Section R14-2-1204. Funding of the AUSF

A.      The AUSF shall be funded in accordance with this Article by all telecommunications service providers that interconnect to the public switched network. Within 30 days of the effective date of this Article, and thereafter on or before October 1 of each year, each telecommunications provider shall provide to the Administrator a list of all other telecommunications pro- viders that interconnect to its facilities or network.

B.       The AUSF shall be funded equally by toll and local customers of the providers of telecommunications services, and shall be assessed in the following manner:

1.        Category 1 - Providers of basic local exchange service, as discussed in R14-2-1204(B)(1)(a), and other service pro- viders as required under R14-2-1204(B)(1)(a)(i) or per- mitted under R14-2-1204(B)(3)(b), shall be considered providers of Category 1 service.

a.         One-half of the AUSF funding requirement will be collected through Category 1 service providers. Cat- egory 1 AUSF assessment will be based upon access lines and interconnecting trunks, and assessed by providers of local switched access as either an access line or interconnecting trunk surcharge. The “per access line” surcharge to be in place during a given year will be calculated by the Administrator using the total number of access lines and equivalent access lines deriving from interconnecting trunks that were in service for all Category 1 service pro- viders on October 1 of the previous year. Access lines shall include business and residence lines, pub- lic access lines, and other identifiable access lines. All wireless providers including but not limited to

paging and other Commercial Mobile Radio Service providers, that interconnect to the public switched network will contribute to the AUSF under the requirements of Category 1. The number of inter- connecting trunks obtained from the local access provider by the wireless provider shall be utilized in conjunction with a Conversion Factor to determine AUSF support from such wireless provider by means of a surcharge on such interconnecting trunks. A wireless provider that fails to contribute to the AUSF as required by this Article shall be subject to termination of its interconnection arrangements pursuant to R14-2-1214(C).

b.        On or before November 1 of each year, each Cate- gory 1 local switched access service provider shall provide to the Administrator the number of access lines and number of interconnecting trunks that were in service on October 1 of that year. The Administra- tor will use these numbers together with the Conver- sion Factor in calculating the per access line surcharge and per interconnecting trunk surcharge for the following year. The Administrator will multi- ply the total number of interconnecting trunks by the Conversion Factor to obtain an equivalent number of access lines for the purpose of calculating the sur- charges.

2.        Category 2 - Providers of intrastate toll service, or other service providers as permitted under R14-2-1204(B)(3), shall be considered providers of Category 2 service and shall be assessed AUSF charges as follows:

a.         One-half of the AUSF funding requirement will be collected through Category 2 service providers. The Category 2 AUSF assessment will be based on total Arizona intrastate toll revenue, and assessed as a percent of revenue. The percent of revenue assess- ment to be in place during a given year will be calcu- lated by the Administrator using the annual Arizona intrastate revenue for all Category 2 service provid- ers for the previous year.

b.        On or before November 1 of each year, each Cate- gory 2 service provider shall report to the Adminis- trator the total Arizona intrastate revenue collected between August 1 of the current year and August 1 of the previous year. The Administrator will use this revenue so reported to calculate the AUSF assess- ment rate for the following year.

3.        New telecommunications service providers.

a.         Telecommunications providers that begin providing basic local exchange service after the effective date of this Article shall be assessed AUSF charges pur- suant to R14-2-1204(B)(1). Telecommunications providers that begin providing toll service after the effective date of this Article shall be assessed AUSF charges pursuant to R14-2-1204(B)(2).

b.        All other telecommunications service providers that interconnect to the public switched network and begin providing telecommunications service  after the effective date of this Article, shall choose to be considered either a Category 1, Category 2, or both Category 1 and Category 2 service provider. Such election shall be made in writing to the Administra- tor within 30 days of beginning to provide telecom- munications service in Arizona, with a copy to the Director of Utilities. Written concurrence of the Director of Utilities must be received by the Admin- istrator for such selection to be effective. Such selec-

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tion will be irrevocable for a period of at least three years.

4.        A telecommunications provider that provides both Cate- gory 1 and Category 2 services shall be assessed AUSF charges pursuant to both R14-2-1204(B)(1) and R14-2- 1204(B)(2).

Historical Note

Adopted effective April 26, 1996, under an exemption as determined by the Arizona Corporation Commission

annual intrastate toll revenues calculated in subsection (D)(1) to arrive at a percentage of revenue surcharge.

E.    Recipients of lifeline or other low-income support shall be exempt from paying a Category 1 surcharge.

Historical Note

Adopted effective April 26, 1996, under an exemption as determined by the Arizona Corporation Commission (Supp. 96-2).

(Supp. 96-2). R14-2-1205.   Calculation of Surcharges A. Any provider of telecommunications service may file either an   AUSF tariff or price list, if appropriate, establishing a flow- A. The Administrator will calculate the total AUSF support due   through mechanism to collect the surcharge approved by the   all local exchange carriers who have been granted AUSF sup-   Commission and calculated by the Administrator.   port by the Commission. Administrative costs and audit fees B. On or before the 20th day of each month, each Category 1 ser-   will be added to this amount. The amount of any excess funds   vice provider responsible for collecting AUSF surcharges shall   in the AUSF will then be subtracted to determine the total   remit to the Administrator the AUSF surcharge, including any   funding requirement. The funding requirements from Cate-   surcharge on wireless providers, collected by that provider   gory 1 and Category 2 service providers will then be calcu-   during the preceding month. The Category 1 provider shall   lated. One-half of the funding will be obtained from Category   submit such documentation of AUSF revenues from the AUSF   1 providers through surcharges applied to access lines and   surcharge as may be required by the Administrator.   interconnecting  trunks  in  service.  The  other  half  will  be C. On or before the 20th day of each month, each Category 2 ser-   obtained from Category 2 providers through surcharges on   vice provider responsible for collecting AUSF surcharges shall   intrastate toll revenues.   remit to the Administrator the AUSF surcharge collected by B. For the purpose of determining the surcharges, the Administra-   that provider during the third preceding month. The Category   tor will develop growth factors to apply to the total reported   2 provider shall submit such documentation of AUSF revenues   access lines and toll revenues. Such growth factors will be cal-   from the AUSF surcharge as may be required by the Adminis-   culated at 1/2 of the estimated annual percentage growth in   trator.   access lines and in toll revenues. D. Eligible recipients of AUSF support are: C. Category 1 Surcharge. One-half of the total annual AUSF sup-   1.     Providers of telecommunications service engaged in pro-   port approved by the Commission for all eligible recipients   viding basic local exchange telephone service in Arizona   will be obtained from Category 1 service providers. A monthly   which have obtained a Commission order authorizing   per access line surcharge and a monthly per interconnecting   payments from the AUSF; and   trunk surcharge required to obtain this funding will be calcu-   2.     Providers that become entitled to AUSF support based   lated as follows:   upon the provisions of R14-2-1206(E).   1.     Adding together the number of access lines and equiva- E. If the Commission approves AUSF support to a provider of   lent access lines for all Category 1 service providers,   telecommunications service for a defined area, such AUSF   adjusted by the growth factor;   support shall also be available to competitive providers of   2.     Dividing the total annual AUSF support approved by the   basic local exchange service in the same defined area that are   Commission for all eligible recipients by 2 to obtain the   contributing to the AUSF, and that are willing to provide ser-   portion of AUSF support required from Category 1 ser-   vice to all customers in the specific AUSF support area as   vice providers;   defined by the Commission. The AUSF support to which the   3.     Dividing the amount of Category 1 AUSF support calcu-   competitive provider is eligible shall be calculated on a per-   lated in subsection (C)(2) by the sum of access lines cal-   customer basis, at the same level at which the incumbent pro-   culated in subsection (C)(1) to yield the per access line   vider of telecommunications service receives AUSF support,   surcharge;   and shall not result in an increase in the total AUSF support   4.     Dividing the per access line surcharge calculated in sub-   available for the specific census block groups or study area. If   section (C)(3) by 12 to determine the monthly access line   basic  exchange  service  is  provided  through  the  resale  of   assessment;   another carrier’s local loop facilities, AUSF support will only   5.     Multiplying the surcharge obtained in subsection (C)(4)   be available to the retail service provider if AUSF support is   by the Conversion Factor to determine the monthly inter-   not included in the wholesale price for the resold local service.   connecting trunk surcharge.   This Section shall not apply to small local exchange carriers D. Category 2 Surcharge. One-half of the total annual AUSF sup-   nor to the universal service support being received by any tele-   port approved by the Commission for all eligible recipients   communications service provider as of the effective date of   will be obtained from Category 2 service providers. A percent   this Article.   of revenue surcharge required to obtain this funding will be F. For small  local  exchange  carriers  and  for  any  basic  local   calculated as follows:   exchange telephone service provider receiving universal ser-   1.     Totaling the annual intrastate toll revenues of all Cate-   vice support as of the effective date of this Article, the AUSF   gory 2 service providers, adjusted by the growth factor;   support shall not be available to competitive providers of basic   2.     Dividing the total AUSF support approved by the Com-   local exchange service prior to completion of the review pro-   mission for all eligible recipients by 2 to obtain the por-   vided for in R14-2-1216. Following completion of the review,   tion of AUSF support required from Category 2 service   AUSF  support  provided  to  small  and  intermediate  local   providers;   exchange carriers shall be available to all competitive provid-   3.     Dividing  the  amount  of  Category  2  AUSF  support   ers of basic local exchange service in the same defined area   requirement calculated in subsection (D)(2) by the total   that are contributing to AUSF, and that are willing to provide       service to all customers in the specific geographic study area

R14-2-1206.   Implementation

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as defined by the Commission, unless otherwise ordered by the Commission.

G. Defined area, study area, geographic area, and support area mean the same area during the first three years of the effective date of this Article. After the first three years, they will still have the same meaning unless otherwise ordered by the Com- mission.

Historical Note

Adopted effective April 26, 1996, under an exemption as determined by the Arizona Corporation Commission (Supp. 96-2).