Universal Service Contribution Methodology

Federal Communications Commission

FCC 07-231

Before the

Federal Commuiiicatioiis Cotiunission

Washington, D.C. 20554

WC

Docket No. 06-122

In the Matter of

Universal Service Contribution Methodology

Petition for Declaratory Ruling of CTIA -

The

Wireless Association on Universal Service

Contribution Obligations

Petition for Declaratory Ruling of Cingular

Wireless, LLC

DECLARATORY ORDER

Adopted: December 26,2007

Released: January 24,2008

By the Conunission:

I.

INTRODUCTION

1. In this Declaratory Order (Order), we address petitions filed by CTIA-The Wireless

Association (CTIA) and Cingular Wireless, LLC, seeking clarification of the definition of "toll services"

for purposes of determining contribution obligations to the federal universal service fund (USF or Fund).'

We grant both petitions to the extent that they ask the Commission to declare that the definition of "toll

services" discussed in the 2006 Contribution Methodology Order is the definition to be used on the FCC

Form 499 for reporting the revenues derived from toll service charges.^ We also address CITA's request

to clarify how wireless carriers should allocate toll service revenues to the interstate and international

jurisdiction. In particular, we clarify that, to the extent a Fund contributor (including wireless and

interconnected Voice over Internet Protocol (VoIP) providers) uses a traffic study or studies to determine

its contribution obligations, such traffic study or studies must specifically account for the interstate or

international nature of toll service revenues.

'

Universal Service Contribution Methodology, WC Docket No. 06-122, Petition for Declaratory Ruling of CTIA-

The Wireless Association on Universal Service Contribution Obligations (filed Aug. 1, 2006) (CTIA Petition)-,

Petition for Declaratory Ruling of Cingular Wireless LLC (filed Aug. 8, 2006) (Cingular Wireless Petition). On

January 3,2007, Cingular Wireless, LLC, changed its name to AT&T Mobility, LLC. See Cingular Wireless, LLC

SEC Form 8-K (filed Jan

06-122, Petition for Declaratory Ruling of CTIA-

The Wireless Association on Universal Service Contribution Obligations (filed Aug. 1, 2006) (CTIA Petition)-,

Petition for Declaratory Ruling of Cingular Wireless LLC (filed Aug. 8, 2006) (Cingular Wireless Petition). On

January 3,2007, Cingular Wireless, LLC, changed its name to AT&T Mobility, LLC. See Cingular Wireless, LLC

SEC Form 8-K (filed Jan. 9,2007) available at http://www.sec.gOv/Archives/edgar/data/l 130452/

00009501440700018 l/g05017e8vk.htm (last visited Jan. 2, 2008). Because the Cingular Wireless Petition was

filed in the name of Cingular Wireless, LLC, we continue to refer to the company as Cingular in this Order.

^ See Universal Service Contribution Methodology; Federal-State Joint Board on Universal Service, WC Docket

No. 06-122,04-36, CC Docket Nos. 96-45,98-171,90-571,92-237,99-200,95-116,98-170, Report and Order and

Notice of Proposed Rulemaking, 21 FCC Red 7518,7535, para. 29 (2006) (2006 Contribution Methodology Order).

The Commission requires contributors to report their end user telecommunications revenues on a quarterly basis

(FCC Form 499-Q) and on an annual basis (FCC Form 499-A). See 47 C.F.R. § 54.711(a).

1411

Federal Commnnications Commission

FCC 07-231

n.

BACKGROUND

2. Universal service represents a key component of communications policy. The statutory

framework established by Congress in the Telecommunications Act of 1996 (1996 Act) governs the

assessment of contributions to the Fund.' Section 254(b) of the Act instructs the Commission to establish

universal service support mechanisms with the goal of ensuring the delivery of affordable

telecommunications services to all Americans.'* Section 254(b) also provides that Comrmssion policy on

universal service shall be based, in part, on the principles that contributions should be equitable and

nondiscriminatory, and support mechanisms should be specific, predictable, and sufficient

to establish

universal service support mechanisms with the goal of ensuring the delivery of affordable

telecommunications services to all Americans.'* Section 254(b) also provides that Comrmssion policy on

universal service shall be based, in part, on the principles that contributions should be equitable and

nondiscriminatory, and support mechanisms should be specific, predictable, and sufficient. Section

254(d) of the Act mandates that "[e]very teleconununications carrier that provides interstate

telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific,

predictable, and sufficient mechanisms established by the Commission to preserve and advance universal

service."® Section 254(d) also vests the Commission with the permissive authority to require "[a]ny other

provider of interstate telecommunications ... to contribute to the preservation and advancement of

universal service if the public interest so requires."'

3. In 1997, in the Universal Service First Report and Order, the Commission determined to

assess universal service contributions based on end user telecommunications revenues.® The Commission

concluded that the revenues approach would be: (1) competitively neutral; (2) easy to administer; and (3)

explicit.® In the Second Order on Reconsideration, the Commission set forth the specific methodology

for contributors to use to compute their USE contributions.'" In 1998, in response to wireless carriers'

'

Teleconununications Act of 1996, Pub.L.No. 104-104, 110 Stat. 56 (1996) (1996 Act). The 1996 Act amended the

Communications Act of 1934 (the Act). See A1 U.S.C. §§ 151, et seq.

"

47 U.S.C.§ 254(b).

'

47 U.S.C. §§ 254(b)(4), (5). The Commission adopted the additional principle that federal support mechanisms

should be competitively neutral, neither unfairly advantaging nor disadvantaging particular service providers or

technologies. See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12

FCC Red 8776, 8801-03, paras

§§ 151, et seq.

"

47 U.S.C.§ 254(b).

'

47 U.S.C. §§ 254(b)(4), (5). The Commission adopted the additional principle that federal support mechanisms

should be competitively neutral, neither unfairly advantaging nor disadvantaging particular service providers or

technologies. See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12

FCC Red 8776, 8801-03, paras. 46-51 (1997) {Universal Service First Report and Order) (subsequent history

omitted).

* 47 U.S.C. § 254(d).

Ud.

® See Universal Service First Report and Order, 12 FCC Red at 9206-07, paras. 843-44; Federal-State Joint Board

on Universal Service, Access Charge Reform, Sixteenth Order on Reconsideration and Eighth Report and Order in

CC Docket No. 96-45 and Sixth Report and Order in CC Docket No. 96-262, 15 FCC Red 1679,1685, para. 15

(1999) {establishing a single contribution methodology for all universal service support mechanisms based on

interstate and international revenues in response to the 5"' Circuit's decision in Texas Office of Public Utility

Counsel v. FCC. 183 F.3d 393 (5"' Cir. 1999), cert, denied. 530 U.S. 1210).

'

Universal Service First Report and Order, 12 FCC Red at 9206, 9211, paras. 843, 854.

See Changes to the Board ofDirectors of the National Exchange Carrier Association, Inc., Federal-State Joint

Board on Universal Service, CC Docket Nos. 96-45,97-21, Report and Order and Second Order on

Reconsideration, 12 FCC Red 184(X) (1997) {Second Order on Reconsideration); see also Changes to the Board of

Directors of the National Exchange Carrier Association, Inc., Federal-State Joint Board on Universal Service, CC

Eiocket Nos

of the National Exchange Carrier Association, Inc., Federal-State Joint

Board on Universal Service, CC Docket Nos. 96-45,97-21, Report and Order and Second Order on

Reconsideration, 12 FCC Red 184(X) (1997) {Second Order on Reconsideration); see also Changes to the Board of

Directors of the National Exchange Carrier Association, Inc., Federal-State Joint Board on Universal Service, CC

Eiocket Nos. 96-45,97-21, Order on Reconsideration, Second Report and Order, and Further Notice of Proposed

Rulemaking, 12 FCC Red 12444 (1997) {concluding that, on an interim basis contributors, including wireless

carriers, that cannot derive interstate revenues from their books of account or that cannot derive the line-by-line

revenue breakdowns from their books of account may provide on the Worksheet good faith estimates of these

figures).

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Federal Communications Commission

FCC 07-231

concerns about the difficulties of distinguishing between interstate and intrastate revenues, the

Commission permitted those carriers to rely on an interim "safe harbor" percentage." At the same time,

the Commission allowed wireless carriers to report a different percentage so long as the carriers could

document the method used to calculate their reported percentages of interstate revenues.'^ Of particular

note, the Commission permitted wireless providers to use traffic studies as a proxy for calculating their

actual interstate and international revenues.'^ In June 2006, when the Commission extended USF

contribution obligations to interconnected VoIP providers, it also permitted such providers to use traffic

studies to estimate their interstate and international revenues.'"'

4

enues.'^ Of particular

note, the Commission permitted wireless providers to use traffic studies as a proxy for calculating their

actual interstate and international revenues.'^ In June 2006, when the Commission extended USF

contribution obligations to interconnected VoIP providers, it also permitted such providers to use traffic

studies to estimate their interstate and international revenues.'"'

4. On August 1,2006, CTIA filed a petition raising concerns regarding the allocation of toll

revenue when a wireless provider uses a company-specific traffic study to report interstate and

international revenue.'^ On August 8,2006, Cingular filed a similar petition requesting clarification

regarding the allocation of toll revenue when a wireless provider has opted to utilize a safe harbor.'^

CITA asserts that the Commission has consistently indicated that a provider that avails itself of the traffic

study method to report end-user telecommunications revenues could apply this method to all end-user

telecommimications revenues, including toll revenues, and asks the Commission to clarify how wireless

carriers should properly report toll revenue.'^ To assist wireless carriers in reporting toll revenue, both

CTIA and Cingular seek guidance on the definition of "toll revenues," and CIIA asks the Commission to

declare that the definition of "toll revenue" discussed in paragraph 29 of the 2006 Contribution

Methodology Order is the proper definition for purposes of reporting separately stated toll revenue on

FCC Form 499.'® In that regard, CTLA asks the Commission to declare that toll revenue does not include

either: (1) revenue associated with plans that give end users fixed amounts of minutes which can be used

either for local or long distance service; or (2) per-minute airtime charges that are the same for local or

long distance calls." Finally, CTIA asks that, to the extent the Commission provides clarification in these

areas, those clarifications apply prospectively only.^

"

See Federal-State Joint Board on Universal Service

d with plans that give end users fixed amounts of minutes which can be used

either for local or long distance service; or (2) per-minute airtime charges that are the same for local or

long distance calls." Finally, CTIA asks that, to the extent the Commission provides clarification in these

areas, those clarifications apply prospectively only.^

"

See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Memorandum Opinion and Order and

Further Notice of Proposed Rulemaking, 13 FCC Red 21252,21258, para. 11 (1998) (stating that wireless carriers

that choose to avail themselves of the safe harbor percentages could assume that the Commission would not find it

necessary to review or question the data underlying their reported percentages) (Safe Harbor Order).

Id. (noting that the Conunission retained its authority to require carriers that reported interstate revenues below the

safe harbors, perhaps using traffic studies, to document the method by which they arrived at their reported

percentage of interstate telecommunications revenues).

"Id.

2006 Contribution Methodology Order, 13 FCC Red. at 7547, para. 57.

"

CTIA Petition at 3.

'* Cingular Wireless Petition at 1-2. CTIA also requested clarification regarding the allocation of toll revenue when

a wireless provider uses the interim wireless safe harbor to report revenues. CTIA Petition at 7-9. We do not reach

the safe harbor issue in this Order.

"

See CTIA Petition at 5-12; see also Qwest Comments at 2.

"

See CTIA Petition at 5-12; see also Cingular Wireless Petition at 11-12.

"CTIA Petition, at 5.

^

Id. at 14.

1413

requested clarification regarding the allocation of toll revenue when

a wireless provider uses the interim wireless safe harbor to report revenues. CTIA Petition at 7-9. We do not reach

the safe harbor issue in this Order.

"

See CTIA Petition at 5-12; see also Qwest Comments at 2.

"

See CTIA Petition at 5-12; see also Cingular Wireless Petition at 11-12.

"CTIA Petition, at 5.

^

Id. at 14.

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Federal Communications Commission

FCC 07'231

m. DISCUSSION

5. In this Order, we address the manner in which Fund contributors, including wireless and

interconnected VoIP providers, must report on FCC Form 499 revenues that they obtain from toll

services.^' First, we reiterate that, for universal service purposes, "[tjoll services are telecommunications

services that enable customers to communicate outside of their local exchange calling areas," and that, for

wireless providers, this means outside the customer's plan-defined home calling area?^ Second, we fmd

that those contributors reporting revenues based on traffic studies must report all revenues associated with

interstate or intemational toll service calls for which there is a separate charge on an end user's bill as

interstate or intemational toll service revenues when submitting their Telecommunications Reporting

Worksheets (FCC Forms 499-A and 499-Q). In this respect, and as explained more fully below, we find

that wireless providers and interconnected VoIP providers that report revenue based on a traffic study or

studies must account for toll service traffic that is assessed an additional charge(s) in a manner that

reflects accurately both the jurisdiction of this traffic and the associated revenue.

A.

ToU Service Revenue

6

499-A and 499-Q). In this respect, and as explained more fully below, we find

that wireless providers and interconnected VoIP providers that report revenue based on a traffic study or

studies must account for toll service traffic that is assessed an additional charge(s) in a manner that

reflects accurately both the jurisdiction of this traffic and the associated revenue.

A.

ToU Service Revenue

6. We agree with CTIA that, as we explained in the 2006 Contribution Methodology Order, toll

services are "telecommunications services that enable customers to communicate outside of their local

exchange calling areas."^' Toll service revenues are, in turn, revenues resulting from the provision of

telecommunications services that enable customers to communicate outside of their local exchange

calling areas. In applying this definition to wireless carriers, the Commission indicated that certain

wireless revenues fall within the definition of toll service revenues. In particular, the Commission stated:

Many wireless telephony customers subscribe to plans that give them fixed amounts

of minutes which can be used for either local or long distance service. Other

wireless telephony customers, however, pay by the minute for some or all calls. For

long distance service, the charge is often made up of an air time charge that is the

same for local and long distance calls, and an additional toll charge that applies only

to long distance calls. For some wireless telephony providers, toll service revenue

includes these additional charges for intrastate, interstate, and intemational toll

calls.^"^

7

r, pay by the minute for some or all calls. For

long distance service, the charge is often made up of an air time charge that is the

same for local and long distance calls, and an additional toll charge that applies only

to long distance calls. For some wireless telephony providers, toll service revenue

includes these additional charges for intrastate, interstate, and intemational toll

calls.^"^

7. CinguIJir asserts that the Commission never previously provided clear guidance as to

precisely what revenue falls into the category of wireless toll revenue.^ Cingular also claims that the

concept of a local exchange calling area does not translate into commercial mobile radio service (CMRS)

networks.^ CTIA similarly asserts that the 2006 Contribution Methodology Order is not only the first

Although the CTIA Petition only seeks a declaratory order in the wireless context, because both wireless and

interconnected VoIP providers may utilize a traffic study or studies to report interstate and intemational revenues,

we address in this Order the Commission's reporting requirements for any Fund contributor that permissibly uses a

traffic study to report USE revenues.

^

2006 Contribution Methodology Order, 21 FCC Red at 7534, para. 29; see, e.g., Cingular Wireless Petition at 11-

12,23-24; CTIA Petition at 3-5; T-Mobile Comments at 2; USCC Comments at 4-5.

^ 2006 Contribution Methodology Order, 21 FCC Red at 7534, para. 29.

^*Id.

^

See Cingular Wireless Petition at 12; see also T-Mobile Comments at 2.

^

See Cingular Wireless Petition at 11-12.

1414

revenues.

^

2006 Contribution Methodology Order, 21 FCC Red at 7534, para. 29; see, e.g., Cingular Wireless Petition at 11-

12,23-24; CTIA Petition at 3-5; T-Mobile Comments at 2; USCC Comments at 4-5.

^ 2006 Contribution Methodology Order, 21 FCC Red at 7534, para. 29.

^*Id.

^

See Cingular Wireless Petition at 12; see also T-Mobile Comments at 2.

^

See Cingular Wireless Petition at 11-12.

1414

Federal Communicatioiis Commission

FCC 07-231

Commission-level universal service contribution order to define "toll traffic," but the first Commission-

level order to define toll traffic in the CMRS context?^ CTIA further asserts that the 2006 Contribution

Methodology Order suggests that "toll charges, in the wireless context, are additional charges for 'long

distance' calls (that is, calls outside of the customer's home calling area, as defined in the customer's

plan), distinct from any itemized airtime charges that may apply and also distinct from roaming (whether

on-network or off-network)."^* Both Cingular and CTIA urge the Commission to clarify that the

definition of toll services set forth in the 2006 Contribution Methodology Order is the definition the

Commission will apply and that contributors must use in reporting toll service revenues on the FCC Form

499.

8. We grant petitioners request for clarification and state that the definition of toll services set

forth in paragraph 29 of the 2006 Contribution Methodology Order is the definition that contributors must

use to report toll services revenues on their FCC Form 499s.^' Regarding petitioners' complaint that this

defmition of "toll service" is difficult to apply to wireless services, we acknowledge that the definition

includes a term, "local exchange calling area," typically associated with wireline networks, but we think

petitioners overstate the case

ogy Order is the definition that contributors must

use to report toll services revenues on their FCC Form 499s.^' Regarding petitioners' complaint that this

defmition of "toll service" is difficult to apply to wireless services, we acknowledge that the definition

includes a term, "local exchange calling area," typically associated with wireline networks, but we think

petitioners overstate the case. In common usage a "toll" is a separate charge for use of a service or access

to infrastructure, such as a toll road or bridge, or "a charge for a long distance telephone call."^°

Moreover, since 1934, the Act's definition of "telephone toll traffic" has included the concept of "a

separate charge."*' And although wireless service is not typically described in terms of "local exchange

areas," we note that wireless providers have long crafted cdling plans for consumers that feature a

separate charge for calls made outside of a plan-defined home calling area.*^ In this respect, providers

have demonstrated that their billing systems can and do segregate and separately track revenues

associated with calls that fall outside of a subscriber's plan, in terms of minutes used (overages), calls

originating outside of the plan-defined home calling area (roaming), and calls placed to points outside of

the plan-defined home calling area (toll).** Although the definition of toll service reflected in the FCC

Form 499 instructions predates the 2006 Contribution Methodology Order, we recognize that the

Commission had not addressed the application of that definition to wireless services prior to that order.

See CTIA Petition at 4.

® We note that the term "home calling area" is used generally by wireless carriers to denote the plan-defined area in

which a subscriber may make calls and inciu- no additional charges beyond the plan-specific per month charge,

assuming the subscriber does not exceed the plan allotted minutes. See id

e application of that definition to wireless services prior to that order.

See CTIA Petition at 4.

® We note that the term "home calling area" is used generally by wireless carriers to denote the plan-defined area in

which a subscriber may make calls and inciu- no additional charges beyond the plan-specific per month charge,

assuming the subscriber does not exceed the plan allotted minutes. See id. at 5', see also Letter from Brian Fontes,

Vice President -

Federal Relations, AT&T Mobility, LLC, to Marlene H. Dortch, Secretary, Federal

Communications Commission, WC

£>ocket No. 06-122 at 2-3, filed Feb. 6,2007 (Cingular Wireless letter).

^

The discussion of "toll services," "toll traffic," and "toll revenues" in this order pertains solely to universal service

contribution obligations. Nothing in this order is intended to address intercarrier compensation and other issues

raised in CC Docket No. 01-92 or other pending proceedings. See Developing a Unified Compensation Regime, CC

Docket No. 01-92, Further Notice of Proposed Rulemaking, 20 FCC Red 4685 (2005).

Merriam-Webster Online Dictionary, copyright 2005 by Merriam-Webster, Inc. available at www.merriam-

webster.com (last visited Jan. 2, 2(X)8).

"

47 U.S.C. § 153(48) (defining telephone toll service as "telephone service between stations in different exchange

areas/or which there is made a separate charge not included in contracts with subscribers for exchange service")

(emphasis added).

** Cingular Wireless Letter at 3

(discussing legacy regional plans).

** See id. See also Letter from Paul W. Gamett, CTIA -

The Wireless Association, to Marlene H. Dortch, Secretary,

Federal Communications Commission, WC Docket No. 06-122 at 2, filed Feb. 21,20O7 (CTIA Member Toll

Charges Letter).

1415

ate charge not included in contracts with subscribers for exchange service")

(emphasis added).

** Cingular Wireless Letter at 3

(discussing legacy regional plans).

** See id. See also Letter from Paul W. Gamett, CTIA -

The Wireless Association, to Marlene H. Dortch, Secretary,

Federal Communications Commission, WC Docket No. 06-122 at 2, filed Feb. 21,20O7 (CTIA Member Toll

Charges Letter).

1415

Federal Communications Comniission

FCC 07-231

Thus, we agree with CTIA that the definition of wireless toll services applies from the effective date of

that order.

9. Toll services can thus be defined as telecommunications services, regardless of how

provisioned, that enable the customer to call points outside the customer's plan-defined home calling area

for an additional charge.'* These services can take many forms. Wireless and interconnected VoIP

providers and many local exchange carriers offer a range of calling plans to consumers. These plans may

include small local calling areas, regional calling areas, and nation-wide calling areas." Although some

wireless plans may include an additional air time charge that is the san^ for local and long distance calls,

and therefore does not represent a toll service char^, other plans assess an additional charge that applies

only to calls to points outside of the customer's plan-defined home calling area, that is, a toll charge."

10. In the 2006 Contribution Methodology Order, we expressed concern that wireless carriers

were not properly reporting revenues associated with toll services." Providers using traffic studies to

report revenues on the FCC Forms 499 shall identify toll service revenues consistent with the home

calling area of the particular plan for the subscriber

efined home calling area, that is, a toll charge."

10. In the 2006 Contribution Methodology Order, we expressed concern that wireless carriers

were not properly reporting revenues associated with toll services." Providers using traffic studies to

report revenues on the FCC Forms 499 shall identify toll service revenues consistent with the home

calling area of the particular plan for the subscriber. Therefore, revenue associated with wireless and

interconnected VoIP consumers that subscribe to nation-wide, fixed-price calling plans that give the

customer fixed amounts of minutes, and do not distinguish between local, intrastate, or interstate service,

must be identified as toll service revenue only to the extent that additional fees are assessed for calls made

to points outside the plan-defined home calling area. For these plans, toll service revenue would likely be

limited to charges associated with intemational calling." Similarly, revenues associated with regional or

local plan-defined home calling areas must be reported as toll service revenue to the extent that there are

additional fees assessed for calls made to points outside the plan-defined home calling area." Revenues

of a wireless provider or an interconnected VoIP provider associated with additional airtime, roaming,

and overage charges, while not toll service revenue, must be allocated between the interstate and

intrastate jurisdictions.*"

11. There are also wireless plans that charge by the minute for some or all calls. These plans,

which require consumers to pay in advance for usage, do not offer consumers a "bucket" of minutes per

^

See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of1993, Annual Report and

Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Eleventh Report, 21 FCC

Red 10947,11049, para. 125 (2006) (explaining wireless carrier calling areas).

"

See Cingular Wireless Letter at 3; CTIA Member Toll Charges Letter at 2

rs a "bucket" of minutes per

^

See Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of1993, Annual Report and

Analysis of Competitive Market Conditions with Respect to Commercial Mobile Services, Eleventh Report, 21 FCC

Red 10947,11049, para. 125 (2006) (explaining wireless carrier calling areas).

"

See Cingular Wireless Letter at 3; CTIA Member Toll Charges Letter at 2. Some interconnected VoIP plans also

include international calls within the flat rate monthly plan fee. See generally http;//comparevoipproviders.org (last

visited Jan. 2,2008) for a listing of various VoIP calling plans and coverage.

^

See Cingular Wireless Letter at 3. We note that such toll charges, as we define the term here, are distinct from

roaming charges, which we do not define in this Order.

"

2006 Contribution Methodology Order, 21 FCC Red at 7534, paras. 29-30.

For example, as Cingular explains in its letter, the only "toll" charges associated with its nationwide calling plans

would be for calls made from die United States to foreign points. Cingular Wireless Letter at 4. Calls made or

received by Cingular customers while outside the United States are generally treated as intemational roaming. Id.

"

For example, as Cingular explains in its letter, for its legacy regional plans, calls made to points outside the plan-

defined home calling area are treated as toll, depending on the number called, whereas calls made from or received

while outside the plan-defined home calling area are treated as roaming. Cingular Wireless Letter at 3. See also

CTIA Member Toll Charges Letter at 2-3.

*° Instructions to the Telecommunications Reporting Worksheet (2007), Form 499-A, at 23-24.

1416

ls made to points outside the plan-

defined home calling area are treated as toll, depending on the number called, whereas calls made from or received

while outside the plan-defined home calling area are treated as roaming. Cingular Wireless Letter at 3. See also

CTIA Member Toll Charges Letter at 2-3.

*° Instructions to the Telecommunications Reporting Worksheet (2007), Form 499-A, at 23-24.

1416

Federal Communications Commission

FCC 07-231

month. Rather, consumers pay on a per-minute basis for e^h call made. For long distance service, the

charges associated with these offerings are often made up of an air time charge that is the same for local

and long distance calls, and an additional toll charge that applies only to long distance calls made to

points outside of the plan-defined home calling area. As with the other wireless offerings, wireless

providers will need to report toll service revenue to the extent they charge additional fees beyond the

airtime charges for calls to points outside the plan-defmed home calling area. Further, as with the

"bucket" plan offerings, additional airtime, roaming, and overage charges must be allocated between the

interstate and intrastate jurisdictions as revenue reported for mobile telephony service."'

B.

Toll Service Revenue Reporting

12. Having defined toll service revenues for purposes of USF contribution obligations, we next

address how, on a going-forward basis, wireless, interconnected VoIP, and other providers should treat

toll service revenues when conducting their traffic studies

ted between the

interstate and intrastate jurisdictions as revenue reported for mobile telephony service."'

B.

Toll Service Revenue Reporting

12. Having defined toll service revenues for purposes of USF contribution obligations, we next

address how, on a going-forward basis, wireless, interconnected VoIP, and other providers should treat

toll service revenues when conducting their traffic studies. We begin by noting that wireless providers

have indicated to the Commission that revenues associated with toll services are identifiable because, for

the provider to generate a bill for the customer, it must have a system that is capable of determining that a

certain call made by a subscriber does not fit within the subscriber's plan-defined home calling area, and

thus should be assessed an additional charge."^ This premise would also hold true for other providers that

are able to identify and charge for calls that fall outside a subscriber's plan-defined home calling area or

local exchange. We also understand, however, that the billing information alone may not in all cases be

sufficient to determine whether the call and associated revenue is interstate/international or intrastate for

purposes of billing a customer due to limitations of a provider's billing system, attributes of a consumer's

calling plan, or for other reasons. The availability of traffic studies for use in revenue reporting remains a

viable means for these providers to determine the percentage of revenue that should be allocated to the

interstate jurisdiction.

13

ue is interstate/international or intrastate for

purposes of billing a customer due to limitations of a provider's billing system, attributes of a consumer's

calling plan, or for other reasons. The availability of traffic studies for use in revenue reporting remains a

viable means for these providers to determine the percentage of revenue that should be allocated to the

interstate jurisdiction.

13. In the 2006 Contribution Methodology Order, we expressed concern that some wireless

providers may not be accurately reporting toll service revenues, and we noted that providers have

incentives to design traffic studies so as to minimize their interstate and international end-user revenues.""

Unlike monthly charges associated with calling plans and associated usage, the revenue associated with

toll service is predominantly a result of domestic long distance and international calling"' and is often

much higher than the per-minute revenue associated with a plan's bucket minutes."® In order to more

accurately reflect the jurisdictional nature of toll service revenue, providers, including wireless and

interconnected VoIP providers, must ensure that toll service revenues are accurately accoimted for by

See id.

See Cingular Wireless Letter at 3; CTIA Member Toll Charges Letter at 2.

See T-Mobile Comments at 4.

** 2006 Contribution Methodology Order, 21 FCC Red at 7534-35, paras. 29-32.

Cingular Wireless Letter at 2-4; CTIA Member Toll Charges Letter at 2-3.

"® For example. Sprint international calling rates range from $.06 to over $2.49 per minute. See

http://www.nextel.com/en/services/worldwide/ratesfromus.shtml (last visited Jan. 2,2(X)8). The Sprint bucket plan

minutes range from as little as $.04 to $.14 per minute depending on the size of the bucket and assuming that all

minutes are used. See http://nextelonline.nextel.com/NASApD/onlinestore/en/Action/SubmitReEionAction (last

visited Jan. 2,2008). Similar per minute charges are found with other wireless providers

n/services/worldwide/ratesfromus.shtml (last visited Jan. 2,2(X)8). The Sprint bucket plan

minutes range from as little as $.04 to $.14 per minute depending on the size of the bucket and assuming that all

minutes are used. See http://nextelonline.nextel.com/NASApD/onlinestore/en/Action/SubmitReEionAction (last

visited Jan. 2,2008). Similar per minute charges are found with other wireless providers. See generally

www.vzw.com.www.cinsular.com (last visited Jan.2, 2(X)8).

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FCC 07-231

appropriately weighting such traffic in the reporting methodology they choose.''^ Wireless and

interconnected VoIP providers may, for example, conduct separate traffic studies on the traffic associated

with toll service charges to determine the percentage of such revenue that is associated with the interstate

and international jurisdiction. Thus, a provider using traffic studies to report revenues could conduct one

study focusing on toll calls to allocate toll service revenue and a separate study of all calls to allocate all

other telecommunications revenues. Conducting two studies should more accurately approximate actual

revenues than a single study that includes all telecommunications revenues. We note that the procedures

adopted in the 2006 Contribution Methodology Order for performing a valid traffic study would apply to

separate toll service traffic studies.^

14. Alternatively, wireless and interconnected VoIP providers may be able to design a single

traffic study that adequately accounts for toll service revenue by properly weighting such traffic.^'

Wireless and interconnect^ VoIP providers could also choose to report toll service revenue based on

actual revenues, while conducting a traffic study excluding toll service calls to address other

telecoirununications revenues.

15

ess and interconnected VoIP providers may be able to design a single

traffic study that adequately accounts for toll service revenue by properly weighting such traffic.^'

Wireless and interconnect^ VoIP providers could also choose to report toll service revenue based on

actual revenues, while conducting a traffic study excluding toll service calls to address other

telecoirununications revenues.

15. Our goal in adopting this flexible approach to allocating toll service revenues by jurisdiction

is to provide contributors, including wireless and interconnected VoIP providers, a means of assuring

compliance with their USF contribution obligations. Regardless of which option is chosen, however, toll

service traffic must be identified and treated in a manner that recognizes that such traffic is more likely to

be interstate or international than intrastate.®" Moreover, appropriate weighting of the higher revenue that

is often associated with toll service must be reflected in the traffic study or studies." Accordingly, any

revenues associated with charges on customer bills that are identified as interstate or international must

effectively be accounted for {e.g., through proper weighting in a traffic study) as 100 percent interstate or

international when reporting revenues in the appropriate block of the Telecommunications Reporting

Worksheets.

IV.

PROCEDURAL MATTERS

16. To request materials in accessible formats for people with disabilities (Braille, large print,

electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer &

Governmental

Affairs Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY). Contact the FCC to request reasonable

accommodations for filing comments (accessible format documents, sign language interpreters, CART,

etc.) by e-mail: FCC504@fcc.gov; phone: 202-418-0530 or TTY: 202-418-0432

s (Braille, large print,

electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer &

Governmental

Affairs Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY). Contact the FCC to request reasonable

accommodations for filing comments (accessible format documents, sign language interpreters, CART,

etc.) by e-mail: FCC504@fcc.gov; phone: 202-418-0530 or TTY: 202-418-0432.

For example, if on average a service provider derives five times as much revenue fi'om an international minute as

it does from an intrastate minute, then it would weight each international minute equivalent to five intrastate minutes

in calculating a single traffic-based percentage to apply to all revenues. To the extent that a provider chooses to use

a weighted traffic study, we again reiterate that such a study must meet the requirements for ensuring accuracy

adopted in the 2006 Contribution Methodology Order. See 2006 Contribution Methodology Order, 21 FCC Red at

7535, n.ll5.

See supra n.47.

^

See supra para. 12.

"

See supra n.47.

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V.

ORDERING CLAUSES

17. Accordingly, IT IS ORDERED that pursuant to the authority contained in sections 1, 2,4(i),

4(j), 201,202,218-220, 254, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.

§§ 151,152, 154(i)-(j), 201, 202, 208-220,254, and 303(r), this Order in WC Docket No. 06-122 IS

ADOPTED.

18. IT IS FURTHER ORDERED that the petitions for declaratory ruling filed by CTIA-The

Wireless Association and Cingular Wireless, LLC, ARE GRANTED to the extent discussed herein.

19. IT IS FURTHER ORDERED THAT pursuant to sections 1.2 and 1.103(a) of the

Commission's rules, 47 C.F.R. §§ 1.2,1.103(a), this Order SHALL BECOME EFFECTIVE upon release.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

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R ORDERED that the petitions for declaratory ruling filed by CTIA-The

Wireless Association and Cingular Wireless, LLC, ARE GRANTED to the extent discussed herein.

19. IT IS FURTHER ORDERED THAT pursuant to sections 1.2 and 1.103(a) of the

Commission's rules, 47 C.F.R. §§ 1.2,1.103(a), this Order SHALL BECOME EFFECTIVE upon release.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

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APPENDIX

Commenters In WC

Docket No. 06-122

Comments

Abbreviation

Qwest Communications International Inc.

Qwest

T-Mobile USA,

Inc.

T-Mobile

United States Cellular Corporation

USCC

Reply Commenters in WC Docket No. 06-122

Renlv Comments

Abbreviation

CTIA -

The Wireless Association

CTIA

Cingular Wireless

Cingular

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