In a move consistent with our prediction the FCC would act quickly to clarify the rules, policies and procedures associated with the much-anticipated (and much-feared) transition from the “Entity-Wide” USF exemption process to a “Service-Specific” model (see July 29, 2014 Client Advisory), the FCC released a Public Notice today seeking industry and public comments on the wholesale industry group’s proposed changes to the Form 499 Instructions. A copy of the FCC Public Notice is linked here: https://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0802/DA-13-1700A1.pdf
Comments on the industry group’s proposed 499 revisions are due September 6th with Reply Comments due September 13th.
In November 2012, the FCC ordered the transition from the “Entity-Wide” exemption process to a “Service-Specific” model. This move was clearly an effort to increase contributions to the USF and other critical FCC programs. As such, it is impossible to overstate the importance of the Wholesale-Reseller USF Exemption process and associated FCC regulations, often referred to as the “Carrier’s Carrier Rule.”
The Carrier’s Carrier Rule and USF Exemption process impact each and every wholesaler, retailer and consumer of telecommunications, Interconnected VoIP services, broadband Internet Access services AND, potentially, future enhanced communications services that may come under FCC jurisdiction for Universal Service Fund purposes. Compliance with the Carrier’s Carrier Rule can be costly and cumbersome, but non-compliance can be immensely more costly and painful. If you have doubts, simply ask any Service Provider that has ever been audited by USAC how expensive and excruciating the audit and appeals process can be. As with most any “government auditor,” whether the Internal Revenue Service or state tax auditor, USAC is tenacious and unrelenting in its pursuit to identify non-compliance with FCC rules and regulations (and Form 499 Instruction) that can support revenue reclassification resulting in INCREASED contributions.
Considering the potential long-term consequences of any changes to the Form 499 Instructions, we highly recommend industry participation in the public Notice and Comment process. Minimally, we urge clients to pay close attention to the process and results. And once we have results, proactively solicit guidance to understand exactly how the new rules, instructions and policies impact your company and its relationships with suppliers, resellers and consumers.
Please contact Jonathan Marashlian if you are interested in filing comments or if you would like to be kept informed of future developments related to the Carrier’s Carrier Rule and Wholesale-Reseller USF Exemption process and requirements.