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Home My WebLink About20180717Idaho Universal Service Fund.pdfIDAHO UNIVERSAL SERVICE FUND July 16,2018 Daniel Klein ldaho Public Utilities Commission 472W Washington Street Boise, lD 83702-5983 Grue- r- r?-o(, Dear Daniel Enclosed is the Administrator's Report of the ldaho Universal Service Fund (IUSF) for the year ended June 30,2018. Enclosed are one copy, including all schedules and work papers, and three copies, exclusive of the statewide calculations and inventories. You may distribute the report as you find appropriate. Additionally, I have enclosed, for approval, the proposed 2018-2019 administrative budget for the ldaho Universal Service Fund. lf you have any questions, or desire additional information, please do not hesitate to call me. Sincerely, Alyson Anderson Administrator Enclosure 7964 NORTH 3OO EAST . CENTERVILLE, UT 8401,4- 1085 PHONE: 801 -294-534 3 . FAX: 8O 1 -294-5143 alyson-ande rson @ msn. c om r.: =7)r lrl l/J,tr 4m+G f\) O(,JO RICiIVED Ztilff JUL l? PH 2:03 lrl ADMIMSTRATONPS REPORT IDAHO UNTVERSAT SERVICE FUND \ZEAR ENDED -- JUNE 3Or zo"t 8 SURCHARGE REVENUES Surcharge revenues collected dwingthe year endedJune 3Or 2018 totaled $ 1,88 9,4 9 3, of which $ 1,0 5 5,0 64, or 5 60/o w as assessed on local exchange services and $8341429, or 44o/o, was assessed on MTS/WATS services. Current monthly surcharge rates are $.25 per residentialliner$.44 per business line, and $.009 per MTS/WATS bllled minute. DISBURSEMENTS COMPANIES RECEIVING DISBURSEMENTS Author ize d disburse me n t s to Lo c al Exc ha nge Comp anie s during the y e ar endedJune 30, 2078 totaled $ 1 ,698,6 70 (page 1 1). The following table shows the LocalExchange companies authoizedby the ldaho Public Utilities Commission to receive disbursements from theldaho Universal Service Fund. Original IPUC Order Authorizing Disbursement Current Authofized Annual DisbursementCom ATC Communications Cambridge Telephone Fremont Telecom lnlandTelephone Co Midvale Telephone Direct Communication Rockland Rural Telephone Co Silver Star Telecom Total 227 18 & 22128 22737 28085 & 28166 23838 22377 22732 $ 464,5O2$ 738,762 $ 57,258 $ 27,604$ 350,785 $ 202,407 $1,698,610 22474 & 26598 22237 & 22370 $ soz,22t$ 755,677 Name I ADMINISTRATIVE FEES AND EXPENSES Administrativefees andexpenses for the year endedJune 30,2018 were $27,909. Administrative expenses includebank andbroker charges of $7+t, and audit fee of $7,70O. Administrative expenses payable atJune 30,2018 are $1,19t. CASH AtJune 30,Z)78,theldaho Universal Service Fund hada cash balance of $249,7 58. The following is a table showing the begrnnLng) endrng, and quafierly fund cashbalances for the year endedJune 30,2018. INTEREST No interest was earned on funds held in bank accounts for the year ended June 30,2018. INVESTMENTS TJneldaho Universal Service Fund hadno investments during theyear endedJune 30,2018. 2 Balance t2/ 3t / 1,730/17 784 9r7581$z+$ 3/31/ 18 6/30/ 18 Balance 9130/ t7 Ending Balance II{\TESTMENTS AND FUNDS II{\TENTORIES Total residential and business lines at May 1, 2078 were 722,347 and 774,359 respectively (pages 69 and 71). This represents an 2Oo/o decrease in residential lines and a 60/o deqease in business lines from the prior year. Total MTS/WATS billed minutes of use for the year endedDecember 37, 2017 were 770,779,570 (page 75), a 72o/o decrease from the prior year. STATEWIDE WEIGHTED AVERAGE RATES A schedule summarizingthe total funding eligibility for the local exchange companies is shown onpage 72. ONE-PARTY, SINGLE LINE SERVICE The statewide weighted ayerage rates for one-party single-line residential andbusiness services are shown onpages 34 and 67. The following table shows the statewide weighted averuges for one-pafiy, single line service. TOLL SWITCHED ACCESS The statewide weighted ayera4e revenue per MTS/WATS access minute is shown onpage 14. The statewide weighted ayerage toll switched access revenue is $ .043 per minute. J STAI}wIDE WEIGTIITD A\TERAGE RAIT ruST THRESHOLD 125% STATEWIDE WEIGHTED AVERAGE RATE RESIDENTTAL SERVICES $22.0e $27.62 BUSIMSS SERVICES $36.94 $46.17 FUNDING OPTIONS OPTION 1: STATUS QUO If current surcharge levels ($.ZS per residentialhne, $.44 perbusiness line, and $.009 per intrastate MTS/WATS bllled minute) are maintained andno additional IUSF funding is authorized,the fund will increase by approximately $252,562 (page 76). The 2078-2019 IUSF authonzed disbursements will be $1 ,698,670. MTS/WATS services would contrrbute approximately 5Oo/o of the surcharge reyenue andlocal exchange services would contribute 5Oo/o of the surcharge revenue. The fund would have a balance of approximately $502,320 atJune 30,2079. OPTION 2: ADJUST FUNDING TO MEET STATEWIDE AVERAGES & MAINTAIN SURCHARGE RATES Idaho Universal Service Fund rule 106.02 indicates that to continue receiving IUSF funding after the first year of eligibility , the company may need to revise rates to meet or exceed the statewide threshold rates. If the rate is below the statewide threshold rate, and the difference between the rate is greater than 3o/o and $6,000, the company must revise rates equal or exceed TOOo/o of the statewide ayerage for MTS/WATS access sewice, and 725o/o of the statewide ayerage for local exchange service. The following applies rule 106 to each comparry currently drawing from the IUSF. t ATC Communications should increaselocal residential and business rates. ATC Communications annual IUSF draw would be reducedby $68,t0s. o Cambridge Telephone Company should rcduce toll switched access rates and increase local residential and business rates. Cambridge Telephone Company annual IUSF draw would be reduced by $1 8260. i Columbine Telephone /Silver Star Telecom should increase toll switched access, local residential, and business rates. Silver Star Telecom annual IUSF draw would be reduced by $107,550. I Direct Communications Rockland should increase local residential and business rates. Direct Communications Rockland annual IUSF draw would be reducedby $24,407. t Fremont Telecom should increase toll switched access rates, and increase local residential and business rates. Fremont Telecom annual IUSF draw would be decreased by $89,973. 4 a lnlandTelephone Company should decrease toll switched access rates. lnland Telephone Company annual IUSF draw would be increased by $12,372. o Midvale Telephone Company should increase local residential and business rates. Midvale Telephone Company annual IUSF draw would be reducedby $261403. t Rural Telephone Company should increase local residential rates. Rural Telephone Company annual IUSF draw would be reduced by $13,177. The 2018-2019 IUSF authodzed disbursements, including the adjustments to company fundingper rule 706, will be $1 )363,727.1f current surcharge levels are maintained at $.25 per residentialhne, $.44 per business line, and $.009 per rntrastate MTS/ WATS billedmrnute,the fund will increase by approximately $588,052 (page 76). MTS/WATS services would contrbute 5Oo/o of the total surcharge revenue andlocal exchange services would contribute 50o/o of the total surcharge revenue. T1ne fund would have abalance of approximately $837,809 atJune 30) 2079. OPTION 3: ADJUST INVENTORIES, MAINTAIN FUNDING LEVELS & MAINTAIN SURCHARGE RATES In order to more accurately calculate futare fundbalances, the inventories havebeen adlusted accordtngto the most recent five-year trend. Thus, the residential lines havebeen reduced l2o/o, the business lines reduced 72o/o and the MTS/ WATS billed minutes have been reduced 9%. lf the surcharge rates are maintained at $.25 per residentralhne, $.44 per business line, and $.009 per intrastate MTS/WATS brlled minute and IUSF disbursements are maintained at current levels, the fund will increaseby approximately $46,20G (page 77). MTS/WATS services would contribute approximately 52o/o of the surchar9e reyenue andlocal exchange services would contrlbute 48o/o of the surcharge revenue. The fund would have a balance of approximately $295,963 atJune 30,2079. OPTION 4: ADJUST INVENTORIES, ADJUST ruNDING & MAINTAIN SURCHARGE RATES In order to more accurately calculate future fundbalances, the inventories havebeen adlusted according to the most recent five-year trend. Thus, the residential lines havebeen reduced l2o/o, the business lines reduced 72o/o andthe MTS/WATS billed minutes havebeenreduced 9o/o. lf the surcharge rates are maintained at $.25 per residentialhne, $.44 per business line, and $.009 per intrastate MTS/ WATS btlled minute and IUSF disbursements are maintained at current levels, the fund will increaseby ) approximately $SSt ,695 (page 77). MTS/WATS services would contribute approximately 48o/o of the surchar1e reyenue andlocal exchange services would contribute 52o/o of the surcharge revenue. The fund would have abalance of approximately $GSt ,452 atJune 30,2079. OPTION 5: ADJUST II{VENTORIES, ADJUST FUNDING TO MEET STATEWIDE AVERAGES & DECREASE SURCHARGE RATES ln order to more accurately calculate futwre fundbalances, the inventories havebeen adjusted according to the most recent five-year trend. Thus, the residential lines havebeenreduced 72o/o, the business lines reduced 72o/o and the MTS/WATS billed minutes havebeen reduced 9o/o. lf the local surcharge rates are decreased to $.22 per residential line, $.37 per business line and the MTS/WATS rate is decreasedto $.007 per intrastatebllled minute, as well as IUSF disbursements adjusted per rule 106, the fund will increase by approximately $57,069 (page 7S). MTS/WATS services would contrlbute approxrmately 49o/o of the surchar3e revenue andlocal exchange services would contribute 57o/o of the surcharge revenue. The fund would have abalance of approximately fi306,826 atJune 30,2079. RS During the pastyear)therc was a 20o/o decline in local residential lines, a 6% declinelocalbusiness lines, 9o/o decline in MTS/WATS billed minutes. As in tlrre pastr l believe thatthelocal access lines andtoll minutes will continue to decline due to the continued populafity of wireless, cellular and VOIP, as well as the shift from stand-alone residential service to bundled packages. This affects the statewide average rate calculations, as well as the application of rule 106 to the companies fundedby the IUSF. In light of the FCC orders and industry changes, it is becoming more difficult to evaluate the IUSF funding as it applies to Rule 106. It is equally challenging to estimate future inventory levels andthe fundbalance. TIte Commission recognized this in opening Case No. GNR-T-[7-Os,The 2017 Review of the ldaho Universal Service Fund. Normally I feel compelled to apply ldaho Universal Service Fund rule 106.02 and recommend companres revise rates to meet or exceed the statewide thresholdrates, thercby adjusting the annual draw on the fund. However , in light of Case No. GNR-T-77-05,I recommendthat the Commission adopt Option 3. 6 The fund balance is currently adequate to meet the fund obligations. MTS/WATS services would contribute approximately 52% of the surcharge revenue andlocal exchange services would contribute 48o/o of the surcharge revenue. The fundbalance atJune 30r 2079 should approxrmate $295,963. 7