,352 5.2 Minnesota 22,140 1,760 0 41,683 10,844 0 18,686 0 80,404 85 175,603 0.8 Mississippi 4,492 30 0 7,088 138,131 0 6,217 0 29,985 0 185,944 47.0 Missouri 23,958 296 0 24,725 25,701 0 13,664 0 76,155 0 164,499 6.1 Montana 34,962 542 0 32,174 13,086 0 5,787 9 8,370 0 94,931 5.5 Nebraska 21,893 881 0 22,296 16,106 0 11,954 357 17,929 1,187 92,602 13.4 Nevada 3,325 0 0 5,226 4,224 0 2,373 0 3,016 0 18,165 6.8 New Hampshire 109 0 0 5,282 961 0 2,866 0 3,546 0 12,765 1.0 New Jersey 0 0 0 259 151 0 344 0 300 0 1,053 0.0 New Mexico 30,819 338 0 19,132 12,147 0 5,325 690 12,621 0 81,072 6.8 New York 1,251 0 0 10,663 14,619 0 6,366 0 16,443 0 49,341 3.0 Table 3. 4 H i gh -Cost Support Fu n d Claims - by Mechan i s m an d State: 2015 (in Thousan d s of Dollars) 35 State High -Cost Loop Support Safety Net Additive Support Safety Valve Support Interstate Common Line Support Frozen High- Cost Support 1 Remote Alask a Support* CAF ICC Mobility Fund Phase I Support Connect America Cost Model Phase II Rural Broad b an d Experimen ts Total Support CETC Share of Support Table 3. 4 H i gh -Cost Support Fu n d Claims - by Mechan i s m an d State: 2015 (in Thousan d s of Dollars) North Carolina 3,882 728 0 23,889 19,629 0 16,617 0 15,028 0 79,774 2.2 North Dakota 25,763 749 21 37,224 25,945 146 11,312 351 5,423 433 107,366 24.8 Northern Mariana Island 0 0 0 0 980 0 0 0 2,229 0 3,209 18.1 Ohio 4,667 104 0 10,442 6,506 0 11,112 0 52,503 0 85,334 0.0 Oklahoma 35,218 40 0 37,610 33,732 0 17,620 0 5,097 80 129,397 20.2 Oregon 14,345 284 0 16,569 21,608 0 9,329 0 14,362 740 77,237 15.7 Pennsylvania 319 45 0 7,217 33,568 0 11,757 0 26,787 0 79,693 0.2 Puerto Rico 0 0 0 0 115,237 0 0 0 0 0 115,237 68.7 Rhode Island 0 0 0 0 30 0 0 0 0 0 30 0.0 South Carolina 20,305 1,254 0 47,661 7,402 0 19,205 0 12,606 0 108,434 1.5 South Dakota 29,951 704 0 33,475 2,411 44 12,829 756 8,517 0 88,688 2.9 Tennessee 9,240 681 0 33,498 9,132 0 10,425 0 26,615 0 89,591 0.8 Texas 78,535 2,197 0 63,269 41,887 0 13,050 0 71,241 1,111 271,290 4.0 Utah 4,596 41 0 13,973 1,466 0 4,833 0 3,064 0 27,973 0.3 Vermont 386 0 0 6,245 5,015 0 4,752 0 3,774 0 20,173 0.0 Virgin Islands 0 0 0 0 16,428 0 0 0 0 0 16,428 0.4 Virginia 1,129 0 0 10,386 42,400 0 18,678 0 9,862 4 82,459 1.8 Washington 5,333 40 0 9,288 33,544 0 6,644 0 22,516 0 77,364 23.9 West Virginia 1,418 81 0 3,307 20,712 0 1,978 0 25,768 0 53,264 16.3 Wisconsin 22,984 770 0 40,563 32,026 0 15,063 0 82,636 0 194,042 9.9 Wyoming 9,889 94 0 10,526 18,708 0 3,878 0 0 0 43,095 13.5 Total $717,913 $20,383 $4,553 $920,115 $1,154,965 $78,170 $420,830 $15,968 $1,159,240 $7,739 $4,499,876 13.7 % Notes: CAF ICC refers to Connect America Fund Intercarrier Compensation Support. Remote Alaska Support also includes support to Standing Rock. * The Remote Alaska Support consists of CETC support that was frozen on a per-line basis for 11 study areas in Alaska and for Standing Rock in North Dakoda in the USF/ICC Transformation Order. Source: Universal Service Administrative Company. 1 Includes Phase I Frozen Support for price cap carriers and for competitive ETCs. 36 Rank Affilia t e Name 1 2013 2014 2015 Total CETC Share of 3 -Yea r Total 2 1 AT&T Inc. $465,891 $347,001 $614,947 $1,427,839 36.7 % 2 CenturyLink, Inc. 399,214 347,934 573,366 1,320,515 0.0 3 Frontier Communications Corporation 230,598 162,233 318,221 711,052 0.0 4 Windstream Holdings, Inc. 229,806 163,623 232,016 625,446 0.0 5 Telephone and Data Systems, Inc. 207,306 180,489 178,676 566,470 55.4 6 Verizon Communications Inc. 3 140,517 133,801 116,342 390,659 18.5 7 América Móvil 99,151 63,077 63,077 225,306 38.0 8 General Communication, Inc. 53,310 54,710 83,100 191,119 89.5 9 Telapex, Inc. 4 61,241 51,987 51,572 164,801 88.8 10 FairPoint Communications, Inc. 45,929 43,800 51,996 141,724 0.0 11 Consolidated Communications, Inc. 36,704 39,587 38,987 115,278 0.0 12 Alaska Communications Systems Holdings, Inc. 40,681 38,935 24,404 104,020 43.0 13 Rural Telephone Service/Golden Belt 37,376 31,442 27,753 96,571 37.0 14 Deutsche Telekom AG 34,902 21,473 20,887 77,263 100.0 15 Smithville Holding Company, Inc. 24,960 24,533 23,428 72,921 0.0 Table 3.5 Annua l Hig h-Cost Claims by Yea r-End 2015 Affilia te Structure: 2013-2015 1 These responses refer to “affiliate name” rather than “holding company” so as to include all entities under common ownership or control, to the extent this information is readily available to the Commission. In most cases, the “affiliate name” is reported by the entity or entities in FCC Form 477. Carriers appear on this list if they are in the top 10 for any of the presented years. 4 Telapex, Inc. owns C Spire Wireless. Source: Universal Service Administrative Company. 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. 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), aff’d In re: FCC 11-161 , 753 F.3d 1015 (10th Cir. 2014). 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. This phase down of support for competitive ETCs was halted at 40 percent on June 30, 2014 under the terms adopted in the USF/ICC Transformation Order because the Mobility Fund Phase II is not operational. See id. at 17832, para. 519. ( in Thousa nds of Do lla r s) 37 Rank Affilia te Name 1 Hig h-Cost Loop Suppo r t Saf e ty Net Additive Suppo r t Saf e ty Valve Suppo r t Inte r s ta te Access Suppo r t CAF ICC CAF Phase 1 Fro z e n CETC Fro z e n Hig h-Cost Suppo r t Remo te Alask a Suppo r t Mobility Fund Phase I Suppo r t Conne c t Americ a Cost Model Phase II Total Suppo r t CETC Share of Total Suppo r t 2 1 AT&T Inc. $0 $0 $0 $0 $0 $101,190 $160,562 $0 $0 $353,195 $614,947 26.1 % 2 CenturyLink, Inc. 0 0 0 0 0 209,331 0 0 0 364,035 573,366 0.0 3 Frontier Communications Corporation 0 0 0 0 0 64,889 0 0 0 253,332 318,221 0.0 4 Windstream Holdings, Inc. 0 0 0 0 35,536 52,344 42 0 0 144,094 232,016 0.0 5 Telephone and Data Systems, Inc. 2,396 644 0 50,685 29,467 0 95,483 0 0 0 178,676 53.4 6 Verizon Communications Inc. 0 0 0 0 0 94,435 21,907 0 0 0 116,342 18.8 7 General Communication, Inc. 1,550 0 0 3,061 2,778 0 10,291 51,615 13,805 0 83,100 91.1 8 América Móvil 0 0 0 0 0 36,054 27,023 0 0 0 63,077 42.8 9 FairPoint Communications, Inc. 0 0 0 0 4,491 23,438 0 0 0 24,067 51,996 0.0 10 Telapex, Inc. 1,671 0 0 2,454 1,541 0 45,906 0 0 0 51,572 89.0 11 Consolidated Communications, Inc. 0 0 0 0 4,387 21,368 0 0 0 13,232 38,987 0.0 12 Rural Telephone Service/Golden Belt 7,254 0 1,982 5,949 1,274 0 11,295 0 0 0 27,753 40.7 13 Golden West Telecommunications Cooperative, Inc. 9,906 33 0 11,654 3,205 0 0 0 0 0 24,798 0.0 14 Triangle Telephone Cooperative Assn., Inc. 13,861 425 0 9,321 847 0 0 0 0 0 24,455 0.0 15 Alaska Communications Systems Holdings, Inc. 0 0 0 0 0 19,683 996 3,725 0 0 24,404 19.3 16 Smithville Holding Company, Inc. 13,113 855 0 8,411 1,049 0 0 0 0 0 23,428 0.0 17 Valley Telephone Cooperative, Inc. 12,397 172 0 7,681 1,367 0 28 0 0 0 21,645 0.1 18 Deutsche Telekom AG 0 0 0 0 0 0 20,887 0 0 0 20,887 100.0 19 Nemont Telephone Cooperative, Inc. 7,750 0 0 7,757 1,218 0 4,114 0 9 0 20,848 19.8 20 Copper Valley Telephone Cooperative 7,504 0 0 3,175 462 0 0 9,129 0 0 20,271 45.0 21 Comporium, Inc. 2,706 428 0 11,453 4,481 0 0 0 0 0 19,068 0.0 22 Hargray Communications Group, Inc. 5,621 0 0 8,984 4,374 0 0 0 0 0 18,980 0.0 23 Lumos Networks Corp. 625 0 0 3,230 14,238 0 740 0 0 0 18,833 3.9 24 Farmers Telephone Cooperative, Inc. (SC) 5,142 0 0 8,059 3,485 0 1,579 0 0 0 18,265 8.6 25 Pioneer Telephone Cooperative (OK) 0 0 0 5,252 4,090 0 8,870 0 0 0 18,213 48.7 Source: Universal Service Administrative Company. Table 3.6 High-Cost Suppor t Fund Claims by Affiliat e : 2015 (in Thousands of Dollar s) 1 These responses refer to “affiliate name” rather than “holding company” so as to include all entities under common ownership or control, to the extent this information is readily available to the Commission. In most cases, the “affiliate name” is reported by the entity or entities in FCC Form 477. Notes: Details may not add to totals due to rounding. CAF ICC refers to Connect America Fund Intercarrier Compensation Support. Remote Alaska Support also includes support provided to Standing Rock. 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), aff’d In re: FCC 11-16 1 , 753 F.3d 1015 (10th Cir. 2014). 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. This phase down of support for competitive ETCs was halted at 40 percent on June 30, 2014 under the terms adopted in the USF/ICC Transformation Order because the Mobility Fund Phase II is not operational. See id. at 17832, para. 519. 38 Section 4 – E-rate (Schools and Libraries) Overvi ew – School s and Librari es Program The Schools and Libraries universal service support program, commonly known as the E -rate program, helps schools and libraries obtain affordable broadband Internet access, internal network connections, and telecommunications services. Eligible schools, school districts and libraries may apply individua lly or as part of a consortium. Funding may be requested under two categories of service: category one services to a school or library (telecommunications, telecommunications services and Internet access), and category two services that deliver Internet access within schools and libraries (internal connections, basic maintenance of internal connections, and managed internal broadband services). Discounts for support depend on the level of poverty and whether the school or library is located in an urban or rural area. The discounts range from 20 percent to 90 percent of the costs of eligible services. E- rate program funding is based on demand up to an annual Commission-established cap of about $ 3.9 billion. The E -rate program is administered by the Universal Service Administrative Company (USAC) under the direction of the FCC. Specifically, USAC is responsible for processing the applications for support, confirming eligibility, and reimbursing service providers and eligible schools and libraries for the discounted services. USAC also ensures that the applicants and service providers comply with the E -rate rules and procedures established by the Commission. Additional information about the Schools and Library program can be found on the Commission’s website at http://www.fcc.gov/encyclopedia/e-rate-schools-libraries-usf-program and on 86$C’s ZeEsLWe aW http://www.usac.org/sl/. 39 Schools and Libra r ie s Funding Commitm e nt s and Disbur s e m e nt s by Applic a nt Type and Yea r (in Thousands of Dollars) Total School Statewide Other Total School Statewide Other Commitments Libraries 1 Schools Districts Contract 2 Consortia Disbursements Libraries 1 Schools Districts Contract 2 Consortia 1998 $1,699,125 $65,988 $110,701 $1,288,421 $0 $234,015 $1,399,098 $49,883 $83,343 $1,069,783 $0 $196,090 1999 2,148,000 66,172 180,741 1,598,385 0 302,701 1,650,004 47,457 140,131 1,265,896 0 196,521 2000 2,078,777 65,879 110,857 1,692,230 0 209,810 1,647,014 43,566 88,514 1,384,113 0 130,821 2001 2,176,505 57,824 164,598 1,739,594 0 214,490 1,695,758 41,940 117,487 1,400,664 0 135,668 2002 2,122,797 62,941 167,229 1,642,692 0 249,935 1,598,198 42,697 106,197 1,286,705 0 162,599 2003 2,531,004 63,310 200,601 2,005,192 0 261,902 1,940,112 44,325 136,108 1,587,204 0 172,475 2004 2,036,269 54,303 158,787 1,568,231 0 254,947 1,536,420 39,723 107,113 1,210,052 0 179,532 2005 2,022,058 54,435 153,398 1,599,242 0 214,983 1,625,555 48,598 111,132 1,287,991 0 177,833 2006 1,951,888 59,711 129,449 1,502,064 0 260,664 1,568,995 46,138 96,295 1,222,975 0 203,587 2007 2,359,180 60,628 174,825 1,880,403 0 243,324 1,955,781 47,964 135,913 1,563,637 0 208,267 2008 2,384,128 75,771 151,848 1,897,118 0 259,391 1,915,581 58,114 113,552 1,522,479 0 221,436 2009 2,820,130 84,709 195,655 2,269,756 0 270,010 2,305,057 69,214 151,255 1,858,098 0 226,490 2010 3,004,552 91,104 211,037 2,413,044 0 289,367 2,419,868 71,890 156,900 1,950,956 0 240,121 2011 2,674,495 90,910 218,072 2,045,344 0 320,170 2,119,954 73,149 161,634 1,636,183 0 248,988 2012 2,960,119 96,432 289,148 2,267,904 12,130 294,505 2,244,959 77,667 204,669 1,717,752 7,941 236,929 2013 2,166,289 91,327 136,499 1,632,802 20,209 285,452 1,716,412 75,068 96,617 1,307,021 10,164 227,541 2014 2,286,474 94,359 158,894 1,715,298 34,867 283,056 1,788,693 77,710 112,682 1,363,175 18,023 217,104 2015 3,310,615 107,828 191,749 2,666,133 22,349 322,556 1,350,063 44,025 82,059 1,132,264 2,968 88,747 Source: Universal Service Administrative Company Table 4.1 is the 2016 version of Table 2.19 of the 2013 USF Monitoring Report. Funds by service type have not been included in this version, but can be found in the Supplementary Material file "SL Funds - by Service Type, State, and Funding Year". Year Table 4.1 Funding Commit me nt s F unding Disbur se me nt s 1 Starting in funding year 2016, Libraries includes both Library and Library System applicants. Note: Activity through June 30, 2016. Funding Year 2016 commitment and disbursement information have not been displayed because only a small fraction of commitments (and no disbursements) have been made for that funding year. A substantial amount of commitments and disbursements for funding year 2016 will be made. Also, because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Disbursements may also 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 Starting January 2011, applicants could designate their consortium as a statewide entity if the application encompassed all public schools, private schools and/or all public libraries in the state. See http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-10-2218A1.pdf. In 2016, applicants filing as a consortium, school district, and library system could designate their sub-type as a statewide entity. These applicant's commitments and disbursments are included within their primary applicant type column and are not included in the Statewide Contract column. 40 Table 4.2 Schoo ls an d Libra ries Fu n d in g Commitmen ts an d Disb u rsemen ts f ro m Progra m Incep tio n th ro u g h Ju n e 30, 2016 by State an d Applica n t Type Library/Library Consortium Schools School Districts Statewide Contracts Other Consortium Totals Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds Funds Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Committed Disbursed Alabama $13,911 $11,137 $20,263 $15,018 $601,531 $500,775 $86 $1 $100,623 $73,075 $736,415 $600,006 Alaska 10,137 7,674 4,258 3,239 514,380 429,348 0 0 17,664 13,278 546,440 453,539 American Samoa 0 0 0 0 0 0 0 0 38,344 30,204 38,344 30,204 Arizona 20,098 21,922 149,257 100,281 901,050 669,728 0 0 27,630 16,871 1,098,035 808,801 Arkansas 5,836 4,708 8,808 6,652 256,529 189,331 25,836 10,277 153,014 94,147 450,024 305,116 California 107,014 71,109 287,203 198,394 5,719,977 4,188,413 106 51 247,745 155,511 6,362,045 4,613,477 Colorado 13,987 9,832 21,215 15,400 349,904 272,260 0 0 22,964 16,139 408,070 313,632 Connecticut 5,477 3,746 48,952 35,139 273,366 221,419 0 0 112,590 93,789 440,384 354,093 Delaware 1,385 1,185 3,373 2,298 16,979 13,993 2,246 39 17,157 14,536 41,140 32,050 District of Columbia 8,816 4,540 26,828 17,176 169,090 112,441 0 0 17,947 8,589 222,681 142,745 Florida 57,910 44,362 159,438 119,465 1,153,853 911,214 0 0 98,901 82,172 1,470,102 1,157,213 Georgia 80,974 72,569 37,807 30,822 1,134,176 903,992 4,411 311 183,421 160,100 1,440,788 1,167,794 Guam 134 22 259 137 27,020 19,900 0 0 0 0 27,413 20,059 Hawaii 2,760 1,557 59,513 28,858 37,292 19,702 3,128 478 1,071 629 103,764 51,224 Idaho 4,471 3,568 7,517 4,909 98,278 75,503 0 0 23,193 13,811 133,459 97,791 Illinois 40,390 29,778 144,065 106,968 1,623,697 1,205,904 0 0 74,073 53,086 1,882,226 1,395,737 Indiana 53,971 41,681 37,371 26,738 466,100 363,312 0 0 94,682 42,828 652,124 474,559 Iowa 4,589 3,066 14,675 10,592 154,345 111,275 0 0 72,022 61,455 245,632 186,388 Kansas 11,727 9,216 10,231 7,342 262,470 207,088 0 0 23,973 19,298 308,401 242,944 Kentucky 16,475 12,436 6,831 4,403 555,989 407,710 0 0 116,929 83,389 696,223 507,938 Louisiana 63,445 52,398 54,806 39,799 747,796 616,659 0 0 33,862 24,701 899,909 733,557 Maine 1,524 1,109 15,849 11,577 62,485 43,499 0 0 56,673 50,870 136,532 107,056 Maryland 18,405 13,164 28,394 18,918 327,324 249,480 0 0 32,223 24,258 406,346 305,821 Massachusetts 43,237 30,162 61,611 45,256 449,534 352,511 11 0 51,058 25,227 605,451 453,157 Michigan 33,862 26,669 57,648 38,398 824,201 618,764 0 0 134,167 101,408 1,049,878 785,239 Minnesota 26,028 20,389 40,762 27,617 299,929 225,523 0 0 125,595 107,930 492,315 381,460 Mississippi 31,206 23,387 20,185 14,350 468,692 353,941 144 83 102,725 75,741 622,952 467,503 Missouri 21,343 17,407 46,561 34,166 502,911 394,819 0 0 203,781 136,168 774,596 582,560 Montana 1,619 1,144 4,776 3,598 76,309 62,204 0 0 609 450 83,313 67,397 Nebraska 4,243 3,370 7,880 6,060 121,250 105,251 0 0 31,814 29,002 165,187 143,683 Nevada 4,044 2,734 6,574 4,621 116,943 80,740 0 0 0 0 127,560 88,094 New Hampshire 387 217 8,473 5,288 37,379 26,926 0 0 1,443 1,080 47,682 33,511 New Jersey 28,311 19,950 140,134 97,397 905,187 652,332 0 0 16,775 11,037 1,090,407 780,716 New Mexico 5,986 3,683 79,561 55,269 503,162 384,738 0 0 96,824 37,939 685,532 481,629 New York 197,172 135,134 587,139 423,801 2,340,963 2,006,035 0 0 558,044 411,067 3,683,319 2,976,037 North Carolina 29,923 24,803 44,353 34,567 951,107 791,859 23,724 11,911 49,606 38,695 1,098,714 901,835 North Dakota 200 151 9,790 7,404 25,258 19,320 0 0 39,567 33,646 74,815 60,521 Northern Mariana Isl. 201 138 162 143 18,109 14,348 0 0 0 0 18,472 14,629 Ohio 52,594 41,893 134,595 97,488 1,120,355 859,839 0 0 86,474 70,983 1,394,018 1,070,203 Oklahoma 36,266 28,667 47,457 33,897 850,945 666,950 0 0 13,749 5,005 948,416 734,519 Oregon 5,884 3,620 11,946 8,492 221,823 175,681 0 0 39,063 24,020 278,715 211,814 Pennsylvania 44,506 36,861 167,992 112,731 1,014,649 837,433 0 0 142,889 122,030 1,370,036 1,109,056 Puerto Rico 68,084 36,111 94,235 61,114 229,441 135,967 0 0 115,312 57,743 507,072 290,935 Rhode Island 2,091 1,717 8,200 6,262 73,037 55,842 19 8 42,418 39,322 125,764 103,152 South Carolina 6,513 4,503 26,012 17,058 512,055 386,104 0 0 261,810 225,591 806,390 633,255 South Dakota 382 185 21,256 15,588 41,911 31,350 2,745 2,553 36,735 22,675 103,029 72,352 Tennessee 18,532 13,380 17,916 14,453 717,351 532,803 0 0 226,184 184,114 979,984 744,750 Texas 57,069 38,597 189,472 137,718 3,934,585 3,005,159 0 0 181,117 126,213 4,362,243 3,307,687 Utah 2,313 1,111 4,493 2,564 96,447 75,913 0 0 235,561 129,832 338,813 209,420 Vermont 1,078 652 13,876 8,912 28,362 20,250 0 0 1,940 1,388 45,255 31,202 Virgin Islands 355 160 13,849 10,565 10,665 9,412 3,854 1,836 59,985 54,351 88,708 76,324 Virginia 31,087 24,534 25,912 20,797 539,621 437,544 0 0 13,720 12,231 610,340 495,105 Washington 28,523 22,161 19,353 14,968 404,968 307,199 78 78 83,652 64,342 536,575 408,748 West Virginia 4,212 3,256 3,774 2,177 180,286 128,636 19,735 9,876 53,345 39,112 261,352 183,057 Wisconsin 15,538 11,148 44,770 31,389 332,778 259,738 0 0 169,316 125,860 562,402 428,135 Wyoming 664 451 4,692 3,371 26,144 18,871 3,432 1,591 29,409 23,809 64,341 48,093 Totals $1,346,892 $999,129 $3,112,321 $2,201,600 $33,429,991 $25,766,947 $89,554 $39,095 $4,771,388 $3,470,750 $42,750,147 $32,477,521 ( i n Thous a nds of Dol l a r s ) Note: Activity through June 30, 2016. Unlike in Table 4.1, all commitments and disbursements have been included, including those in funding year 2016. 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. Source: Universal Service Administrative Company State/Territory 41 Section 5 – Rural Heal th Care Overvi ew – Rural Healt h Care Program The Rural Healt h Care Program provides funding to eligible health care providers (HCPs) for broadband and telecommunications services necessary for the provision of health care. The goal of the program is to improve the quality of health care available to patients in rural communities by ensuring that eligible HCPs have access to broadband and t elecommunications services. Funding for the Rural Health Care Program is capped at $40 0 million annually and is administered by USAC under the direction of the FCC. During the time period reported upon in this report, the Rural Health Care Program provided funding through three programs: the Healthcare Connect Fund, the Rural Health Care Pilot Program , and the Telecommunications Program. In 2012, the Commission created the new Healthcare Connect Fund to reform, expand, and modernize the Rural Health Care Program. The Healthcare Connect Fund provides support for high-capacity broadband connectivity to eligible health care providers (HCPs) , and encourages the formation of state and regional broadband HCP networks. The Commission established the Rural Health Care Pilot Program in Septemb er 2006 to provide funding for state or regional broadband networks designed to bring the benefits of telehealth and telemedicine services to areas of the country where the need for those benefits was most acute. Many of the lessons learned during the Pilot Program were used in establishing the Healthcare Connect Fund. While new participants are no longer accepted into the Pilot Program, there is some remaining funding already committed that existing participants are using. Established in 1997, the Telecommunications Program ensures that eligible rural HCPs pay no more than their urban counterparts for telecommunica tions services. Additional information about the Rural Health Care Program can be found on the Commission’ s website at http://www.fcc.gov/encyclopedia/rural-health-careand on USAC’ s website at http://www.usac.org/rhc/. 42 Fun ds Commit t ed Fun ds Disbu rsed Fun ds Commit t ed Fun ds Disbu rsed Fun ds Commit t ed Fun ds Disbu rsed Fun ds Commit t ed Fun ds Disbu rsed 1998 3,388 3,369 0 0 0 0 3,388 3,369 1999 4,653 4,291 0 0 0 0 4,653 4,291 2000 10,711 10,196 0 0 0 0 10,711 10,196 2001 19,582 18,477 0 0 0 0 19,582 18,477 2002 23,344 21,366 0 0 0 0 23,344 21,366 2003 27,908 25,726 0 0 0 0 27,908 25,726 2004 32,124 30,959 0 0 0 0 32,124 30,959 2005 40,742 39,999 0 0 0 0 40,742 39,999 2006 45,984 45,074 0 0 0 0 45,984 45,074 2007 56,210 54,818 467 467 0 0 56,677 55,285 2008 67,765 66,661 14,734 14,300 0 0 82,499 80,962 2009 72,828 71,439 350,957 275,330 0 0 423,785 346,769 2010 92,042 87,208 0 0 0 0 92,042 87,208 2011 104,360 101,272 0 0 0 0 104,360 101,272 2012 117,189 116,889 0 0 0 0 117,189 116,889 2013 133,412 128,469 0 0 48,701 38,831 182,112 167,299 2014 137,167 134,126 0 0 102,461 63,128 239,628 197,254 2015 169,395 98,502 0 0 84,428 14,968 253,824 113,469 Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. Note: Activity through June 30, 2016. Funding Year 2016 commitment and disbursement information have not been displayed because only a small fraction of commitments (and no disbursements) have been made for that funding year. A substantial amount of commitments and disbursements for funding year 2016 will be made. Also, because of the appeals process, funding commitments and disbursements can be made after the end of the program year. Disbursements may also continue beyond the end of the program year in the event of delayed internal connections installation. Other adjustments and corrections may also be made. Rural Healt h Care Fun di ng Commit t ment s and Disbu rsement s by Program and Year ( i n Thousands of Dol l ars ) Table 5.1 Telecommun icat ion s and Internet Access Program Pilot Healt hcare Connect Totals F un di ng y ear 43 Funds Commi tte d Funds Disbur se d Funds Commi tte d Funds Disbur se d Funds Commi tte d Funds Disbur se d Funds Commi tte d Funds Disbur se d Alabama 8,259 6,868 2,749 2,746 2,558 1,357 13,566 10,972 Alaska 612,883 550,939 1,882 209 753 313 615,518 551,460 American Samoa 1,512 1,419 0 0 0 0 1,512 1,419 Arizona 24,788 21,445 7,506 5,187 1,374 576 33,668 27,208 Arkansas 16,776 14,395 4,218 4,132 12,265 7,583 33,259 26,110 California 44,046 40,796 22,903 11,136 27,087 14,784 94,036 66,716 Colorado 3,498 3,117 10,870 10,702 13,594 8,091 27,962 21,910 Connecticut 12 12 0 0 907 148 920 160 Delaware 1 1 0 0 0 0 1 1 District of Columbia 18 0 0 0 0 0 18 0 Florida 5,200 4,573 82 47 5,050 1,886 10,332 6,506 Georgia 30,482 28,145 2,233 2,166 9,423 4,913 42,137 35,224 Guam 767 762 89 83 73 35 929 880 Hawaii 2,435 2,376 4,653 2,100 23 19 7,111 4,494 Idaho 5,726 4,740 0 0 1,474 875 7,200 5,616 Illinois 17,502 16,243 21,071 21,070 5,766 2,549 44,339 39,862 Indiana 9,431 6,992 15,458 12,416 5,585 2,200 30,474 21,608 Iowa 6,635 6,304 17,368 17,291 8,408 3,678 32,412 27,273 Kansas 8,787 7,866 0 0 2,906 1,415 11,694 9,281 Kentucky 13,188 11,667 2,945 913 6,841 3,114 22,973 15,694 Louisiana 5,958 4,283 15,570 375 1,881 1,147 23,410 5,805 Maine 589 469 12,957 12,639 2,800 329 16,346 13,437 Maryland 156 128 0 0 412 219 568 347 Massachusetts 941 924 0 0 1,279 821 2,220 1,744 Michigan 19,482 18,322 19,449 19,230 5,739 2,619 44,670 40,171 Minnesota 32,131 29,685 5,714 5,292 3,190 1,152 41,035 36,129 Mississippi 22,756 16,660 0 0 4,091 1,155 26,848 17,815 Missouri 11,248 9,345 2,538 2,193 6,709 3,491 20,495 15,029 Montana 10,692 10,307 15,413 14,572 660 262 26,765 25,142 Nebraska 20,205 19,144 18,010 18,010 3,058 762 41,274 37,915 Nevada 2,307 2,176 0 0 381 240 2,688 2,416 New Hampshire 234 221 6,400 6,335 490 295 7,124 6,851 New Jersey 0 0 0 0 0 0 0 0 New Mexico 9,786 8,872 11,742 8,929 5,369 4,683 26,897 22,484 New York 1,933 1,621 15,492 13,858 6,687 2,663 24,112 18,143 North Carolina 6,712 5,778 12,169 11,759 16,104 4,802 34,985 22,339 North Dakota 14,070 13,181 912 828 1,507 229 16,489 14,238 Northern Mariana Islands 43 21 46 44 6 0 94 65 Ohio 6,572 6,017 27,209 26,478 4,529 2,287 38,311 34,782 Oklahoma 26,796 23,178 0 0 11,376 5,324 38,173 28,503 Oregon 3,390 3,080 18,130 17,129 12,588 5,755 34,108 25,963 Pennsylvania 1,399 1,300 6,793 6,035 7,569 3,481 15,761 10,816 Puerto Rico 0 0 0 0 45 23 45 23 Rhode Island 0 0 0 0 0 0 0 0 South Carolina 666 536 8,763 8,282 5,846 3,725 15,276 12,544 South Dakota 10,496 10,269 4,585 4,482 3,240 2,516 18,321 17,268 Tennessee 10,992 8,484 6,834 0 1,853 926 19,679 9,411 Texas 54,182 41,808 15,503 0 7,074 3,757 76,759 45,565 Utah 8,456 8,118 8,815 7,886 1,461 58 18,732 16,061 Vermont 805 771 6,078 6,024 368 172 7,252 6,966 Virgin Islands 852 846 0 0 0 0 852 846 Virginia 20,682 16,567 2,709 563 4,941 2,709 28,332 19,839 Washington 2,213 2,043 118 117 2,012 987 4,344 3,148 West Virginia 3,065 2,634 7,070 5,751 1,685 880 11,821 9,266 Wisconsin 65,287 60,349 2,312 2,303 10,601 5,554 78,200 68,206 Wyoming 3,150 3,043 797 782 603 368 4,549 4,193 Totals 1,190,193 1,058,840 366,158 290,098 240,243 116,926 1,796,594 1,465,863 Table 5.2 Rural Health Care Funding Committme nts and Dis bur s e me nts f rom Program Inception through June 30, 2016 by State and Program ( in Thousa nds of Do lla rs) Note: Disbursements through June 30, 2016. Unlike in Table 5.1, all commitments and disbursements have been included, including those in funding year 2016. Because of the appeals process, funding commitments and disbursements may be made after the program year ended. Source: USAC data. Rollups performed by the Industry Analysis and Technology Division, Wireline Competition Bureau, FCC. State H e al thc ar e Conne c t Total s Telec ommuni c ati ons and Inte r ne t Access Progr am Pilot 44 Section 6 – Subscri b ers h i p & Penet rati on Overvi ew – Subscr i ber s hip & Penet r at ion: Voice & Interne t 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. In addition to telephone penetration statistics, recent surveys by the Census Bureau now also provide information about the penetration of high-speed Internet services. Starting in 2016, this section also includes telephone and internet expense statistics for lower income households. This chapter presents comprehensive data on telephone penetration and expense statistics collected by the Bureau of the Census and the Bureau of Labor Statistics primarily through the American Community Survey (ACS) , the Current Population Survey (CPS), and the Consumer Expenditures Survey (CE). The chapter also provides national and state-level estimates of high-speed Internet adoption based on the ACS. Along with telephone and high-speed Internet penetration statistics for the nation and each of the states, data are provided on penetration for various demographic characteristics. In particular for telephone service, attention is given to penetration rates and expenses 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 questi ons 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 While the ACS provides telephone penetration data, the ACS now also provides data for calculating high-speed Internet penetration rates. Specifically, the ACS for the first time in 2013 asked whether households have access to the Internet. The ACS asks, “At this house, apartment, or mobile home – do you or any member of this household access the Inte rnet?” Statistics based on 2015 data from the ACS on high- speed Internet penetration has been incorporated into this report. Since the ACS is conducted throughout the year, a 1-year average is calculated using the data. 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 surv ey methodologies as well as differences in the context in which the questions are asked. For example, the 2013 ACS reported 97. 7% of all occupied housing units in the United States had telephone service available, whereas the March 2013 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. 45 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. The changes in the CPS estimates reflect changes 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. 2 Annual data for Puerto Rico have been available f rom the ACS starting with 2005. The percentage of occupied housing units with voice service for the last five years of available data are reported in Table 6.6. 46 Month Year Hou s eh old s (million s ) Hou s eh old s w ith a Telep h on e in Unit (million s ) Percen tage w ith Telep h on e in Unit Hou s eh old s w ith ou t a Telep h on e in Unit (million s ) Percen tage w ith ou t Telep h on e in Unit 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 November 2002 109.0 104.0 95.3 5.1 4.7 November 2003 113.1 107.1 94.7 6.0 5.3 November 2004 113.8 106.4 93.5 7.4 6.5 November 2005 115.2 107.0 92.9 8.2 7.1 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 November 2012 122.0 116.9 95.8 5.1 4.2 March 2013 123.3 118.3 96.0 5.0 4.0 July 2013 123.1 118.3 96.1 4.8 3.9 November 2013 123.7 118.4 95.7 5.3 4.3 March 2014 124.2 119.5 96.3 4.7 3.7 July 2014 123.9 119.0 96.0 4.9 4.0 November 2014 124.8 119.9 96.1 4.9 3.9 March 2015 125.5 121.1 96.5 4.4 3.5 July 2015 125.8 121.7 96.3 4.1 3.5 November 2015 126.1 122.2 96.3 3.9 3.1 March 2016 127.2 123.4 97.0 3.8 3.0 July 2016 127.0 123.3 97.1 3.7 2.9 Table 6.1 Househ old Voice Subscrib ers h ip in the United States, 1983 - 2016 Source: United States Census Bureau, Current Population Survey 47 $ 9 ,9 9 9 or Less $10,000 - $19,000 $20,000 - $29,9 9 9 $ 30,000 - $39 ,9 9 9 $ 40,000 or Greate r All House ho ld s 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 2013 92.6 95.6 97.0 97.2 98.3 96.0 2014 93.1 95.9 96.7 97.9 98.2 96.3 2015 93.2 96.0 97.1 97.7 98.1 96.4 2016 93.2 96.4 97.0 97.6 98.0 96.4 $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 2013 22,687 45,375 68,062 90,750 2014 23,031 46,061 69,092 92,122 2015 23,014 46,027 69,041 92,054 2016 23,210 46,419 69,629 92,839 (in 1984 Doll ars) Note: All numbers based on CPI non-adjusted series, March 1984 base of 102.6 Table 6.2 Household Voice Penetration by Income, 1997-2016 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 6.1 due to sampling differences between the March CPS and the March CPS Supplement. Table 6.3 Nominal Dollar Equivalents by Year 48 1920 35.0 1930 40.9 1940 36.9 1950 61.8 1960 78.3 1970 90.5 1980 92.9 1990 94.8 93.3 2000 97.6 94.4 2001 96.9 94.9 2002 96.6 95.3 2003 96.2 95.1 2004 95.7 93.8 2005 94.8 93.1 2006 94.1 93.6 2007 94.6 94.8 2008 3 98.2 95.2 2009 97.7 95.7 2010 97.5 95.8 2011 97.4 95.7 2012 97.4 95.9 2013 97.7 95.9 2014 97.6 96.1 2015 97.4 96.3 2016 NA 4 96.4 4 ACS statistics for 2016 are not available. Table 6.4 His torical Voice Penetration Estimates 2 Household penetration data (1990 - 2016) are annual averages from the U.S. Census based on the Current Population Survey. For 2016, July CPS data are used. 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 - 2016). 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. Percent age of Occupie d Housing Units w it h Telephone Serv ic e 1 Percent age of House holds w it h Telephone Serv ic e 2 49 Charact er i st i c 2013 2014 2015 2016 Persons in Household 1 94.0 94.2 94.6 94.7 2 - 3 96.7 96.8 96.9 97.1 4 - 5 96.8 97.1 97.4 97.3 6 + 95.8 96.4 96.9 96.1 Age of Householder 15 - 24 Yrs Old 93.8 94.6 95.5 94.9 25 - 54 Yrs Old 95.6 95.9 96.2 96.3 55 - 59 Yrs Old 96.6 96.5 96.9 96.9 60 - 64 Yrs Old 96.4 96.4 96.7 97.0 65 - 69 Yrs Old 97.1 97.1 97.1 97.0 70 - 99 Yrs Old 96.6 96.6 96.2 96.4 Race of Householder White 96.4 96.6 96.8 96.8 Black 93.0 93.7 94.1 94.7 Hispanic Origin 93.1 93.5 94.7 94.6 Total United States 95.9 96.1 96.3 96.4 Table 6.5 Voice Penetra ti o n by Select ed Demo g ra phi c Chara cteri s ti cs (Percen tage of Hou seh old s with Voice Service) Source: U.S. Census Bureau, Current Population Survey. Note that 2012 to 2015 values are annual averages. For 2016, values are July 2016 figures since complete 2016 figures were unavailable at the time of publication. 50 2011 2012 2013 2014 2015 Alabama 97.2 97.3 97.4 97.4 97.2 Alaska 98.1 97.7 98.0 98.1 97.3 Arizona 97.0 97.2 97.3 97.5 97.4 Arkansas 96.6 96.2 97.2 97.3 96.4 California 97.9 97.9 98.0 97.9 97.8 Colorado 97.5 97.7 97.7 97.9 97.9 Connecticut 98.5 98.5 98.6 98.5 98.5 Delaware 98.2 97.8 98.1 97.9 98.3 District of Columbia 96.7 97.0 97.2 97.6 97.2 Florida 96.6 96.5 97.0 97.1 97.1 Georgia 96.4 96.0 97.6 97.3 97.3 Hawaii 97.4 97.4 97.7 97.7 97.7 Idaho 96.5 97.1 97.1 97.3 97.3 Illinois 97.7 97.7 97.7 97.4 97.6 Indiana 96.6 96.7 97.4 97.5 97.4 Iowa 96.9 97.4 97.9 97.6 97.5 Kansas 97.6 97.3 97.4 97.4 97.1 Kentucky 96.9 96.8 97.2 97.1 97.3 Louisiana 97.2 97.4 97.3 97.0 97.2 Maine 98.2 98.2 97.6 98.1 97.6 Maryland 97.5 97.8 98.1 97.6 97.7 Massachusetts 98.3 98.4 98.4 98.2 98.1 Michigan 97.0 97.2 97.4 97.6 97.4 Minnesota 98.0 98.0 98.1 97.9 97.3 Mississippi 96.9 97.2 96.8 97.2 97.0 Missouri 97.3 97.1 97.6 97.1 97.2 Montana 97.1 97.4 96.9 97.0 97.0 Nebraska 97.8 97.6 97.5 97.7 97.3 Nevada 97.8 97.5 97.9 96.5 97.2 New Hampshire 98.2 98.0 97.9 98.3 98.3 New Jersey 97.6 98.2 98.5 98.5 97.8 New Mexico 94.9 96.5 96.8 97.2 96.6 New York 97.2 97.5 98.0 97.8 97.9 North Carolina 97.5 97.6 97.8 97.7 97.6 North Dakota 98.1 97.3 97.8 98.1 96.9 Ohio 97.1 96.8 97.2 97.3 97.3 Oklahoma 97.5 97.7 97.5 97.1 97.0 Oregon 97.2 97.5 97.6 97.6 97.3 Pennsylvania 97.8 98.0 98.0 98.2 98.0 Rhode Island 97.5 97.9 98.3 97.8 98.1 South Carolina 97.2 97.3 97.7 97.6 97.0 South Dakota 97.3 97.2 97.5 97.2 96.7 Tennessee 97.1 97.3 97.6 97.5 97.6 Texas 97.2 97.4 97.7 97.7 97.4 Utah 97.6 97.6 97.9 98.0 97.7 Vermont 98.2 98.6 98.1 98.1 97.9 Virginia 97.5 97.6 98.2 98.1 97.6 Washington 97.9 97.4 97.9 97.6 97.5 West Virginia 96.0 96.5 97.0 96.9 97.3 Wisconsin 97.7 97.7 97.9 97.7 97.3 Wyoming 97.8 97.7 98.1 97.9 97.4 Total United States 97.4 97.4 97.7 97.6 97.4 Puerto Rico 93.8 94.2 93.8 94.3 95.5 Table 6.6 Voice Penetra ti o n by State, 2011 - 2015 (Percen ta g e of Occup ied Ho u sin g Units w ith Voice Service) Source: U.S. Census Bureau, American Community Survey. U.S. Total does not include Puerto Rico. 51 1984 1996 2000 2007 2015 Alabama 88.4 92.2 91.9 91.8 95.9 Alaska 86.5 94.4 94.3 96.5 97.5 Arizona 86.9 93.1 93.9 92.9 95.7 Arkansas 86.6 86.9 88.6 92.0 93.7 California 92.5 95.0 95.8 96.5 95.6 Colorado 93.2 95.5 96.3 96.8 97.5 Connecticut 95.5 97.5 96.4 96.6 97.8 Delaware 94.3 96.1 96.3 94.9 94.6 District of Columbia 94.9 93.0 93.2 91.6 96.8 Florida 88.7 93.1 92.1 93.6 94.8 Georgia 86.2 89.7 91.1 92.6 95.5 Hawaii 93.5 94.8 94.7 96.0 94.6 Idaho 90.7 92.9 93.9 96.4 96.9 Illinois 94.2 93.0 91.5 94.1 96.4 Indiana 91.6 93.7 94.5 90.4 95.2 Iowa 96.2 96.6 96.2 97.0 98.4 Kansas 94.3 93.9 94.8 96.2 96.8 Kentucky 88.1 92.3 93.3 94.4 96.4 Louisiana 89.7 91.1 92.6 94.9 96.2 Maine 93.4 96.5 97.9 96.6 96.9 Maryland 95.7 96.7 95.0 95.5 97.1 Massachusetts 95.9 95.7 94.6 96.3 97.7 Michigan 92.8 95.0 95.0 95.0 97.0 Minnesota 95.8 97.1 97.4 97.9 98.9 Mississippi 82.4 87.5 89.2 90.5 96.0 Missouri 91.5 95.3 95.8 96.1 97.7 Montana 91.0 94.3 94.6 95.4 96.5 Nebraska 95.7 96.0 97.3 93.7 97.1 Nevada 90.4 93.5 94.0 95.2 95.7 New Hampshire 94.3 96.1 97.7 96.8 98.0 New Jersey 94.8 93.6 94.6 95.7 93.4 New Mexico 82.0 86.2 91.2 91.6 91.6 New York 91.8 93.4 95.1 93.4 95.6 North Carolina 88.3 93.5 93.9 94.5 96.3 North Dakota 94.6 96.3 95.8 98.0 98.2 Ohio 92.4 94.5 94.8 95.9 97.3 Oklahoma 90.3 91.3 91.2 94.9 96.6 Oregon 90.6 96.0 94.8 96.7 97.8 Pennsylvania 94.9 96.9 96.6 97.0 98.5 Rhode Island 93.6 95.7 94.9 95.3 96.9 South Carolina 83.7 91.3 93.2 90.6 95.5 South Dakota 93.2 93.3 94.3 97.2 97.6 Tennessee 88.5 94.0 95.5 93.2 92.6 Texas 88.4 91.0 93.5 93.5 96.9 Utah 92.5 96.7 95.9 96.8 96.9 Vermont 92.3 95.9 95.6 97.4 98.3 Virginia 93.1 94.9 95.4 95.3 97.4 Washington 93.0 94.5 94.9 96.8 98.4 West Virginia 87.7 92.9 94.0 94.5 95.8 Wisconsin 95.2 97.0 94.8 96.8 98.5 Wyoming 89.9 95.0 94.7 96.1 96.3 Total United States 91.6 93.9 94.4 94.8 96.3 Table 6.7 Voice Penetration by State, Selected Years (Percentag e of Households w ith a Telephone in Unit) Source: U.S. Census Bureau, Current Population Survey. 52 $9,999 or Less $10,000 to $19,999 $19,999 to $29,999 $30,000 to $39,999 $40,000 or More All Household s Alabama 92.3 96.6 96.4 97.9 98.4 95.9 Alaska 97.5 97.1 99.5 97.8 99.4 98.5 Arizona 92.8 96.8 96.3 96.6 96.6 95.8 Arkansas 92.3 94.3 96.0 95.9 96.6 94.7 California 93.3 95.1 95.5 96.6 97.7 95.9 Colorado 96.1 98.2 98.8 98.9 99.7 98.6 Connecticut 97.9 100.0 100.0 100.0 100.0 99.7 Delaware 93.2 92.8 89.7 94.4 97.9 94.0 District of Columbia 97.6 90.5 95.0 97.3 96.5 95.7 Florida 90.3 95.2 96.4 97.3 97.1 94.9 Georgia 93.0 96.2 95.7 96.5 95.5 95.2 Hawaii 87.9 93.1 96.6 97.0 94.7 93.8 Idaho 92.2 94.6 99.3 97.8 98.1 96.3 Illinois 93.2 96.7 96.2 97.8 98.3 96.6 Indiana 89.9 96.3 94.7 94.0 97.4 94.5 Iowa 96.8 98.7 100.0 100.0 99.1 98.9 Kansas 91.1 96.1 97.8 97.1 98.4 96.0 Kentucky 95.6 98.7 99.0 99.3 99.0 98.0 Louisiana 94.2 97.6 97.8 97.2 98.7 96.9 Maine 98.8 100.0 100.0 98.6 98.0 99.1 Maryland 91.9 95.8 95.2 98.2 97.9 96.2 Massachusetts 97.9 97.7 98.6 99.2 99.1 98.6 Michigan 96.9 95.6 97.9 97.4 99.3 97.5 Minnesota 97.7 99.6 95.9 99.4 99.8 98.7 Mississippi 93.1 96.5 96.3 98.0 96.8 95.6 Missouri 94.0 98.7 97.0 97.9 98.4 97.3 Montana 96.1 99.5 99.6 99.0 98.9 98.6 Nebraska 94.3 97.0 98.9 99.4 99.2 97.8 Nevada 90.7 94.6 97.4 95.9 98.2 95.3 New Hampshire 97.9 97.4 95.1 98.9 99.0 97.9 New Jersey 85.7 92.1 95.2 94.7 96.7 93.5 New Mexico 80.9 93.1 95.0 95.7 95.3 91.0 New York 95.2 95.9 96.5 97.3 98.1 96.7 North Carolina 93.8 96.8 97.9 97.6 98.6 96.9 North Dakota 95.2 98.9 99.6 100.0 98.4 98.3 Ohio 93.5 96.2 98.9 97.7 96.2 96.3 Oklahoma 92.5 98.4 97.5 98.7 98.0 96.7 Oregon 89.7 98.8 99.3 98.4 99.3 97.4 Pennsylvania 95.2 99.1 98.6 98.9 99.6 98.4 Rhode Island 87.1 96.5 97.9 98.9 96.9 95.1 South Carolina 90.9 93.4 96.4 97.3 97.8 94.6 South Dakota 89.5 98.1 96.0 99.3 99.6 96.4 Tennessee 91.1 92.3 95.9 92.2 93.3 92.8 Texas 93.6 95.6 96.9 98.7 97.6 96.4 Utah 93.7 96.8 96.9 96.8 98.8 97.0 Vermont 97.0 98.6 97.4 100.0 98.6 98.3 Virginia 95.7 99.1 98.9 99.5 99.9 98.7 Washington 87.3 99.8 98.4 98.9 99.4 97.5 West Virginia 94.3 96.4 99.1 99.1 98.9 97.0 Wisconsin 97.0 99.8 98.1 99.1 98.9 98.6 Wyoming 95.2 95.0 91.8 96.9 96.2 95.1 Total United States 93.2 96.4 97.0 97.6 98.0 96.4 Table 6.8 Hou sehold Voice Penetrat ion by State and Income, 2016 Note: Income categories use 1984 dollars. For a conversion to current-year dollars, consult Table 6.2. Source: U.S. Census Bureau, Current Population Survey (March CPS Supplement). 53 All Househol ds 77.2 76.7 H ousehol d Incom e 2 Less than $20,000 49.4 48.8 $20,000 - $74,999 74.9 74.2 $75,000 or more 92.8 92.4 Metropol i t an Status 3 Metropolitan Area NA 78.4 Nonmetropolitan Area NA 63.7 Urban / Rural Area 3 Rural Area NA 78.1 Urban Area NA 70.1 All Indivi dual s 81.3 80.8 Age 4 Under 18 83.6 83.3 18 - 64 83.5 83.1 65 + 68.0 67.0 Race and Hispani c Origin 5 White alone, non-Hispanic 84.4 83.9 Black alone, non-Hispanic 70.1 69.7 Asian alone, non-Hispanic 91.7 91.3 Hispanic (of any race) 74.8 74.5 American Indian 65.9 65.3 5 American FactFinder, Table B28005 Table 6.9 Internet Use by Selected Chara cteri s ti cs , 2015 1 High-speed service includes all internet service other than dial-up. 2 American FactFinder, Table S2801 4 American FactFinder, Table B28005 3 American FactFinder, Table GCT2801 Percent w it h som e Internet subscr i pti on Percent w it h high-s peed Internet subscr i pti on 1 54 Percent Margi n of Error Percent Margi n of Error Alabama 65.8 +/-0.5 68.3 +/-0.5 Alaska 81.4 +/-1.0 81.7 +/-1.3 Arizona 75.5 +/-0.4 78.1 +/-0.4 Arkansas 63.5 +/-0.8 64.2 +/-0.5 California 80.0 +/-0.2 81.3 +/-0.2 Colorado 81.2 +/-0.4 83.0 +/-0.4 Connecticut 80.5 +/-0.5 82.0 +/-0.6 Delaware 75.5 +/-1.2 77.4 +/-1.1 District of Columbia 73.4 +/-1.1 76.8 +/-1.4 Florida 75.8 +/-0.3 77.5 +/-0.2 Georgia 73.4 +/-0.3 74.8 +/-0.4 Hawaii 80.6 +/-0.8 82.2 +/-0.9 Idaho 73.6 +/-1.0 76.7 +/-0.9 Illinois 75.5 +/-0.3 76.9 +/-0.3 Indiana 71.4 +/-0.4 73.3 +/-0.4 Iowa 74.2 +/-0.5 75.0 +/-0.5 Kansas 74.5 +/-0.6 76.2 +/-0.5 Kentucky 68.9 +/-0.5 70.9 +/-0.6 Louisiana 66.6 +/-0.6 68.7 +/-0.6 Maine 74.9 +/-0.8 77.1 +/-0.7 Maryland 80.1 +/-0.4 81.4 +/-0.4 Massachusetts 80.5 +/-0.3 82.6 +/-0.4 Michigan 72.9 +/-0.3 74.4 +/-0.3 Minnesota 78.3 +/-0.4 79.5 +/-0.4 Mississippi 59.1 +/-0.8 61.0 +/-0.8 Missouri 71.6 +/-0.4 73.3 +/-0.4 Montana 72.9 +/-1.0 75.0 +/-1.0 Nebraska 74.8 +/-0.7 78.1 +/-0.5 Nevada 76.3 +/-0.7 79.0 +/-0.6 New Hampshire 82.1 +/-0.8 84.5 +/-0.7 New Jersey 80.9 +/-0.3 81.6 +/-0.3 New Mexico 67.5 +/-0.7 67.2 +/-0.9 New York 76.5 +/-0.2 77.8 +/-0.2 North Carolina 72.4 +/-0.4 74.1 +/-0.4 North Dakota 74.7 +/-1.2 76.3 +/-1.0 Ohio 73.9 +/-0.3 76.1 +/-0.2 Oklahoma 69.2 +/-0.4 70.8 +/-0.5 Oregon 78.9 +/-0.6 80.8 +/-0.4 Pennsylvania 73.9 +/-0.3 75.7 +/-0.3 Rhode Island 76.5 +/-1.1 78.2 +/-1.1 South Carolina 68.1 +/-0.6 69.9 +/-0.5 South Dakota 71.6 +/-1.1 75.3 +/-1.2 Tennessee 68.2 +/-0.5 70.2 +/-0.4 Texas 73.0 +/-0.2 74.3 +/-0.2 Utah 81.7 +/-0.6 83.1 +/-0.7 Vermont 76.3 +/-1.1 78.7 +/-1.1 Virginia 77.2 +/-0.4 78.6 +/-0.4 Washington 81.9 +/-0.4 83.9 +/-0.4 West Virginia 66.2 +/-0.8 69.8 +/-0.8 Wisconsin 75.3 +/-0.4 76.9 +/-0.4 Wyoming 76.1 +/-1.4 77.8 +/-1.3 Total United States 75.1 +/-0.1 76.7 +/-0.1 Puerto Rico 48.1 +/-0.6 51.8 +/-0.7 Source: Results based on the 2015 American Community Survey, available through the ACS FactFinder: http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_13_1YR_G CT2801.US01PR&prodType=table Table 6.10 High-Speed Inte r ne t Penet r at ion for House holds by State 1 1 High-speed internet service includes all internet service other than dial-up. 2014 2015 55 Subscribers Ratio Subscribers Ratio Subscribers Ratio Subscribers Ratio Alabama 1,842 1,241 0.67 862 0.47 534 0.29 38 0.02 Alaska 252 202 0.80 135 0.54 * * * * American Samoa 10 * * 0 0.00 0 0.00 0 0.00 Arizona 2,387 2,008 0.84 1,383 0.58 1,101 0.46 285 0.12 Arkansas 1,132 717 0.63 457 0.40 240 0.21 74 0.07 California 12,617 10,776 0.85 8,641 0.68 6,108 0.48 2,116 0.17 Colorado 1,998 1,771 0.89 1,183 0.59 1,099 0.55 * * Connecticut 1,356 1,161 0.86 992 0.73 789 0.58 211 0.16 Delaware 339 308 0.91 282 0.83 245 0.72 75 0.22 District of Columbia 267 228 0.85 198 0.74 186 0.70 * * Florida 7,218 6,577 0.91 5,389 0.75 3,790 0.53 817 0.11 Georgia 3,541 2,726 0.77 2,018 0.57 1,389 0.39 213 0.06 Guam 42 * * * * * * 0 0.00 Hawaii 450 397 0.88 396 0.88 * * * * Idaho 585 459 0.78 223 0.38 164 0.28 9 0.02 Illinois 4,779 3,669 0.77 2,871 0.60 2,036 0.43 363 0.08 Indiana 2,492 1,828 0.73 1,304 0.52 825 0.33 138 0.06 Iowa 1,232 893 0.72 489 0.40 118 0.10 12 0.01 Kansas 1,112 851 0.77 606 0.54 360 0.32 128 0.12 Kentucky 1,702 1,203 0.71 769 0.45 274 0.16 19 0.01 Louisiana 1,719 1,189 0.69 895 0.52 577 0.34 122 0.07 Maine 553 460 0.83 318 0.58 109 0.20 * * Maryland 2,156 1,822 0.85 1,642 0.76 1,443 0.67 387 0.18 Massachusetts 2,538 2,232 0.88 2,026 0.80 1,875 0.74 608 0.24 Michigan 3,828 2,831 0.74 2,231 0.58 1,667 0.44 190 0.05 Minnesota 2,115 1,658 0.78 1,087 0.51 898 0.42 230 0.11 Mississippi 1,093 611 0.56 380 0.35 214 0.20 28 0.03 Missouri 2,361 1,702 0.72 1,170 0.50 700 0.30 173 0.07 Montana 408 314 0.77 173 0.42 * * * * Nebraska 731 550 0.75 357 0.49 239 0.33 34 0.05 Nevada 1,006 840 0.83 636 0.63 482 0.48 * * New Hampshire 520 465 0.89 381 0.73 299 0.58 * * New Jersey 3,188 2,839 0.89 2,620 0.82 2,489 0.78 579 0.18 New Mexico 765 536 0.70 261 0.34 234 0.31 79 0.10 New York 7,256 6,094 0.84 5,482 0.76 4,254 0.59 744 0.10 North Carolina 3,743 2,947 0.79 2,134 0.57 1,259 0.34 580 0.15 North Dakota 293 232 0.79 183 0.62 132 0.45 17 0.06 Northern Mariana Isl. 16 * * 0 0.00 0 0.00 0 0.00 Ohio 4,570 3,537 0.77 2,544 0.56 1,055 0.23 47 0.01 Oklahoma 1,450 978 0.67 669 0.46 393 0.27 91 0.06 Oregon 1,523 1,257 0.83 910 0.60 775 0.51 * * Pennsylvania 4,958 3,899 0.79 2,987 0.60 2,612 0.53 775 0.16 Puerto Rico 1,241 * * * * * * * * Rhode Island 410 342 0.83 327 0.80 * * * * South Carolina 1,796 1,357 0.76 1,034 0.58 499 0.28 26 0.01 South Dakota 327 247 0.76 197 0.60 141 0.43 14 0.04 Tennessee 2,487 1,736 0.70 1,363 0.55 1,021 0.41 167 0.07 Texas 9,014 6,874 0.76 5,296 0.59 3,138 0.35 1,390 0.15 Utah 896 775 0.86 490 0.55 427 0.48 167 0.19 Vermont 257 231 0.90 153 0.60 123 0.48 47 0.18 Virgin Islands 43 * * * * * * 0 0.00 Virginia 3,042 2,456 0.81 2,059 0.68 1,725 0.57 391 0.13 Washington 2,645 2,291 0.87 1,666 0.63 1,511 0.57 * * West Virginia 742 510 0.69 335 0.45 275 0.37 * * Wisconsin 2,293 1,756 0.77 1,268 0.55 668 0.29 12 0.01 Wyoming 226 176 0.78 114 0.50 96 0.42 * * Total 117,562 93,428 0.79 71,779 0.61 51,454 0.44 13,313 0.11 Sources: FCC Form 477 (Connections); 2010-2014 ACS 5 -Year Estimates (Households for the fifty states, District of Columbia and Puerto Rico) Census 2010 (Housing Units for Puerto Rico, American Samoa, Guam, Northern Mariana Islands and U.S. Virgin Islands). Mbps = megabits per second and kbps = kilobits per second. * = Data withheld to maintain firm confidentiality. Note: Figures may not sum to totals due to rounding. Table 6.11 (H ou seh ol d s an d Subscri b ers in thou san d s) Hou seholds 10 Mbps Dow n loa d 25 Mbps Dow n loa d Residential Fix ed Connections per Household by Speed Tier as of December 31, 2015 100 Mbps Dow n loa d 1 Mbps uploa d 3 Mbps Uploa d 10 Mbps Uploa d At lea st 200 Kbps in any direct ion 56 All 4 With Expens es Only All With Expens es Only All With Expens es Only 1 95.7 58.9 3.1 3.2 2.2 2.4 0.9 1.4 2 97.4 68.9 3.5 3.9 2.5 2.9 1 1.7 Source: American Community Survey 2015 Public Use Microdata Sample (PUMS) data for telephone service and internet access and Consumer Expenditure Survey 2015 public-use microdata (PUMD) for telephone and internet expenses and after tax income Table 6.12 Telephone Servic e , Inter ne t Access, Telephone Expense s, and Inter ne t Expense s in Low-Income House hol ds, 2015 Yes Yes Yes YesYesYes 3 The telephone expenses include residential phone service, VOIP, phone cards, and cellular phone service. 4 The telephone and internet expenses are calculated for everyone in the income groups (All) and for only those who have telephone or internet expenses in the income groups (With Expenses Only). 1 Group one contains occupied housing units where the household income is less than or equal to 135% of the 2015 Federal Poverty Guideline for the household. Group 2 contains occupied housing units where household income is greater than 135% of the Federal Poverty Guideline, but less than or equal to 200% of the Federal Poverty Guideline for that Household. (% after-ta x income)(% after-ta x income)(% after-ta x income) 3 Internet Expens es 2 The statistical significance of the difference between the percentages for Group 1 and Group 2 was determined using a Satterthwaite (Welch) t-test for unequal variances. Yes Yes Group 1 Telephone Expens es Cellula r Phone Expens es Statistically Significant Difference 2 Telephone Service (%) Internet Access (%) 57 Section 7 – Price Indice s Overvi ew – 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.1 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. The CPI for telephone services is based on a ³market basket ´intended to represent the telephone- related expenditures of a typical urban household. It includes both land-line telephone service and wireless telephone service. 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/. 58 1969 - 2015 2005 - 2015 CPI All Items (SA0) 4.1 1.9 CPI All Services (SAS) 4.9 2.4 CPI Telephone Services (SEED) 1.8 0.5 CPI Major Categories: - Food & Beverages (SAF) 4.1 2.5 - Housing (SAH) 4.3 1.9 - Apparel (SAA) 1.7 0.5 - Transportation (SAT) 3.8 1.3 - Medical Care (SAM) 5.9 3.2 - Recreation (SAR) * 0.5 - Other Goods & Services (SAG) 5.3 2.8 CPI Public Transportation (SETG) 4.9 1.9 CPI Utility (Piped) Gas Service (SEHF02) 5.3 -4.6 CPI Electricity (SEHF01) 4.3 4.0 CPI Water & Sewerage Maint. (SEHG01) 6.2 5.7 CPI Postage (SEEC01) 4.9 3.7 Source: Bureau of Labor Statistics. (Average Annual Rates of Change) Long-Term Changes for Various Price Indi ces Table 7.1 * Series not established until after 1969. 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. 59 All Goods and Servi ce s Telephone Servi ce s 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 2012 1.7 0.3 2013 1.5 0.0 2014 0.8 -2.1 2015 0.7 0.7 Table 7.2 Annual Changes in CPI Telepho ne Servi ces and All Items Indices Sources: Bureau of Labor Statistics and Bureau of Economic Analysis. Note: Values report the percent change from December of the previous year through December of the year shown. 60 All Goods and Servi ces Telephone Servi ces Land-l i ne Telephone Servi ces Wi rel es s Telephone Servi ces CUUR0000SA0 CUUR0000SEED CUUR0000SEED04 CUUR0000SEED03 2012 January 104.96 99.01 104.93 59.92 February 105.42 99.05 105.04 59.92 March 106.23 99.12 105.18 59.94 April 106.55 99.20 105.37 59.95 May 106.42 99.29 105.47 60.01 June 106.26 99.39 105.74 60.01 July 106.09 98.91 105.59 59.58 August 106.68 98.58 105.91 59.14 September 107.16 98.68 105.75 59.29 October 107.12 98.89 105.78 59.49 November 106.61 98.97 106.11 59.45 December 106.32 98.97 106.13 59.45 2013 January 106.64 99.26 107.15 59.36 February 107.51 99.26 107.58 59.20 March 107.79 99.19 107.56 59.14 April 107.68 98.58 107.42 58.58 May 107.87 98.64 107.60 58.58 June 108.13 98.58 107.47 58.57 July 108.17 98.70 108.16 58.43 August 108.30 98.63 108.14 58.36 September 108.43 98.83 108.78 58.33 October 108.15 99.04 109.34 58.33 November 107.93 98.93 109.20 58.28 December 107.92 98.96 109.35 58.25 2014 January 108.32 99.35 111.11 58.14 February 108.72 98.94 110.81 57.85 March 109.42 98.85 110.82 57.78 April 109.78 98.95 110.78 57.87 May 110.16 98.87 111.14 57.71 June 110.37 98.79 111.00 57.68 July 110.33 98.82 111.09 57.68 August 110.14 98.79 111.09 57.65 September 110.23 98.78 111.25 57.60 October 109.95 97.51 111.20 56.51 November 109.35 97.09 111.04 56.18 December 108.73 96.86 111.37 55.89 2015 January 108.22 96.82 112.32 55.61 February 108.69 96.70 112.70 55.41 March 109.34 96.32 113.10 54.98 April 109.56 96.22 113.03 54.90 May 110.12 95.87 113.28 54.54 June 110.51 95.96 113.48 54.56 July 110.51 96.18 113.63 54.71 August 110.36 96.79 113.83 55.19 September 110.19 97.04 113.94 55.39 October 110.14 97.20 114.00 55.51 November 109.90 97.63 113.90 55.91 December 109.53 97.59 113.86 55.88 2016 January 109.71 97.73 114.60 55.85 February 109.80 97.13 115.14 55.27 March 110.27 97.08 114.90 55.28 April 110.80 97.10 114.88 55.29 May 111.25 96.69 114.88 54.97 June 111.62 96.56 114.23 54.99 July 111.44 96.33 114.02 54.85 Source: Bureau of Labor Statistics Table 7.3 Monthly Consume r Price Indic e s (De c e mbe r 2009 = 100) BLS Series ID 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. Series are not seasonally adjusted. Series may be referenced via the BLS website with the Series ID listed at the top of each column. 61 A - 1 Append i x: Addition al Informati on Regard i n g Uni vers al Service High - Cost Support CONTENTS Connect Ameri ca Fund Support for Fixe d Servi c e s in Areas Served By Price Cap Carri er s ............. 2 Connect Ameri c a Fund Suppor t for Mobile Servi c es ............................................................................ 16 Connect Ameri ca Fund Support for Fixe d Servi ce s in Areas Served By Rate- Of - Return Carri ers ........................................................................................ 19 Other Reform s Stemmi ng From the USF/ICC Transf orm at i on Order ............................................... 30 Progres s tow ar ds the Commi ssi on’ s Goals ............................................................................................. 34 Introduction. The Federal Communications Commission’s (Commission) 2011 USF/ICC Transformation Orde r comprehensively reformed and modernized the high- cost program within the universal service fund to support networks capable of providing voice and broadband services.1 Among other actions taken in that Order , the Commission adopted a framework, known as the Connect America Fund (CAF), to provide ongoing support to ensure that consumers in rural, insular, and high-cost areas have access to modern communications networks capable of providing voice and broadband service, both fixed and m obile, at rates that are reasonably comparable to those in urban areas. The Commission’s goals are to: “(1) preserve and advance universal availability of voice service; (2) ensure universal availability of modern networks capable of providing voice and broadband service to homes, businesses, and community anchor institutions; (3) ensure universal availability of modern networks capable of providing mobile voice and broadband service where Americans live, work, and travel; (4) ensure that rates are reasonably comparable in all regions of the nation, for voice as well as broadband services; and (5) minimize the universal service contribution burden on consumers and businesses.” 2 This appendix of the Monitoring Report provides a summary of the actions taken through December 31, 2016 to implement the high-cost program reforms and updates the data previously published in 2015 Universal Service Monitoring Report.3 1 See 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 , Report and Order and Further Notice of Proposed Rulemaking, 26 FCC 17663 (2011) (USF/ICC Transformation Order and/or FNPRM ), aff’d In re: FCC 11 -161 , 753 F.3d 1015 (10th Cir. 2014). 2 USF/ICC Transformation Order , 26 FCC Rcd at 17680, para. 48 (footnote omitted). 3 2015 Universal Service Monitoring Report Appendix, available at https://apps.fcc.gov/edocs_public/attachmatch/DOC -337019A1.pdf . A - 2 Connect America Fun d Support for Fixed Serv ices in Areas Serv ed By Price Cap Carriers Connect America Phase I. Phase I of the Connect America Fund implementation consisted primarily of two parts. First, the Commission froze support under existing high- cost support mechanisms for price cap carriers and their rate-of-return affiliates and required that frozen support during Phase I be used to build and operate voice and broadband-capable networks used to offer the provider’s own retail broadband service in areas substantially unserved by an unsubsidized competitor. 4 Second, to spur the deployment of voice and broadband-capable infrastructure to unserved locations while the Wireline Competition Bureau (Bureau) developed a forward-looking cost model to calculate the offer of Phase II support to price cap carriers, the Commission decided to offer additional, incremental support to price cap carriers.5 In Round 1 of Connect America Phase I, support to extend broadband- capable infrastructure was made available for areas lacking Internet access with speeds of at least 768 kbps downstream/200 kbps upstream. In July 2012, price cap carriers elected nearly $115 million in Phase I incremental support, committing to bring broadband-capable infrastructure to nearly 400,000 previously unserved Americans by 2015.6 A map of states where carriers plan ned to use Phase I Round 1 funding is available at http://www.fcc.gov/maps/connect-america-fund-caf-phase-i.7 The deadline for completion of deployment for the first round of Phase I incremental support was July 2015. Recipients reported the following deployment to the Administrator, the Universal Service Administrative Company ( USAC ), in their July 2016 FCC Form 481:8 4 USF/ICC Transformation Order at 17712, para. 128; see also 47 CFR § 54.313(c). A price cap carrier recipient of frozen supp ort was required to certify that an increasing portion of its frozen support was used to build and operate broadband-capable networks used to offer the provider’s own retail broadband service in areas substantially unserved by an unsubsidized competitor. Recipients had to certify that 1/3 of frozen support received in 2013 was used for such purposes, increasing to 2/3 of frozen support in 2014, and all frozen support in 2015 and beyond. However, the use of frozen support is not limited to new capital inve stment occurring in 2013 and beyond. In calculating the amount of frozen support used to build and operate such networks, carriers are permitted to include the funds used to maintain and operate existing networks in areas substantially unserved by an unsubsidized competitor, as well as funds used to recover the costs of past network upgrades to extend broadband - capable networks in areas substantially unserved by an unsubsidized competitor. Connect America Fund et al. , Order, 28 FCC Rcd 14887, 14890, para. 10 (WCB 2013). 5 USF/ICC Transformation Order , 26 FCC Rcd at 17715-17, paras. 133-38. 6 Press Release, FCC, FCC Kicks -Off ‘Connect America Fund’ with Major Announcement: Nearly 400,000 Unserved Americans in Rural Communities in 37 States Will Gain Access to High -Speed Internet within Three Years (July 25, 2012), http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC -315413A1.pdf . 7 The Commission permitted carriers to change which census blocks they deployed to from what was originally indicated, so the map does not necessarily indicte actual deployment. See Connect America Fund, Report and Order, 28 FCC Rcd 7766, 7777, 7780, para. 31, 36 n.60 (2013). 8 USAC validation of the reported deployment for Round 1 is in progress. The Commission has directed USAC to develop a map that will enable the public to see the expansion of service availability over time resulting from the implementation of the reforms adopted in the USF/ICC Transformation Order . See Connect America Fund et al. , Report and Order, Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking, 31 FCC Rcd 3087, 3164, para. 221 (2016) (Rate-of -Return Reform Order and/or FNPRM ). A - 3 Fi g ure 1 Phase I Round 1 Locati on Reporti ng 100% Buil d - Out Milest one Hol di ng Company Name Depl oym e nt Obligat i on Actual Depl oye d Locat ions Number of Locat ions Def i ci e nt Percent age Compl et e d Alaska Communications Systems (ACS) 5,401 2,501 2,900 46.31% CenturyLink 45,289 45,289 0 100.00% FairPoint 2,613 2,613 0 100.00% Frontier 92,877 97,684 0 105.18% Hawaii Telcom 519 520 0 100.19% Windstream 843 846 0 100.36% In May 2013, the Commission adopted rules for a second round of Connect America Phase I incremental support.9 The Commission expanded the eligible locations to include areas lacking Internet access with 3 Mbps downstream and 768 kbps upstream10 and concluded that parties could challenge whether a location was in fact served by an existing provider and thus inelig ible for support.11 On January 10, 2014, the Bureau issued an Order adjudicating challenges filed by over 80 interested parties.12 In Round 2 of Connect America Phase I, further support to extend broadband- capable infrastructure was provided. By March 2014, the Bureau had authorized nearly $324 million in Phase I Round 2 support for deployment of broadband-capable infrastructure to over 1.2 million Americans. 13 Included in this 1.2 million are 650,000 Americans who will receive access to broadband- capable infrastructure due to the Commission’s decision to expand the eligible areas to include areas lacking 3 Mbps downstream and 768 kbps upstream. A map of areas where carriers plan ned to use Phase I Round 2 funding is available at http://www.fcc.gov/maps/connect-america-fund-phase-i-round-two. Within two years of accepting Phase I Round 2 support, carriers were required to deploy to two- thirds of the required number of Phase I locations. 14 Carriers reported on their two-year deployment in 9 Connect A merica Fund , Report and Order, 28 FCC Rcd 7766 (2013) ( P hase I Round 2 Order ). 10 Id. at 7771-72, paras. 15-16. 11 Id. at 7776-79, paras. 28-33. 12 Id. 13 Id. ; Over $32 Million of Connect America Funding Authorized to Connect Unserved Homes and Businesses in A laska, Hawaii, and Puerto Rico, Public Notice, 28 FCC Rcd 14896 (W CB 2013); Over $255 Million of Connect America Funding Authorized to Connect Unserved Homes and Businesses in 41 States , Public Notice, 28 FCC Rcd 16450 (WCB 2013). Price cap carriers that made conditional elections were given the opportunity to modify their elections, specifying additional locations in already authorized census blocks. Connect America Fund, Order, 29 FCC Rcd 181, 238, para. 299 (WCB 2014). Windstream and AT&T subsequently revised their elections in light of the resolution of the challenges. On March 14, 2014, the Bureau authorized an additional $16,713,875 in Phase I incremental support for a further 20,045 locations. See Additional $16 . 7 Million in Connect America Phase I Support Authorized, Public Notice, 29 FCC Rcd 2824 (WCB 2014). 14 Wireline Competition Bureau Announces Deadlines for Connect America Phase I Round Two, Public Notice, 29 FCC Rcd 11445 (WCB 2014). A - 4 July 2016. Recipients reported the following figures for Round 2 to the USAC in their July 2016 FCC Form 481:15 Fi g ure 2 Phase I Round 2 Locati on Reporti ng Two - Thirds Bui l d - Out Milest one Hol di ng Company Name Depl oym e nt Obligat i on Actual Depl oye d Locat ions Number of Locat ions Def i ci e nt Percent age Compl et e d ACS 316 316 0 100.00% AT&T 129,032 10,138 75,888 7.86% CenturyLink 68,548 5,881 39,820 8.58% FairPoint 4,851 4,048 0 83.45% Frontier 103,304 90,086 0 87.20% Hawaii Telcom 1,317 1,062 0 80.64% Puerto Rico Telephone 40,736 27,307 0 67.03% Windstream 143,072 103,239 0 72.16% Within three years of accepting Phase I Round 2 support, carriers must deploy to 100% of their Phase I Round 2 locations. Puerto Rico Telephone and Hawaii Telcom had until October 31, 2016; CenturyLink and FairPoint have until January 10, 2017; and AT&T, Frontier and Windstream have until March 14, 2017 to fulfill their respective obligations. Carriers are required to report on their completion of Phase I Round 2 by July 1, 2017.16 USAC has recover ed funds from those carriers who have not met deployment obligations (ACS for Phase I Round 1, and AT&T and Cent uryLink for Phase I Round 2).17 Even though AT&T and CenturyLink did not meet their Phase I Round 2 two-year obligations, if they ultimately meet their full deployment obligations, they will be eligible to have their Phase I Round 2 support restored.18 15 USAC validation of the repor ted deployment for the two-thirds milestone for Round 2 is in progress. 16 See Wireline Competition Bureau Reminds Connect America Phase I Round Two Recipients of Deployment and Certification Deadlines , Public Notice, DA 16 -1415 (WCB Dec. 19, 2016). 17 USF/I CC Transformation Order , 26 FCC Rcd at 17721, para. 147. 18 Id. at 17721, para. 147. A - 5 Fi g ure 3 Depl oym e nt Number s by State/Territ or y for CAF Phase I, Rounds 1 and 2 Based on the FCC Form 481 data as of July 1, 2016 A - 6 Connect America Phase I I . In the USF/ICC Transformation Order , the Commission determined that it would provide support in Phase II through a combination of “a new forward- looking model of the cost of constructing modern multi-purpose networks” and a competitive bidding process. 19 Using the cost model to “estimate the support necessary to serve areas where costs are above a specified benchmark, but below a second ‘extremely high -cost’ benchmark,” the Commission concluded it would offer each price cap carrier “a model -derived support amount in exchange for a commitment to serve all locations in its service territory in a state that, based on the model, fall within the high-cost range and are not served by an competing, unsubsidized provider.” 20 Subsequently, in the April 2014 Connec t America Order and FNPRM , the Commission established a three-year phase-down period for carriers that chose model-based support that is less than the frozen high- cost support the carrier previously received in order to avoid flash cuts. 21 Further, in the December 2014 Connect America Order , the Commission finalized the decisions necessary to proceed with the offer of support to price cap carriers.22 In particular, the Commission revised the minimum speed requirement to 10 Mbps downstream. 23 The Commission also increased the term of support to six years , adopted more evenly spaced interim deployment milestones, and concluded that, in limited circumstances, adjustments of up to five percent in the number of locations that must be served with corresponding support reductions are appropriate to ensure that deployment obligations recognize conditions in the real world. 24 Additionally, the Commission forbore from the federal high- cost universal service obligation for price cap carriers to offer voice service in low-cost areas where they do not receive high-cost support, in areas served by an unsubsidized competitor, and in areas where the price cap carrier is replaced by another eligible telecommunications carrier (ETC ).25 The Commission also addressed the eligibility of certain areas for Phase II support, both for the offer of model-based support to price cap carriers and the subsequent Phase II auction. 26 Finally, the Commission took several steps to strengthen the uniform national framework for accountability by codifying the broadband reasonable comparability rates certification requirement, requiring price cap carriers that accept model-based support to submit specific location information, adjusting the framework for reduction in support for late-filed reports and certifications, and adopting measures for addressing non-compliance.27 In the USF/ICC Transformation Order , the Commission delegated to the Bureau “the task of selecting a specific engineering cost model and associated inputs that meet the criteria specified” by the 19 Id. at 17725, para. 156. 20 Id . 21 Connect America Fund et al. , Report and Order , Declaratory Ruling, Order, MO&O, Seventh Order on Reconsideration, and FNPRM, 29 FCC Rcd 7051, 7066-67, paras. 50-51 (2014) (April 2014 Connect America Order and/or FNPRM ). 22 Connect America Fund, ETC Annual Reports and Certifications, Petition of USTelecom for Forbearance Pursuant to 47 U.S.C. §1 6 0 (c) from Obsolete ILEC Regulatory Obligat ions that Inhibit Deployment of Next - Generation Networks , Report and Order, 29 FCC Rcd 15644 (2014) ( December 201 4 Connect America Order ). 23 December 201 4 Connect America Order , 29 FCC Rcd at 15649, paras. 15-29. 24 Id . at 15656-61, paras. 31-44. 25 Id . at 15663-71, paras. 51-70. 26 Id . at 15671-74, paras. 73-81. 27 Id . at 15686-701, paras. 118-157. A - 7 Commission.28 The Commission also directed the Bureau to consider “whether the model ultimately adopted adequately accounts for the cos ts faced by carriers serving [areas outside of the United States].” 29 In April 2013, the Bureau adopted a platform for the Connect America C ost Model (CACM or CAM) , which is the basic framework for the model consisting of key assumptions about the design of the network and network engineering, and also addressing certain framework issues relating to inputs.30 In April 2014, the Bureau released an order finalizing decisions regarding the engineering assumptions in the CAM and adopting the inputs necessary for the model to calculate the cost of serving census blocks in price cap areas.31 In the USF/ICC Transformation Order , the Commission concluded that Phase II support would not be provided in areas served by an unsubsidized competitor, and it delegated t o the Bureau the responsibility of determining those areas.32 The Commission specified that there be a process by which parties could challenge that initial determination of whether or not an area is unserved by an unsubsidized competitor. In June 2014, the Bureau commenced the Phase II challenge process. 33 In March 2015, the Bureau released the Phase II Challenge Process Resolution Order. In that order the Bureau conclude d the Connect America Phase II c hallenge process and made a final determination regarding over 95,000 census blocks. 34 In April 2015, the Bureau announced the offers of model-based Phase II Connect America support to price cap carriers to fund the deployment of voice and broadband-capable networks in their service territories, a total of $1.675 billion annually for six calendar years (2015- 2020).35 The carriers had 120 days (until August 27, 2015) to decide whether to accept the offers on a state-by-state basis. 28 USF/ICC Transformation Order , 26 FCC Rcd at 17725, para. 157; see also id. at 17737, para. 192. 29 Id. at 17737, para. 193. These “non- contiguous areas” are Alaska, Hawaii, Puerto Rico, the U.S. Virgin Islands, and the Northern Marianas Islands. See id. 30 See Connect America Fund; High- Cost Universal Service Support , Report and Order, 28 FCC 5301 (W CB 2013) ( CAM Platform Order ). 31 Connect America Fund et al. , Report and Order, 29 FCC Rcd 3964 (WCB 2014) ( CAM Inputs Order ). 32 USF/ICC Transformation Order , 26 FCC Rcd at 17729, para. 170; see also Connect America Fund, Report and Order, 28 FCC Rcd 15060, 15076- 80, paras. 39-47 (WCB 2013) ( P hase II Service Obligations Order ); Connect America Fund, Report and Order, 28 FCC Rcd 7211 (W CB 2013) ( P hase II Challenge Process Order). 33 Wireline Competition Bureau Commences Connect America Phase II Challenge Process , Public Notice, 29 FCC Rcd 7986 (WCB 2014). On September 26, 2014, the Bureau released a list of challenges that merited responses, giving parties 45 days to reply. Replies Sought in Connect America Phase II Challenge Process , Public Notice, 29 FCC Rcd 11497 (WCB 2014). The Bureau concluded that 24,225 challenges made a valid prima facie case that a census block should be treated as served, while 70,868 challenges made a valid prima facie case that a census block should be treated as unserved. Responses to the prima facie challenges were due November 10, 2014. 34 Connect America Phase II Challenge Process , Order, 30 FCC Rcd 2718 (WCB 2015) ( P hase II Challenge Process Resolution Order ). The Bureau announced the results of the review of the challenges and replies, and provided an accompanying listing of those census blocks that would be treated as served and those that would be treated as unserved for purposes of calculating the Phase II offer of model-based support to price cap carriers. The Bureau concluded, based on review of the challenges and replies, that 57,288 census blocks should be treated as unserved and that 36,700 census blocks should be treated as served. 35 Wireline Competition Bureau Announces Connect America Phase II Support Amounts Offer ed to Price Cap Carriers to Expand Rural Broadband, Public Notice, 30 FCC Rcd 3905 (W CB 2015). A - 8 On August 27, 2015, the Bureau announced that ten telecommunications carriers accepted over $1.5 billion in annual support for rural broadband deployment from the Connect America Fund to serve over 3.6 million homes and businesses by the end of 2020.36 This support, along with carrier investment, will expand broadband to ne arly 7.3 million rural consumers in 45 states and one U.S. territory. In states where the carriers declined support, a competitive bidding process will be used to select entities that will be authorized to receive funding. The carriers accepting support include AT&T, Cincinnati Bell, CenturyLink, Consolidated Communications, FairPoint Communications, Frontier Communications, Hawaiian Telecom, Micronesian Telecom, Verizon ,37 and Windstream.38 Figures 4 and 5 show accepted support by state and by carrier, respectively. Fi g ure 4 Accepte d Price Cap CAF Phase II Offers of Model - B ase d Support By State (Source: https://apps.fcc.gov/edocs_public/attachmatch/DOC -335269A5.xlsx ) State Ho me s & Busine sse s Served Suppo r t Amou nt In Dolla r s AL 126,497 $44,767,752 AR 129,812 $54,276,126 AZ 46,526 $23,370,158 CA 231,835 $98,330,096 CO 53,139 $26,509,143 CT 1,388 $435,139 FL 80,909 $26,836,154 GA 134,005 $50,858,551 HI 11,081 $4,424,319 IA 88,214 $53,200,244 ID 22,379 $11,502,990 IL 92,519 $50,128,844 IN 135,082 $51,128,227 KS 64,393 $35,443,694 KY 152,742 $54,573,721 LA 99,302 $37,378,605 MA 252 $63,258 ME 35,500 $13,289,220 MI 180,377 $60,512,568 36 Press Release, FCC, Carriers Accept Over $1.5 Billion in Annual Support from Connect America Fund to Expand and Support Broadband for Nearly 7.3 Million Rural Consumers in 45 States and One Territory (Aug. 27, 2015), https://www.fcc.gov/document/carriers-accept-over-15-b-support-expand -rural-broadband. 37 Verizon accepted $31,978,057 in annual support for California and $16,576,929 in annual support for Texas conditioned “upon issuance and acceptance of” regulatory approvals for Frontier Communications’ acquisition of Verizon’s subsidiaries in California and Texas . See Verizon Communications Inc. Conditionally Accepts Over $48.5 Million in Connect America Phase II Support in California and Texas , Public Notice, 30 FCC Rcd 8594 (WCB 2015). In April 2016, Verizon notified the Bureau that the transaction had closed, and the Bureau subsequently authorized Frontier Communications to receive Phase II model -based support in California and Texas. Wireline Competition Bureau Authorizes Frontier t o Receive over $48.5 Million in Connect America Phase II Support in California and Texas , Public Notice, 30 FCC Rcd 3506 (WCB 2016) 38 The Bureau provided all non-contiguous carriers the option of choosing either to continue to receive frozen support amounts or to elect to receive the model-determined support amount. CAM Inputs Order , 29 FCC Rcd at 4029, para. 152. Alaska Communications Systems (ACS) in Alaska, PRTC in Puerto Rico, and Vitelco in the U.S. Virgin Islands elected to receive frozen support. Later, the Commission proposed and sought comment on specific service obligations for non-contiguous carriers electing to continue to receive frozen support amounts . April 201 4 Connect America FNPRM , 29 FCC Rcd at 7117-7121. In October 2016, the Commiss ion adopted specific service obligations for ACS, which are summarized below. See infra A -11; Connect America Fund, Order, 31 FCC Rcd 12086 (2016) ( A CS Service Obligations Order ). A - 9 Fi g ure 4 Accepte d Price Cap CAF Phase II Offers of Model - B ase d Support By State (Source: https://apps.fcc.gov/edocs_public/attachmatch/DOC -335269A5.xlsx ) MN 170,355 $85,622,871 MO 189,323 $93,728,312 MP 11,143 $2,627,177 MS 139,269 $51,506,992 MT 35,941 $16,310,111 NC 68,267 $19,055,517 ND 8,044 $5,656,741 NE 35,839 $23,215,615 NH 13,131 $4,376,606 NJ 1,881 $450,340 NM 32,340 $15,369,074 NV 5,235 $2,451,840 NY 59,627 $21,444,471 OH 166,967 $58,483,365 OK 17,391 $8,003,516 OR 50,327 $21,657,260 PA 76,777 $27,694,806 SC 49,358 $16,286,714 SD 15,071 $9,117,215 TN 93,422 $29,927,295 TX 212,492 $93,131,882 UT 9,506 $4,441,848 VA 52,433 $16,588,786 VT 28,399 $8,789,359 WA 81,865 $34,421,951 WI 230,451 $95,438,696 WV 89,190 $38,068,337 Fi g ure 5 Accepte d Price Cap CAF Phase II Offers of Model - B ase d Support By Carri er (Source: https://apps.fcc.gov/edocs_public/attachmatch/DOC -335269A5.xlsx ) Price Cap Carri er Stat es Served Home s & Busi ne ss e s Served Support Amount In Dol l ars AT&T AL , AR , CA , FL, GA , IL, IN, KS , KY , LA , MI, MS, NC, OH , SC, TN, TX , WI 1,117,806 $427,706,650 CINCINNATI BELL KY, OH 7,084 $2,229,130 CENTURYLINK AL , AR , AZ , CO , FL, GA , IA , ID, IL, IN, KS , LA , MI, MN, MO , MT, NC, ND, NE , NJ, NM, NV , OH, OR , PA , SC, SD, TN, TX , UT, VA , WA , WI 1,174,142 $505,702,762 CONSOLIDATED COMMUNICATIONS CA, IA, 39 IL, MN, PA,TX 24,698 $13,922,480 39 Consolidated Communications transferred control of its entire Iowa study area to Mutual Telephone Company of Sioux Center d/b/a Premier Communications (Mutual), with two of the exchanges being transferred to Winnebago Cooperative Telecom Association (Winn ebago). In September 2016, the Bureau granted a study area waiver for this transaction. Connect America Fund et al. , Order, 31 FCC Rcd 10683 (WCB 2016). Starting with the disbursement for October 2016, Mutual and Winnebago are now the recipients of the Phase II support associated with the eligible A - 10 Fi g ure 5 Accepte d Price Cap CAF Phase II Offers of Model - B ase d Support By Carri er (Source: https://apps.fcc.gov/edocs_public/attachmatch/DOC -335269A5.xlsx ) FAIRPOINT COMMUNICATIONS AL , FL, IL, MA , ME , MO , NH , NY, OH , OK , PA , VA , VT , WA 105,220 $37,430,669 FRONTIER COMMUNICATIONS AL , AZ , CA , CT, FL, GA , IA , ID, IL, IN, MI, MN, MS, MT, NC, NE , NM, NV , NY, OH, OR , PA , SC, TN, UT, WA , WI, WV 659,587 $283,401,855 HAWAIIAN TELCOM INC HI 11,081 $4,424,319 MICRONESIAN TELECOMM MTC 11,143 $2,627,177 VERIZON CA, TX 40 114,610 $48,554,986 WINDSTREAM COMMUNICATIONS AL , AR , FL, GA , IA , KY , MN, MO , MS, NC, NE , NY, OH , OK , PA , SC, TX 404,625 $174,895,478 In May 2016, the Commission adopted a Report and Order establishing a framework for the Phase II auction.41 The Commission set the budget for the Phase II auction at $215 million per year for a 10-year support term, adopted service obligations for recipients of Phase II auction support, finalized decisions regarding areas that will be eligible for the auction, adopted certain eligibility requirements as well as post-auction obligations and oversight measures, and provided basic guidance about the auction process. Through the Phase II auction, bidders will be able to compete to receive support to offer voice and broadband service to locations in census blocks where price cap carriers declined Phase II model- based support that remain unserved with 10/1 Mbps broadband, and in certain other census blocks nationwide, including those unserved census blocks with extremely high deployment costs. The Commission will accept bids for four technology-neutral service tiers with varying speed and usage allowances, and for each tier will differentiate between bids that would offer either low or high latency. In the accompanying Further Notice of Proposed Rulemaking, the Commission sought comment on a number of issues, including on how to apply weights to the different service tiers, on measures to achieve the public interest objective of ensuring appropriate support for all states, and on measures to achieve the public interest objective of expanding broadband on Tribal lands. 42 Specific details regarding the mechanics of the auction will be determined by the Commission at a future date after further opportunity for comment. census blocks that are located in their respective exchanges. They will be required to offer voice and broadband service meeting the Phase II service obligations to the total number of locations that are in those eligible census blocks by the relevant build-out milestones. Id. 40 As noted above, Frontier has since acquired Verizon’s subsidiaries in California and Texas. See supra n.37. 41 Connect America Fund, et al. , Report and Order and Further Notice of Pr oposed Rulemaking, 31 FCC Rcd 5949 (2016) ( Phase II Auction Order and/or FNPRM ). 42 P hase II Auction FNPRM , 31 FCC Rcd at 6020-27, paras. 205-29. A - 11 In August 2016, t he Bureau released a list of the census blocks that are preliminarily eligible for the Phase II auction.43 The Bureau will release the final list of the eligible census blocks approximately three months prior to the deadline for short-form applications. The date for the Phase II auction has not yet been set. ACS Phase II Frozen Support . On October 24, 2016, the Commission adopted tailored service obligations for ACS, a carrier serving a non- contiguous area in Alaska. ACS elected to receive nearly $20 million annually for a 10-year term and is required to offer voice service and broadband service at the same speed, latency, usage and pricing metrics as established for Phase II model-based carriers to at least 31,571 locations, primarily in census blocks identified as high-cost that are unserved by unsubsidized competitors. The Commission allowed ACS the flexibility to deploy to up to 7,900 locations in “partially served census blocks,” subject to a challeng e process. The Commission also allowed ACS the flexibility to count towards its service obligation up to 2,714 locations in census blocks identified by the model as “ low-cost,” so long as those locations are unserved with broadband by either ACS or a competitor, the low-cost census block is immediately adjacent to high-cost census blocks, and ACS certif ies that the capital investment cost to build to the location is at least $5,000. 44 Rural Broadband Experiments . In July 2014, the Commission adopted a budget of up to $100 million for rural broadband experiments (RBE) and established an objective methodology for selecting projects among formal applications from those carriers that would deploy new, robust broadband to consumers in price cap areas.45 By the end of 2016, all winning bidders that successfully met the requirements established by the Commission had been authorized. 46 Applications were due on November 7, 2014. On December 5, 2014, the Bureau announced 37 bidders that were provisionally selected for funding in each category, subject to the post-selection process.47 Collectively the bidders sought support to cover 26,867 census blocks in 25 states and Puerto Rico. Following this announcement, some winners indicated they were no longer interested and others defaulted on their bids. Still others sought waiver of the audited financial documents requirement and submitted other documentation instead. On December 23, 2014, the Bureau announced those bidders that defaulted and the availability of $716,000 in additional funding. 48 Entities interested in being considered next -in-line were permitted to submit required documents until January 6, 2015. On February 3, 2015 the Bureau announced the next -in-line bidders.49 On March 4, 2015, the Bureau announced 12 additional provisionally selected bidders.50 43 Wireline Competition Bureau Releases Preliminary List and Map of Eligible Census Blocks for the Connect Ame rica Phase II Auction , Public Notice, 31 FCC Rcd 8870 (WCB 2016). 44 A CS Service Obligations Order , 31 FCC Rcd 12086. 45 Connect America Fund, ETC Annual Reports and Certifications , Report and Order and Further Notice of Proposed Rulemaking, 29 FCC Rcd 8769 (2014) (Rural Broadband Experiments Order ). 46 Two applications for review of Bureau decisions remain pending. 47 Wireline Competition Bureau Announces Entities Provisionally Selected for Rural Broadband Experiments; Sets Deadlines For Submission of Additional Information, Public Notice, 29 FCC Rcd 14684 (WCB 2014). 48 Wireline Competition Bureau Announces Availability of Additional Funding For Rural Broadband Experiments , Public Notice, 29 FCC Rcd 16243 (WCB 2014) 49 Wireline Competition Bureau Announc es Entities Under Consideration As Next -In -Line Bidders for Rural Broadband Experiments , Public Notice, 30 FCC Rcd 1045 (WCB 2015). 50 Wireline Competition Bureau Announces Additional Provisionally Selected Bidders For Rural Broadband Experiments , Public Notice, 30 FCC Rcd 2045 (WCB 2015). A - 12 In 2015, the Bureau authorized RBE support for many of the bidders. In 2016, the Bureau completed its work authorizing the remaining bidders. In total, ove r $41 million in RBE support has been authorized. Figure 6 provides summary information regarding RBE support . A - 13 Fig ure 6 Authori ze d Rural Broadband Experi m e nt s (https://www.fcc.gov/general/rural-broadband-experiments) Project State( s) Total Suppo r t Awarde d Total Census Blo c ks (CBs) co v e r e d by Projec t ( s) Total Price - Cap (PC) Locatio ns w it hin Total CBs Techno lo g y Speeds Offered (Up/Do w n Mbps) Da t e of Public Notice Announc i ng Autho riz a t io n Allamakee -Clayton Electric Cooperative, Inc. IA $1,453,593 209 665 Hybrid fiber/ fixed wireless 10/1 8/7/2015 BARC Electric Cooperative VA $239,918 64 801 Fiber 25/5; 35/10; 50/15; 75/25; 120/25; 250/35; 1,000/50 12/11/2015 Big Bend Telecomm TX $178,425 15 21 Hybrid fiber/ fixed wireless 3/1, 6/1, 12/1 9/12/2016 Consolidated Communications Networks, Inc. ND $3,096,810 103 171 Fiber 10/1 8/7/2015 Daktel Communications, LLC ND $875,000 109 508 Fiber 25/5; 50/5 11/12/2015 Delta Communications LLC IL $2,196,000 78 122 Fiber 10/1 8/7/2015 Douglas Services, Inc. OR $2,375,000 325 2,495 Fiber 50/10; 100/25; 250/25 12/11/2015 A - 14 Fig ure 6 Authori ze d Rural Broadband Experi m e nt s (https://www.fcc.gov/general/rural-broadband-experiments) Project State( s) Total Suppo r t Awarde d Total Census Blo c ks (CBs) co v e r e d by Projec t ( s) Total Price - Cap (PC) Locatio ns w it hin Total CBs Techno lo g y Speeds Offered (Up/Do w n Mbps) Da t e of Public Notice Announc i ng Autho riz a t io n Federated Telephone Cooperative MN $1,455,962 95 344 Fiber 20/20; 50/50; 100/100; 300/300 11/12/2015 First Step Internet, LLC ID, WA $415,855 116 453 LTE Wireless (3.65 GHz) 10/1 9/11/2015 Lake County, Minnesota d/b/a Lake Connections MN $3,491,280 845 8,497 Fiber 100/25 12/12/2016 Midwest Energy Cooperative d/b/a Midwest Connections MI $211,532 31 421 Fiber 25/10; 50/20; 100/25 2/9/2016 New Lisbon Broadband and Communications, LLC IN $37,696 7 24 Fiber 10 /1, 25 /5, and 50 /10 5/4/2016 Northeast Rural Services, Inc. OK $4,330,315 434 3,169 Fiber 25/5 (up to 1,000) 9/11/2015 (1,4,6,12) 12/11/2015 (5,11) 9/12/2016 Northern Valley Communications, LLC SD $2,022,120 258 411 LTE Wireless (4 GHz) 25/3 2/9/2016 A - 15 Fig ure 6 Authori ze d Rural Broadband Experi m e nt s (https://www.fcc.gov/general/rural-broadband-experiments) Project State( s) Total Suppo r t Awarde d Total Census Blo c ks (CBs) co v e r e d by Projec t ( s) Total Price - Cap (PC) Locatio ns w it hin Total CBs Techno lo g y Speeds Offered (Up/Do w n Mbps) Da t e of Public Notice Announc i ng Autho riz a t io n Paul Bunyan Rural Telephone Cooperative MN $1,962,000 134 1,839 Fiber 25/5; 250/250; 500/500 (up to 1,000) 11/12/2015 Skybeam, LLC IA, IL,KS, NE, TX $16,942,887 3,877 16,751 Fixed Wireless 5/1; 10/2; 25/5 8/7/2015 (for bids 2, 3,7, 8) 11/12/2015 (bids 1, 4,5,9,11) 01/12/2016 (bid 10) Total 15 states $ 41,284,393 6,700 36,692 A - 16 Connect America Fun d Support for Mobile Services Mobility Fund Phase I . For the first time, in the USF/ICC Transformation Order, the Commission established a universal service support mechanism dedicated exclusively to mobile services – the Mobility Fund. Mobility Fund Phase I support was awarded through a nationwide reverse auction, Auction 901, held in Septe mber 2012. This auction made available up to $300 million in one -time support to accelerate deployment of networks for mobile voice and broadband services in areas unserved by current generation or 3G networks. In this auction, there were a total of 33 winning bidders eligible to receive a total of $299,998,632 in one -time Mobility Fund Phase I universal service support to provide 3G or better mobile voice and broadband services covering up to approximately 83,000 road miles in 795 biddable geographic areas located in 31 states and 1 territory. On March 11, 2016, the Wireless Telecommunications and Wireline Competition Bureaus (Bureaus) authorized approximately $330,000 of support to VTel Wireless for eleven winning bids. With this authorization, all w inning bids for Mobility Fund Phase I have been authorized. 51 Since April 2013, the Bureaus have authorized disbursements for over $270 million in winning bids, and announced over $27 million in auction defaults. Of the authorized winning bids, eight winning bidders subsequently defaulted on their performance obligations for bids totaling over $63 million. A performance default by Allied Wireless Communications Corporation (Allied), accounted for over 71 percent of the total performance default amount and occurred because Allied’s parent company assigned to AT&T the licenses that Allied needed to meet its performance requirements. Mobility Fund Phase II . The Commission also proposed, in the USF/ICC Transformation FNPRM , to use a reverse auction to provide up to $500 million per year in ongoing support as part of the Mobility Fund Phase II in order to promote mobile broadband and high quality voice services in areas where such services cannot be sustained or extended absent federal support. 52 In November 2012, the Bureaus released a public notice seeking further comment on a limited number of specific issues relating to the implementation of Phase II of the Mobility Fund, particularly in light of experience with the recently-concluded Mobility Fund Phase I auction (Auction 901). 53 Subsequently, in 2014, the Commission sought further comment on issues relating to the Mobility Fund. The FNPRM addressed significant developments that have occurred in the marketplace for mobile wireless services since the adoption of the USF/ICC Transformation Order . Given the commercial deployment of 4G Long Term Evolution (LTE), the FNPRM proposed to retarget the focus of Mobility Fund Phase II and sought comment on targeted measures that would (i) address those areas of the country where LTE is not and will not be available in the foreseeable future, and (ii) preserve existing mobile voice and broadband service where it would not otherwise exist without government support. 54 In September 2016, the Wireless Telecommunications Bureau released a staff report, Working Toward Mobility Fund II: Mobile Broadband Coverage Data and Analysis , that analyzes the Form 477 4G LTE cov erage data.55 The report describes and analyzes data on mobile broadband coverage based on 51 Mobility Fund Phase I Support Authorized for 11 Winning Bids, Default on 35 Winning Bids Determined, Public Notice, 31 FCC Rcd 1721 (WTB and WCB 2016). 52 USF/ICC Transformation Order , 26 FCC Rcd at 18069-70, para. 1121. 53 Further Inquiry Into Issues Related to Mobility Fund Phase II , Public Notice, 27 FCC Rcd 14798 (WCB and WTB 2012). 54 April 201 4 Connect America FNPRM, 29 FCC Rcd at 7127 -28, para 239. 55 Working Toward Mobility Fund II: Mobile Broadband Coverage Data and Analysis, Wireless Telecommunications Bureau, Sept. 30, 2016, available at https://apps.fcc.gov/edocs_public/attachmatch/DOC -341539A1.pdf . A - 17 Form 477 submissions, which will enable the Commission to make fact-based decisions regarding where and how high-cost support should be deployed through the Mobility Fund Phase II. The FNPRM remains pending. Tribal Mobility Fund Phase I . In the USF/ICC Transformation Order , the Commission set aside $50 million in one -time (Phase I) support to accelerate immediately deployment of networks for mobile voice and broadband services in unserved Tribal land areas to be awarded through a separate complementary one-time Tribal Mobility Fund Phase I auction. This auction, designated Auction 902, was completed on February 25, 2014. The five winning bidders are eligible to receive a total of up to $49,806,874 in one -time Tribal Mobility Fund Phase I universal service support to provide 3G or better mobile voice and broadband services covering a population of 56,932 in 80 biddable areas. These areas include 18 biddable areas on five Reservations or Tribal lands in Arizona, Montana, New Mexico, and Utah; and 62 biddable areas in 49 Alaska Native Village Statistical Areas and 13 bidding areas otherwise in Alaska Native Regions. The Bureaus have authorized $49,806,874 in support. A - 18 Fi g ure 7 Mobilit y and Tribal Mobilit y Phase I Authori ze d Suppor t (Source: Authorized Public Notices available on FCC Auctions website) Mobile Support in Alaska. In August 2016, consistent with the goals articulated in the USF/ICC Transformation Order, and based on a consensus plan filed by mobile providers serving remote Alaska, the Commission established a separate ongoing high-cost support mechanism to sustain and expand the availability of mobile voice and broadband service in remote Alaska. 56 The competitive ETCs that participate will be required to meet individualized performance plans that include mobile broadband 56 Connect America Fund et al. , Report and Order and Further Notice of Proposed Rulemaking, 31 FCC Rcd 10139 (2016) ( Alaska Plan Order ). See infra A -22. W Y W VA W I W A VT VA UT T X T N SD SC P A O R O K O H N V N M N E N D N C MT MS MP ME L A KY I L I D I A G A CO AZ AL AK T o t al A ut h o r iz e d A - 19 service at specified minimum speeds to a certain percentage of the eligible population. By public notice released December 21, 2016, the Wireless Telecommunications Bureau approved the performance plans of each of the eight wireless providers in remote Alaska that elected support under the Alaska high- cost support mechanism, and directed USAC to begin disbursements under the mechan ism to these providers starting January 1, 2017.57 Connect America Fun d Support for Fixed Serv ices in Areas Serv ed By Rate- Of - Return Carrie rs Reforms to Support for Rate -of -Return Carrier s. In March 2016, following extensive collaboration with rate-of-return stakeholders, the Commission approved an order establishing a new mechanism for the distribution of support in rate-of-return areas that gives rural carriers two paths, described below, for receiving broadband-oriented support.58 Under one option, rate-of-return carriers may elect to receive model-based support, calculated using the Alternative Connect America Cost Model (A -CAM), for a term of 10 years in exchange for meeting defined build-out obligations — a specific number of locations where carriers are required to provide 4/1 Mbps, 10/1 Mbps, and 25/3 Mbps over the course of ten years with interim milestones. In addition, a certain number of locations are subject to the Commission’s reasonable request standard. After conducting a challenge process to eliminate census blocks served by an unsubsidized competitor , the Bureau completed A -CAM ( version 2.3) and announced the offer of model-based support on August 3, 2016.59 Carriers had until November 1, 2016 to indicate, on a state-by-state basis, whether they elect to receive model-based support.60 On November 2, 2016, the Bureau announced that 216 rate -of-return companies submitted letters electing 274 separate offers of A -CAM support in 43 states. The Bureau determined that model -based support and transition payments would exceed the overall 10- year budget set by the Commission by more than $160 million annually. 61 On December 20, 2016, t he Commission released an Order adopting measures to address the significant demand for A -CAM support and directed the Bureau to take steps consistent with this Order to enable electing carriers to receive A -CAM support. 62 As set forth in Figure 8, the Bureau has authorized 35 rate -of-return companies that elected 45 offers of A -CAM support to receive model-based support pursuant to their existing elections. In addition, for the remaining 191 companies that elected model-based support, the Bureau has announced 228 revised offers of model- 57 Wireless Telecommunications Bureau Approves Performance Plans of the Eight Wireless Providers That Elected to Participate in the Alaska Plan, WC Docket No. 16 -271, Public Notice, DA 16- 1419 (WTB rel. Dec. 21, 2016). 58 Connect America Fund et al. , Report and Order, Order and Order on Reconsideration, and Further Notice of Proposed Rulemaking, 31 FCC Rcd 3087 (2016) (Rate-of -Return Reform Order ). 59 Wireline Competition Bureau Releases Report for Alternative Connect America Cost Model with Minor Corrections, Public Notice, 31 FCC Rcd 8959 (WCB 2016); Wireline Competition Bureau Announces Support Amounts Offered to Rate -of -Return Carriers to Expand Rural Broadband, Public Notice, 31 FCC Rcd 8641 ( WCB 2016). 60 See Wireline Competition Bureau Announces Support Amounts Offered to Rate -of -Return Carriers to Expand Rural Broadband, Public Notice, 31 FCC Rcd 8641 (WCB 2016). 61 Wireline Competition Bureau Announces Results of Rate -of -Return Carriers tha t Accepted Offer of Model Support , Public Notice, 31 FCC Rcd 11966 (WCB 2016). 62 Connect America Fund, Report and Order and Further Notice of Proposed Rulemaking, FCC 16- 178 (Dec. 20, 2016) ( A -CAM Revised Offer Order ). A - 20 based support and the associated revised deployment obligations.63 Carriers have until January 19, 2017 to elect this second offer. Fi g ure 8 Authori z e d A - CAM Support & Obligati ons Dece m be r 20, 2016 State Holdi ng Compa ny Annual Rate - of -Ret ur n Carrie r Model -B ased Suppo rt Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 25/3 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 10/1 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 4/1 Mbps Numbe r of Locati on s Remai ni ng on Reas on a bl e Request Standa rd ROR Sub Total ROR Sub Total 51,324,925 54,696 21,703 2,097 4,088 AL Otelco Inc. 1,898,802 5,812 1,938 8 8 AZ Accipiter Communications, 945,721 60 180 68 206 CA Bryan Family Inc. 435,246 3 10 42 127 CA LICT Corporation 1,192,277 144 432 74 222 FL Smart City Finance, LLC 204,405 144 48 11 12 FL Telephone and Data Systems, Inc. 379,344 1,220 407 5 6 GA Fail, Inc. 11,820 30 11 - - GA Pineland Telephone Cooperative, Inc. 1,392,004 1,458 487 42 43 GA Telephone and Data Systems, Inc. 1,983,266 3,981 1,328 54 54 IA Fenton Cooperative Telephone Company 98,922 19 20 5 15 IA LICT Corporation 482,419 372 124 6 6 IA Partner Communications 1,351,206 740 247 81 82 IA Scranton Telephone Company 463,135 133 133 17 52 IL Geneseo Communications, 990,891 681 227 48 48 IN Bloomingdale Home Telephone Company 612,965 316 106 8 9 KS TelAtlantic, Inc. 345,671 32 96 21 65 KS USConnect Holdings, Inc. 674,524 93 282 26 79 MA CornerStone Telephone Company, 557 - 1 - - 63 Wireline Competition Bureau Authorizes 35 Rate -Of -Return Companies to Receive More Than $51 Million Annually in Alternative Connect America Cost Model Support and Announces Offers of Revised A -CAM Support Amounts to 191 Rate -Of -Return Companies to Expand Rural Broadband, Public Notic e, 16-1422 (WCB Dec. 20, 2016). A - 21 Fi g ure 8 Authori z e d A - CAM Support & Obligati ons Dece m be r 20, 2016 State Holdi ng Compa ny Annual Rate - of -Ret ur n Carrie r Model -B ased Suppo rt Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 25/3 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 10/1 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 4/1 Mbps Numbe r of Locati on s Remai ni ng on Reas on a bl e Request Standa rd MA Otelco Inc. 3,243 11 4 - - ME Otelco Inc. 1,041,171 1,433 478 35 35 MS American Broadband Communications et 160,938 158 159 2 9 MT Southern Montana Telephone Company 2,698,957 157 473 200 603 NE USConnect Holdings, Inc. 650,679 23 71 54 165 NH Telephone and Data Systems, Inc. 520,365 1,407 470 4 5 NV Beehive Telephone Companies 355,595 20 62 23 72 NV Day Management Corporation 447,998 444 149 39 39 NY Alteva Inc. 4,219 18 7 - - OH Hanson Communications, 428,162 354 119 4 5 OH Horizon Telecom 1,465,554 2,286 762 15 15 OH VNC Enterprises, LLC 88,186 144 49 1 1 OK Cross Telephone Company LLC 3,478,143 3,928 1,310 104 104 OK DWL Holding Company 3,784,420 1,329 1,330 228 686 OK MBO Corporation 3,635,531 2,590 864 247 248 PA TelAtlantic, Inc. 14,400 - - 3 3 PA Townes Telecommunications, 44,326 77 26 - - SC Home Telephone Company, Inc. (SC) 1,367,830 2,357 786 55 56 SC West Carolina Rural Telephone 1,008,846 947 316 45 46 TN Telephone and Data Systems, Inc. 7,176,061 12,129 4,043 118 119 TX Etex Telephone Cooperative, Inc. 1,993,283 4,201 1,401 18 18 TX Five Area Telephone Cooperative, Inc. 3,021,156 288 866 193 579 TX Industry Telephone Company 2,102,230 1,596 533 90 91 TX Riviera Telephone Company, Inc. 361,692 59 180 23 72 VA NTELOS, Inc. 1,693,508 2,728 910 69 70 A - 22 Fi g ure 8 Authori z e d A - CAM Support & Obligati ons Dece m be r 20, 2016 State Holdi ng Compa ny Annual Rate - of -Ret ur n Carrie r Model -B ased Suppo rt Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 25/3 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 10/1 Mbps Numbe r of Locati on s in Eligibl e Cens us B locks w ith Oblig ati o n to Offer 4/1 Mbps Numbe r of Locati on s Remai ni ng on Reas on a bl e Request Standa rd VT Telephone and Data Systems, Inc. 263,655 756 252 2 3 WV Otelco Inc. 51,606 18 6 9 10 Rate-of-return carriers not on A -CAM support remain on legacy support, which the Commission modified in 2016 to provide support in situations where the customer no longer subscribes to traditional regulated local exchange voice service. This reformed mechanism is known as Connect America Fund Broadband Loop Support (CAF -BLS) and replaces interstate common line support (ICLS); it will be implemented starting in January 2017.64 Most carriers remaining on legacy support must offer broadband service at actual speeds of at least 10 Mbps downstream/1 Mbps upstream, over a five-year period, to a defined number of unserved locations.65 These carriers also remain subject to the requirement that they offer voice and broadband service at these speeds upon reasonable request to their remaining locations. As part of the reforms to the legacy support mechanisms, the Commission also adopted an operating expense limitation and a capital investment allowance, which will be implemente d in 2017. The order further adopted a mechanism for implementing the $2 billion per year budget for rate -of-return carriers,66 which was implemented in September 2016.67 The Commission also represcribed the authorized rate of return for carriers from 11.25% to 9.75% , with a phase-in over six years .68 Effective July 1, 2016, the authorized rate of return was 11%. Alaska Plan . On August 31, 2016, the Commission released the Alaska Plan Order .69 In the Order, the Commission adopted an integrated plan to address both fixed and mobile voice and broadband service in high-cost areas of the state of Alaska, building on a proposal submitted by the Alaska Telephone Association. Specifically, the Commission provide d a one-time opportunity for Alaskan rate - of-return carriers to elect to receive support frozen at adjusted 2011 levels for a 10 -year term. Alaskan rate-of-return carriers that elect Alaska Plan support must meet individualized performance obligations by offering voice and broadband services that meet the service obligations the Commission adopted in the 64 For the purpose of calculating CAF -BLS, the Commission adopted a revenue imputation of $42 per loop per month. Rate-of -Return Reform Order , 31 FCC Rcd at 3122, para. 92. The revenue imputation of $42 per loop per month is subject to two exceptions. See id. at 3123- 24, paras. 93-94. 65 Carriers that have deployed 10/1 Mbps broadband to 80% or more of the locations in their study area are not subject to mandatory deployment obligations. In October 2016, the Bureau posted information regarding the mandatory deployment obligations that will apply to rate-of-return carriers that remain on legacy universal service support mechanisms. Wireline Competition Bureau Announces Posting of Informati on Regarding Deployment Obligations for Incumbent Rate -of -Return Carriers, Public Notice, 31 FCC Rcd 11011 (WCB 2016). 66 Id. at 3142-45, paras. 146-55. 67 Wireline Competition B ureau Announces Implementation of the Budget Control Mechanism for Rate -of -Return Carriers , Public Notice, 31 FCC Rcd 7189 (WCB 2016). 68 Rate-of -Return Reform Order , 31 FCC Rcd at 3171, para. 226. 69 Alaska Plan Order , 31 FCC Rcd 10139. A - 23 Order , including specified minimum speeds, by five-year and 10-year service milestones to a specified number of locations. On December 21 , 2016, the Bureau approved the performance plans submitted by 13 rate-of-return companies in Alaska. 70 The Bureau deferred action on the performance plans submitted by two companies that have elected to receive A -CAM support pending their consideration of the revised offer of A -CAM support. 71 HCLS/ICLS . While the Commission adopted reforms to the legacy support mechanisms for rate- of-return carriers in the Rate-of -Return Reform Order, and provided Alaska rate -of-return carriers the option of receiving frozen support in the Alaska Plan Order , rate-of-return carriers continued to receive support under the legacy mechanisms in 2016 pending full implementation of those reforms. Support for rate-of-return carriers has been subject to the HCLS cap and rural growth factor for more than a decade, which were not altered in the USF/ICC Transformation Order .72 In 2001, the Commission modified the distribution of HCLS by re -basing the fund for rural telephone companies and retaining an indexed cap. 73 Specifically, the Commission concluded that the total cap on HCLS would be adjusted annually by a rural growth factor equal to annual changes in gross domestic product (GDP ) and the consumer price index (CPI) and changes in the total number of working loops.74 Given decreases in working loops in rate-of-return areas in recent years, the indexed cap has limited HCLS for many rate- of- return carriers. Figure 9 displays information regarding the amounts of HCLS and ICLS disbursed to incumbent rate-of-return providers from 2011-2016.75 70 Wireline Competition Bureau Authorizes Alaska Plan Support For 13 Alaskan Rate -of -Return Companies , DA 16-271, Public Notice (WCB Dec. 21, 2016) 71 Id. at 2. 72 See Federal-State Joint Board on Universal Service et al. , Twenty-Second Order on Reconsideration et al., 16 FCC Rcd 11244 (2001) (Rural Task Force Order ). 73 See id. at 11249, para. 12. 74 Id. 75 Prior to the USF/ICC Transformation Order , some price cap carriers received HCLS. Companies received support depending on whether they were classified as either “rural” or “non -rural” under the Commission’s rules (rural companies received high-cost loop support, while non-rural companies received high-cost model support) and how they were regulated at the interstate level (rate-of-return carriers received ICLS, while price cap carriers received interstate access support). See Connect Amer ica Fund et al. , Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking, 26 FCC Rcd 4554, 4610, para. 164 (2011). For example, if a price carrier was classified as a “rural” carrier, it would have been eligible to receive HCLS. Thus, one cannot directly compare the HCLS support amounts for the period pre -2012 to the amounts received by rate-of-return carriers post-2012. A - 24 In the December 20 14 Connect America Order, the Commission adopted its proposal to modify the HCLS mechanism by first freezing the national average cost per loop ( NACPL ) and then decreasing HCLS proportionately among all HCLS recipients. 76 Previously, rate-of-return carriers received reimbursement for a fixed percentage of their unseparated loop expenses to the extent that they exceed ed a benchmark set in relation to the NACPL .77 These rules reimbursed 65 percent of the loop costs in excess of 115 percent, but less th an 150 percent of the NACPL, and 75 percent of loop costs in excess of 150 percent of the NACPL. 78 As noted above, HC LS for rate-of-return carriers is subject to an indexed cap.79 Until 2015, the indexed cap was enforced by raising the NACPL used in HCLS c alculations until the amount of calculated support equal ed the cap amount.80 The indexed cap on HCLS had seen steady reductions in recent years as a result of decreasing numbers of working loops and low inflation rates.81 As a result, carriers with costs close to the ever -rising NACPL risk ed losing all HCLS for prior 76 See December 2014 Connect America Order , 29 FCC Rcd at 15679-84, paras. 101-14. 77 See 47 CFR § 54.1310. The Commission’s HCLS rules were formerly codified in Part 36, subpart F. 78 Id. 79 Id. § 54.1302. 80 Id. § 54.1309(c)(2). 81 See National Exchange Carrier Association, Inc. Overview and Analysis of 2013 USF Data Submission, filed September 30, 2014, at 2 (indexed cap on HCLS for 2015 calculated as $735.2 million); National Exchange Carrier Association, Inc. Overview and Analysis of 2004 USF Submission, filed September 30, 2005 at 3 (indexed cap on HCLS for 2006 calculated at $1,047.3 mill ion) (both filings available at http://www.fcc.gov/encyclopedia/necas- overview-universal-service-fund). During this period, the cap has also been rebased on multiple occasions to reflect the ineligibility of price-cap carriers and their rate-of-return affiliates. See, e.g. , USF/ ICC Transformation Order , 26 FCC Rcd at 17760, paras. 258-59. 2012 2013 2014 2015 2016* HCLS 791 767 745 718 696 ICLS 845 871 894 920 938 65 0 70 0 75 0 80 0 85 0 90 0 95 0 Fi g ure 9 Rate - of - Return Carri e r s HCLS and ICLS Claims ( i n $mi l l i ons) (Source: Table 3.3; *2016 is based on annualized January 2016- June 2016 data) H CL S I CL S A - 25 investments, while carriers with a higher cost per loop were sheltered from the impact of the HCLS cap. 82 This created a “race to the top” such that carriers had an incentive to increase their costs to preserve their universal service support and caused some carriers to “fall off the cliff” so that they no longer received any HCLS. To avoid this effect, in the December 2014 Connect America Order , the Commission adopted its proposal to reduce support proportionally among all HCLS recipients through decreased reimbursement percentages for all carriers instead of adjusting the NACPL. 83 Specifically, the Commission froze the NACPL that is used to determine support and instead decreased HCLS proport ionately among all HCLS recipients.84 This change went into effect on July 1, 2015. Phase Out of Safety Net Additive . In the USF/ICC Transformation Order , the Commission decided to phase out a high-cost universal service support mechanism known as the Safety Net Additive (SNA) because it was generally providing support for carriers based on line loss rather than new investment.85 The Commission determined that carriers that qualif ied for SNA support due to a 14 percent or greater increase in investment over the prior year would continue to receive support, while carriers qualifying for SNA based on line loss would have their SNA support eliminate d in 2013.86 In 2014, the Commission modified this decision to provide SNA support to carriers that would have qualified under the prior rules based on significant network investments made in 2010 and 2011. 87 82 We note that a “higher cost” carrier does not necessarily serve an area that is more costly to serve than other areas. To the extent a carrier is experiencing access line loss, for whatever reason, its cost per loop will rise because the total costs for the study area are divided by a smaller number. Thus, two study areas with identical cost characteristics could have significantly different reported costs per loop, based on the extent to which customers are “cutting the cord” for their landline voice service. A study area where there are competitive alternatives in fact may have a higher cost per loop, all other things being equal. 83 December 201 4 Connect America Order , 29 FCC Rcd at 15681, para. 104. 84 Id. 85 USF/ICC Transformation Order , 26 FCC Rcd at 17758, para. 252. In 2001, the Commission created SNA to provide further support to incumbent carriers that made significant investment in their infrastructure. The rule provided additional support for the qualifying year and four subsequent years. See Rural Task Force Order , 16 FCC Rcd at 11276-81, paras. 77-90. 86 USF/ICC Transformation Order , 26 FCC Rcd at 17758, para. 252 . 87 April 201 4 Connect America Order , 29 FCC Rcd 7051 at 7088-90, paras. 109-115. A - 26 Figure 10 below summarizes the phase- down in SNA following the reforms adopted in the USF/ICC Transformation Order . Fig ure 10 Safety Net Claims ( i n $mil li ons ) (Source: Table 3.3; *2016 is based on annualized January 2016 -June 2016 data) 2011 2012 2013 2014 2015 2016* Rate - of - Return Carri er s 65.5 48.4 31.4 28.2 20.4 12.1 Price Cap Carri er s 10.7 - - - - - Total 76.2 48.4 31.4 28.2 20.4 12.1 $250 per Line Cap. In the USF/ICC Transformation Order , the Commission adopted a new rule establishing a presumptive per-line cap of $250 per month on total high- cost universal service support, exc lusive of Connect America Fund ICC support for all ETCs .88 The Commission concluded that support in excess of that amount should not be provided without further justification. 89 Incumbent ETCs were subject to a phase-down to bring their support to the $250 cap between July 1, 2012 and June 30, 2014. The cap became fully effective on July 1, 2014. Figure 11 shows total high-cost support per line for 2015 for the companies receiving the highest amounts per line and which of those companies have requested a waiver of the presumptive cap. Some study areas with legacy support below $3,000 annually are included because the sum of legacy and Connect America Fund ICC support is in excess of $3,000 per year. 88 47 CFR § 54.302. 89 USF/ICC Transformation Order , 26 FCC Rcd at 17765, para. 274 . A - 27 Fi g ure 1190 Incum be nt Study Areas wit h Annual High - Cost Support per Line Exceedi ng $3000 in 2015 Study Area Name State Wa iv e r Dispo sit io n Legacy Hig h Cost Per Line Total Hig h Cost Per Line (Legacy + CAF/ICC) ADAK TEL UTILITY AK Denied $3,275 $5,797 AG ATE MUTUAL TEL CO CO $2,890 $3,220 ALLBAND COMMUNICATIONS COOPERATIVE MI Denied $7,290 $7,599 BACA VALLEY TEL CO NM $3,000 $3,149 BEAVER CREEK TELEPHONE COMPANY WA $3,000 $4,401 BEEHIVE TEL CO - NV NV $2,984 $5,361 BEEHIVE TEL CO - UT UT $2,944 $4,895 BIG BEND TEL CO INC TX Petition Withdrawn $2,872 $3,015 BORDER TO BORDER TX Dismissed $3,000 $3,981 CUNNINGHAM TEL CO KS $3,000 $3,099 DELL TEL. CO -OP - TX TX Dismissed $3,000 $3,340 ELKHART TEL CO INC KS $2,971 $3,178 FARBER TEL CO MO $3,000 $3,280 HARTMAN TEL EXCH INC NE $2,463 $3,056 HOME TEL CO KS $2,912 $3,129 KANOKLA TEL ASSN -KS KS $2,919 $3,020 KANOKLA TEL ASSN -OK OK $2,875 $3,031 LA HARPE TEL CO INC KS $3,000 $3,443 LAKE LIVINGSTON TEL TX $2,678 $3,016 LEACO RURAL TEL COOP NM $2,731 $3,089 LEAF RIVER TEL CO IL $3,000 $3,514 MUTUAL TEL CO KS $2,935 $3,174 NORTH STATE TEL CO. OR $3,000 $3,171 NUNN TEL CO CO $2,972 $3,148 OREGON TEL CORP OR $2,505 $3,327 OREGON -IDAHO UTIL. OR $2,994 $3,868 PINE TEL SYSTEM INC. OR $2,997 $3,861 RICE BELT TEL CO AR $2,905 $3,361 RIVIERA TEL CO INC TX $2,873 $3,176 S. CENTRAL TEL - OK OK Dismissed $3,000 $3,145 SANDWICH ISLES COMM. HI Denied $2,967 $4,450 SHAWNEE TELEPHONE CO IL $3,000 $3,411 SOUTH PARK TEL. CO. CO Petition Withdrawn $3,000 $3,652 90 Some study areas with support on the threshold of the $3,000 annual per -line cap that received reduced support may not appear in Figure 11 because this Figure is based on line counts that differ from how support per-line has been traditionally calculated. See Monitoring Report Supplemental Table S.3.3. HC RoR Claims per Line - by Study Area. A - 28 Fi g ure 1190 Incum be nt Study Areas wit h Annual High - Cost Support per Line Exceedi ng $3000 in 2015 Study Area Name State Wa iv e r Dispo sit io n Legacy Hig h Cost Per Line Total Hig h Cost Per Line (Legacy + CAF/ICC) SOUTHERN MONTANA TEL MT $2,938 $3,214 SUMMIT TEL & TEL -AK AK $3,000 $3,481 TERRAL TEL CO OK $2,739 $4,100 TRI-COUNTY TEL ASSN KS $3,014 $3,088 WESTGATE COMMUNICATIONS LLC D/B/A WEAVTEL WA $2,516 $4,886 XIT RURAL TEL CO -OP TX $2,933 $3,153 ZENDA TEL COMPANY KS $3,000 $3,519 Figure 12 shows total support reductions from 2012-2016 as a result of implementation of the $250 per -month, per-line cap. The legacy support per-line figures in Figure 11 would have been higher without these reductions. Fi g ure 12 High - Cost Support Reduct i ons As Resul t of $250 per - mont h Cap (Source: USAC Claims Data; *2016 is based on annualized January 2016 -June 2016 data) Study Area Name State 2012 2013 2014 2015 2016* ACCIPITER COMM. AZ 360,162 0 0 117,180 0 ADAK TEL UTILITY AK 207,984 517,536 1,002,762 1,112,603 948,288 AGATE MUTUAL TEL CO CO 28,464 89,751 120,461 86,898 0 BACA VALLEY TEL CO NM 0 75,930 214,740 103,974 0 BEAVER CREEK TELEPHONE COMPANY WA 63,672 0 0 31,920 3,588 BEEHIVE TEL CO - NV NV 3,690 56,019 219,904 295,236 241,332 BEEHIVE TEL CO - UT UT 0 102,108 0 0 0 BIG BEND TEL CO INC TX 86,376 0 0 0 0 BLUE VALLEY TELE -COM KS 58,806 0 0 0 0 BORDER TO BORDER TX 185,058 469,428 763,377 863,592 835,368 CUNNINGHAM TEL CO KS 0 24,102 137,705 198,534 0 DELL TEL. CO -OP - TX TX 361,482 830,058 1,304,048 1,461,696 786,792 ELKHART TEL CO INC KS 0 0 34,860 0 0 FARBER TEL CO MO 0 0 24 98,772 38,940 KANOKLA TEL ASSN -OK OK 0 72,948 0 0 0 LA HARPE TEL CO INC KS 23,412 56,733 229,095 118,128 0 LAKE LIVINGSTON TEL TX 0 0 0 0 39,948 LAKESIDE TEL. CO. MS 0 4,287 0 37,104 75,276 LEAF RIVER TEL CO IL 0 0 0 140,484 0 MIDVALE -AZ AZ 0 14,646 0 0 0 MUTUAL TEL CO KS 43,962 162,163 211,790 0 0 NORTH STATE TEL CO. OR 56,364 122,073 281,208 333,780 182,592 A - 29 Fi g ure 12 High - Cost Support Reduct i ons As Resul t of $250 per - mont h Cap (Source: USAC Claims Data; *2016 is based on annualized January 2016 -June 2016 data) NORTHEAST LOUISIANA LA 0 0 0 21,715 188,484 NUNN TEL CO CO 0 0 31,290 9,900 0 OREGON -IDAHO UTIL. OR 0 45,045 57,906 113,418 0 PINE TEL SYSTEM INC. OR 241,932 909,114 1,831,040 2,067,330 1,283,184 RICE BELT TEL CO AR 0 0 0 111,258 0 RIVIERA TEL CO INC TX 0 0 0 0 185,676 S. CENTRAL TEL - OK OK 108,090 250,473 456,714 542,592 343,560 SACRED WIND NM 210,018 271,686 0 0 0 SANDWICH ISLES COMM. HI 2,262,804 5,471,796 6,944,697 3,747,006 0 SHAWNEE TELEPHONE CO IL 0 0 0 417,941 143,880 SOUTH PARK TEL. CO. CO 64,698 136,581 218,992 185,130 144,300 SOUTHERN MONTANA TEL MT 0 20,946 190,136 0 0 ST JOHN TEL CO WA 8,832 1,119 0 0 0 SUMMIT TEL & TEL -AK AK 27,876 79,449 100,947 217,344 92,508 TERRAL TEL CO OK 78,624 225,435 480,793 1,041,288 1,053,000 TRI-COUNTY TEL ASSN KS 0 0 526,711 346,044 0 WESTGATE COMMUNICATIONS LLC D/B/A WEAVTEL W A 52,014 123,813 231,600 178,176 97,752 XIT RURAL TEL CO -OP T X 0 12,492 0 39,198 157,104 ZENDA TEL COMPANY K S 0 0 98,351 216,492 196,572 Total 4,534,320 10,145,731 15,689,151 14,254,733 7,038,144 Petitions for Waiver. In the USF/ICC Transformation Order , the Commission stated that any carrier negatively affected by the universal service reforms could file a petition for waiver to demonstrate that good cause exists for exempting the carrier from some or all of those reforms. 91 In the Fifth Order on Reconsideration, the Commission clarified that it would consider the impact of reforms not only on voice service alone, but also on the continued operation of a broadband-capable network and on consumer rates.92 Since the USF/ICC Transformation Order , some rate-of-return carriers (including their affiliated competitive ETC s) have requested waivers of high -cost support reductions, including several who requested a waiver of the $250 per -line, per-month cap. The supplementary material describes the disposition of all such waiver requests .93 91 Id. at 17840, para. 539. 92 It further stated that it envisioned granting relief only in those circumstances in which a carrier could demonstrate that consumers face a significant risk of losing access to a broadband-capable network that provides both voice as well as broadband, at reasonably comparable rates, in areas where there are no alternative providers of voice or broadband. Connect America Fund et al., Fifth O rder on Reconsideration, 27 FCC Rcd 14549, 14556-57, paras. 20- 21 (2012) (Fifth Order on Reconsideration). 93 See Supplemental Material File “Petitions Seeking Waiver of Support Reductions.docs.” A - 30 Other Refor ms Stemmi n g Fro m the USF/ICC Transf ormati on Order Study Area Boundary Collection. In November 2012, the Bureau adopted an order requiring incumbent LECs to submit study area boundary data necessary to implement universal service reforms, including elimination of support where an unsubsidized competitor offers voice and broadband service that 100 percent overlaps an incumbent LEC’s study area .94 The Bureau subsequently received study area boundary maps from all incumbent LECs and conducted a process to resolve and minimize overlaps among study areas. Incumbent LECs are required to file updated study area boundary data by a specified deadline if any changes are made to their study area boundaries the previous calendar year. All incumbent LECs are also required to recertify their study area boundary data every two years. 95 Pricing of S ervices. Section 254(b) of the Act requires that “[c]onsu mers in all regions of the Nation . . . should have access to telecommunications and information services . . . that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.” 96 In the USF/ICC Transformation Order , the Commission adopted a rule to limit high-cost support where end- user rates do not meet an urban rate floor representing the national average of local rates plus state regulated fees.97 To the extent a carrier’s end -user rates for local service do not meet the rate floor, dollar-for-dollar reductions in HCLS or frozen support are made. 98 The Commission determined it was inappropriate to use limited federal high-cost support to subsidize local rates beyond what is necessary to ensure reasonable comparability.99 The Commission’s rule phase d in the rate floor in three steps, beginning with an initial rate floor of $10 for the period July 1, 2012 through June 30, 2013; $14 for the period July 1, 2013 through June 30, 2014; and an amount to be establis hed through the annual rate survey for the years beginning July 1, 2014, and thereinafter.100 The USF/ICC Transformation Order defined the average urban rate to include local end-user rates plus state regulated fees (specifically, state subscriber line charges (SLCs), state USF, and mandatory extended area service charges) and excluded the federal SLC. 101 On April 3, 2013, the Bureau adopted the form and content for the survey of urban rates for fixed voice and fixed broadband residential 94 Connect America Fund; High -Cost Universal Service Support , Report and Order, 27 FCC Rcd 13528, 13529, para. 2 (WCB 2012). See also Wireline Competition Bureau Publishes Online Map of Submitted Study Area Boundaries, Announces Procedures for Filing Revised Data, Public Notice, 28 FCC Rcd 16315 (WCB 2013). 95 See Wireline Competition Bureau Extends the Filing Deadline For Study Area Boundary Changes to March 23, 201 5 and Sets Recertification Date of May 26, 201 5, Public Notice, 30 FCC Rcd 2239 (WCB 2015). 96 47 U.S.C. § 254(b)(3). 97 USF/ICC Transformation Order , 26 FCC Rcd at 17749, 17751, paras. 235, 238; see also 47 CFR § 54.318. 98 USF/ICC Transformation Order , 26 FCC Rcd at 17752, para. 240. 99 Id. at 17751, para. 237. 100 Id . at 17751, para. 239. 101 Id. at 17751, para. 238. A - 31 services.102 The Bureau has completed the surveys for 2014, 2015 and 2016.103 Completed surveys that will be used to determine the relevant benchmarks for 2017 were due October 25, 2016. 104 For 2016, the Bureau calculated that the average local end-user rates plus state regulated fees of the surveyed incumbent LECs in urban areas is $ 21.93.105 Because the survey average was more than four dollars higher than the Commission anticipated in 2011, in April 2014, the Commission adopted a phase-in of support reductions associated with the rate floor such that reductions cannot increase more than $2 annually. 106 In addition, the Commission determined that there should be no support reductions associated with lines provided to customers enrolled in the Lifeline program.107 It postponed implementation of the support reductions associated with the 2014 rate floor until January 1, 2015. Accordingly, for calendar year 2014, 2015, and 2016 support reductions only occurred for those lines with rates below the appropriate phased-in limit, as shown in Figure 12 below. Figure 1 3 Reduct ion in High - Cost Loop Claims and Froze n Suppor t Claims due to the Rate Floor (Source: Supplementary Material in file named HC Rate Floor Reductions - by Study Area.xlsx; *Note that 2016 price c ap reductions are all for Alaska Communications Systems. 2015 reductions almost all occurred in the 1st half. 2012 2013 2014 2015 2016* Price Cap 39,600 1,525,044 3,369,624 1,652,542 10,296 Rate of Return 515,958 1,277,538 1,091,783 1,799,271 1,289,772 Total 555,558 2,802,582 4,461,407 3,451,813 1,300,068 In the USF/ICC Transformation Order , the Commission also determined that “ETCs must offer voice telephony service, including voice telephone service offered on a standalone basis, at rates that are reasonably comparable to urban rates” 108 and adopted a presumption that “a voice rate is within a reasonable range if it falls within two standard deviations above the national average.” 109 Based on the 2016 survey responses, the Bureau calculated the reasonable comparability benchmark for voice services 102 Connect America Fund, Order, 28 FCC Rcd 4242 (W CB and WTB 2013). 103 All information regarding the survey and survey results is available at https://www.fcc.gov/encyclopedia/urban - rate-survey-data. 104 Wireline Competition Bureau Announces Timeline for Completion of 201 7 Urban Rate Survey, Public Notice, 31 FCC Rcd 10729 (WCB 2016). 105 See Wireline Competition Bureau Announces Results of 2016 Urban Rate Survey for Fixed Voice and broadband Services and Posting of Survey Data and Explanatory Notes , Public Notice, 31 FCC Rcd 3393 (WCB 2016) ( 2 01 6 Benchmark PN ). Because the Bureau has found that recurring monthly rates collected in the survey from non- incumbent LEC providers typically were higher than incumbent LEC reported recurring monthly rates (possibly because non-incumbent LEC prov iders charged rates similar to the incumbent LECs’ monthly charge plus the federal SLC), the Bureau calculates the average using only urban incumbent LEC rates. 106 April 201 4 C onnect America Order, 29 FCC Rcd at 7077-80, paras. 77-81. 107 Id . at 7081-82, para. 86. 108 USF/ICC Transformation Order , 26 FCC Rcd at 17693, para. 81. 109 Id. at 17694, para. 88. A - 32 to be $ 41.07 for 2016.110 For purposes of the reasonable comparability benchmark, the Bureau concluded that the rates of all local flat-rate providers (both incumbent LEC and non- incumbent LEC providers ) should be included when computing the average, and, consistent with existing precedent, that federal SLCs should be included.111 In addition, each ETC, including competit ive ETCs providing fixed voice services,112 is required to certify in the FCC Form 481 that the pricing of its basic residential voice services was no more than the reasonable comparability benchmark, or if not provide an explanation. 113 In the USF/ICC Transformation Order , the Commission also required that as a condition of receiving high-cost or Connect America Fund support, recipients must offer broadband services in supported areas at rates that are reasonably comparable to rates for similar services in urban areas.114 The Commission concluded that rural broadband rates would be deemed “reasonably comparable” to urban rates under section 254(b)(3) if they fell within a reasonable range of urban rates for reasonably comparable broadband service and directed the Wireline Competition Bureau and Wireless Telecommunications Bureau to develop a specific methodology for defining that reasonable range.115 In 2014, the Wireline Competition Bureau adopted a weighted linear regression method to obtain an average rate for fixed services based on download speed, upload speed, and usage allowance.116 The benchmark for a fixed service is calculated by adding twice the standard deviation to the average rate.117 Examples of the average rate and reasonable comparability b enchmark for a range of fixed broadband service offerings in 2016 are below.118 110 See 2016 Benchmark PN. The USF/ICC Transformation Order defined the average urban rate to include local end-user rates plus state regulated fees (specifically, state subscriber line charges (SLCs), state universal service, and mandatory extended area service charges). USF/ICC Transformation Order , 26 FCC Rcd at 17751, para. 238. 111 Id . 112 The Bureau has adopted a benchmark only for fixed voice services because “the differences in rate plans and other attributes of fixed and mobile services would make it inordinately difficult to create a unified benchmark” that applied to both fixed and mobile services. See Connect America Fund, Order, 28 FCC Rcd 4242, para. 6 (WCB 2014). 113 47 CFR § 54.313(a)(10); see also USF/ICC Transformation Order , 26 FCC Rcd at 18046-47, para. 1026. In the USF/ICC Transformation Order , the Commission required that a s a condition of receiving high-cost support, ETCs must offer voice and broadband services in supported areas at rates that are reasonably comparable to rates for similar services in urban areas. USF/Transformation Order , 26 FCC at 17693, 17695, paras. 81, 86. 114 USF/ICC Transformation Order, 26 FCC Rcd at 17693, 17695, paras. 81, 86. See also 47 U.S.C. § 254(b). 115 USF/ICC Transformation Order, 26 FCC Rcd at 17704, para. 113. 116 Connect America Fund, Report and Order, 29 FCC Rcd 13485 (WCB 2014). Previously, the Bureau had solicited comment on a Staff Report discussing potential methodologies for determining the average urban rate for fixed broadband services. Wireline Competition Bureau Announces Posting of Broadband Data from Urban Rate Survey and Seeks Comment on Calculation of Reasonable Comparability Benchmark for Broadband Services , Public Notice, 29 FCC Rcd 7992, Staff Report at 5-6 (WCB 2014) (Urban Rate Survey Public Notice). 117 Urban Rate S urvey Public Notice, 29 FCC Rcd 7992, Staff Report at 3. 118 See FCC, Reasonable Comparability Benchmark Calculator, https://www.fcc.gov/general/reasonable- comparability-benchmark-calculator (last visited Dec. 21, 2016). The Wireless Telecommunications Bureau reviews mobile rates as part of its Mobile Competition Report, which describes the practice of carriers to offer nationwide pricing plans with no pricing disparity between rural and urban markets. See implementation of Section 6002 (B) of the Omnibus Budget Reconciliation Act of 199 3, Nineteenth Report, 31 FCC Rcd 10534, 10597, para. 81, fn. 227 (2016). A - 33 Fi g ure 1 4 Summary of Fixe d Broadband Result s of the Urban Rates Survey (Source: 2016 Urban Rates Survey data) Dow nl oa d Speed (Mbps) Upload Speed (Mbps) Usage Allow anc e (GB) Benchm ar k 10 1 100 $ 69.14 10 1 150 $71.17 10 1 250 $ 73.72 10 1 Unlimited $ 75.20 25119 5 250 $ 87.76 25120 5 Unlimited $ 89.24 Oversight and Accountability . In the USF/ICC Transformation Order , the Commission established a uniform national framework for information that ETCs must report to their respective states and the Commission, while affirming that states will continue to play a critical role overseeing ETCs that they designate.121 The Commission modified and extended existing federal reporting requi rements to all ETCs, whether designated by a state or the Commission, to reflect the new public interest obligations. 122 Specific changes include extending voice reporting requirements to all ETCs, adopting requirements to reflect new broadband obligations, and requiring all ETCs subject to new broadband obligations to file five-year plans.123 In 2013, ETCs began filing their annual repor ts on a standardized form – FCC Form 481 – with the Commission, USAC, the relevant state commissions, relevant authority in a U.S. Territory, or Tribal governments, as appropriate.124 Based in part on those filings, state commissions and ETCs not subject to the jurisdiction of a state commission annually certify to the Commission that high-cost support received was used and will be used for the intended purposes.125 In October 2015, t he Commission reminded ETCs that they may not include certain types of expenses in their revenue requirement or recover them through high-cost support. Those expenses include the following: personal travel; entertainment; alcohol; food, including but not limited to meals to celebrate personal events, such as weddings, births, or retirements; political contributions; charitable donations; scholarships; pe nalties or fines for statutory or regulatory violations; penalties or fees for any late payments on debt, loans, or other payments; membership fees and dues in clubs and organizations; 119 The 25 Mbps/5 Mbps benchmarks are applicable to those entities authorized to receive funding for category one projects in the Commission’s rural broadband experiments. See Rural Broadband Experiments Order , 29 FCC Rcd at 8779. 120 Id . 121 USF/ICC Transformation Order , 26 FCC Rcd at 17854, para. 587. 122 See 47 CFR § 54.313. 123 Id . The Commission subsequently eliminated the requirement to file five- year plans when it adopted the requirement that carriers file geolocation data and related certifications in the Rate -of -Return Reform Order . See Rate-of -Return Reform Or der, 31 FCC at 3093, 3098, 3168, paras. 9, 26, 220. 124 Wireline Competition Bureau Announces Filing Deadline of October 15, 2013 for Eligible Telecommunications Carriers to File High -Cost and Low -Income Annual Reports, and Announces Filing Deadline of Dece mber 16, 2013 for States and ETCs to File Annual Use Certifications , Public Notice, 28 FCC Rcd 11252 (WCB 2013). 125 Id. ; see also 47 CFR § 54.314. A - 34 sponsorships of conferences or community events; gifts to employees; and, personal expenses of employees, board members, family members of employees and board members, contractors, or any other individuals affiliated with the ETC, including but not limited to personal expenses for housing, such as rent or mortgages.126 In March 2016, the Commission directed USAC to develop an online portal that will enable carriers subject to broadband deployment obligations to submit on a rolling basis the geocoded locations to which they have deployed facilities capable of delivering voice and broadband services meeting the requisite public interest obligations.127 The portal is currently under development, and the Bureau is in the process of seeking Paperwork Reduction Act approval for the filing of location-based information.128 Progress tow ard s the Commissi on ’s Goals Broadband Deployment and Adoption. Since adoption of the USF/ICC Transformation Order , there has been steady progress in the extent of broadband deploymen t. As shown in the following charts,129 the extent of deployment of br oadband of 4 Mbps/1 Mbps and of 10 Mbps/1 Mbps reported by rate-of-return carriers increased from December 2014 to December 2015. Specifically, there was a 4 percent increase in the number of census blocks where the incumbent rate-of-return carrier reported offering fixed service with at least 4 Mbps/1 Mbps speeds, and there was a 10.7 percent increase in the number of census blocks where the incumbent rate-of-return carrier reported offering fixed service with at least 10 Mbps/1 Mbps speeds. During this time period, price cap carriers saw a significant increase in the number of census blocks where they reported the deployment of 4/1 Mbps and 10/1 Mbps — an increase of 32 percent and 23.7 percent respectively. 126 All Universal Service High -Cost Support Recipients are Reminded that Support Must be Used for its Intended Purpose , Public Notice, 30 FCC Rcd 11821, 11822 (WCB 2015). 127 Rate-of -Return Reform Order , 31 FCC Rcd at 3117, para. 79. 128 See generally Wireline Competition Bureau Provides Guidance to Carriers Receiving Connect America Fund Support Regarding Their Broadband Location Reporting Obligations , Public Notice, 31 FCC Rcd 12900 (WCB 2016). 129 For Figures 15 and 16, population and housing unit estimates were obtained from the 2010 Census. These estimates were created by summing the population and housing units contained in the Census blocks reported through Form 477. Price Cap and Rate-of-Return study areas are determined using geographic information collected from the FCC study area boundary data collection. Note that a provider that reports deployment in a particular census block may not necessarily offer service to every person and housing unit in the census block. A - 35 Fi g ure 15 Fi xe d Depl oym e nt at Least 4 Mbps Dow ns tr e am and 1 Mbps Upstream for ILECs (in thous ands ) Number of Depl oye d Census Bloc ks Popul ati on in Depl oye d Census Bloc ks Housi ng Units in Depl oye d Census Bloc ks Rate - of - Return Carrie r s December 2014 824 9,228 4,325 December 2015 857 9,681 4,527 Price Caps Carri er s December 2014 2,878 195,661 81,828 December 2015 3,802 222,312 93,972 Fi g ure 16 Fi xe d Depl oym e nt at Least 10 Mbps Dow ns tr e am and 1 Mbps Upstream for ILECs (in thous ands ) Number of Depl oye d Census Bloc ks Popul ati on in Depl oye d Census Bloc ks Housi ng Units in Depl oye d Census Bloc ks Rate - of - Return Carrie r s December 2014 666 8,061 3,747 December 2015 737 8,849 4,114 Price Caps Carri er s December 2014 2,850 194,557 81,340 December 2015 3,525 215,273 90,893 Similarly, there have been increases in the number of fixed broadband service customer subscriptions, for both rate-of-return and price cap carriers. As shown in the figures below, between 2014 and 2015, rate-of-return carriers had a 15 percent increase in subscription to fixed services of at least 4 Mbps/1 Mbps and a 32 percent increase for fixed services of at least 10 Mbps/ 1 Mbps, while subscription for price cap carriers increased by 19 percent for fixed services of at least 4 Mbps/1 Mbps and increased by 15 percent increase for fixed services of at least 10 Mbps/ 1 Mbps. A - 36 Fi g ure 17 Fi xe d Connec ti ons at Least 4 Mbps Dow nst r e am and 1 Mbps Upstream for ILECs (in thous ands ) Total Resident i al Busi ne ss Rate - of - Return Carrie r s December 2014 1,304 1,168 136 December 2015 1,500 1,354 146 Price Caps Carri er s December 2014 17,315 16,175 1,140 December 2015 20,595 19,169 1,426 Fi g ure 18 Fi xe d Connecti ons at Least 10 Mbps Dow nst r eam and 1 Mbps Upstrea m for ILEC s (in thous ands ) Total Resident i al Busi ne ss Rate - of - Return Carrie r s December 2014 715 644 71 December 2015 943 853 90 Price Caps Carri er s December 2014 15,338 14,337 1,001 December 2015 17,641 16,430 1,211 In contrast, as shown below, over the same period the number of switched access lines and interconnected VoIP subscribers served by incumbent LECs has decreased. Fi g ure 19 Switch ed Access Lines and Intercon n ected VoIP Subscri b ers for Incumb en t Local Exchan ge Carriers (con n ecti on s in thou s and s ) (Source: FCC Form 477 Submission) Rate of Return Carri ers Price Cap Carri ers December 2010 4,635 92,862 December 2011 4,495 84,932 December 2012 4,268 77,846 December 2013 4,123 70,959 December 2014130 3,882 65,500 December 2015 3,747 59,930 130 Revised from 2015 Monitoring Report.