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Case Background
Section 364.336,
F.S., is the statutory section which describes how regulatory assessment fees
(RAFs) are set by the Commission for telecommunications companies. Subsection
364.336(2), F.S., was amended effective July 1, 2011, to require that
rulemaking begin by August 1, 2011, to reduce the RAFs for telecommunications
companies under Sections 350.113 and 364.336, F.S. This RAF reduction is
required in order to reflect the regulatory reduction resulting from Chapter
364 amendments that took effect on July 1, 2011, pursuant to the Regulatory
Reform Act enacted in the 2011 Legislative Session. Subsection 364.336(2)
requires that the reduced fee shall be applied beginning with payments due in
January 2012 on revenues for the preceding 6-month period. In addition,
subparagraphs 364.336(2) (a) – (d) set forth factors which the Commission must
consider in determining the required amount of the reduction to the RAF.
This docket was
opened on July 15, 2011. Notice of Development of Rulemaking was published in
the F.A.W. on July 29, 2011. A staff rule development workshop was held on
August 22, 2011. Participating in the workshop were representatives from
AT&T, Embarq Florida, Inc. d/b/a CenturyLink (CenturyLink), Florida Cable
Telecommunications Association (FCTA), TW Telecom of Florida LP, and
CompSouth. In addition, post-workshop written comments were submitted by FCTA
and CenturyLink.
This
recommendation addresses whether the Commission should propose the amendment of
Rule 25-4.0161, F.A.C. The Commission has jurisdiction pursuant to Sections
120.54, 350.127(2), 350.113, 364.285, and 364.336, F.S.
Discussion
of Issues
Issue 1:
Should the Commission propose the amendment of Rule
25-4.0161, F.A.C., Regulatory Assessment Fees; Telecommunications Companies?
Recommendation:
Yes, the Commission should propose the amendment of
this rule as set forth in Attachment A. (Cowdery, Salak, Mailhot, McNulty)
Staff Analysis:
Section 364.336(2), F.S., requires that rulemaking
begin by August 1, 2011, to reduce the RAF for telecommunications companies
under Sections 350.113 and 364.336, F.S. This RAF reduction is required in
order to reflect the regulatory reduction resulting from Chapter 364 amendments
that took effect on July 1, 2011, pursuant to the Regulatory Reform Act enacted
in the 2011 Legislative Session. Subsection 364.336(2) requires that the
reduced fee shall be applied beginning with payments due in January 2012 on
revenues for the preceding 6-month period. In addition, Subsection 364.336(2)
requires the Commission to consider the following factors in reducing the RAF
for telecommunications companies:
(a)
The regulatory activities that are no longer required and the number of
staff currently assigned to such activities.
(b)
The number of staff necessary to carry out the reduced level of
regulatory responsibilities based on reductions in workload for the staff in
the Division of Regulatory Analysis, the Office of Auditing and Performance
Analysis, and the Division of Service, Safety and Consumer Assistance.
(c)
The reductions in overhead associated with the Commissioners’ offices,
the Office of General Counsel, the Office of Commission Clerk, the Office of
Information Technology Services, the Office of Public Information, and the
Office of Inspector General.
(d)
The reductions in direct and indirect costs, including allocations of
fixed costs.
Below is staff’s recommendation as well as a summary of
the comments submitted by workshop participants on the draft rule amendments.
Staff Recommended
Rule Amendments
In the recommended
rule, a new Subsection 25-4.0161(1)
(p. 14) is created which, for purposes of the rule and except for pay telephone
providers, defines “local telephone service providers” as all incumbent local
exchange companies
(ILECs), shared tenant service providers, alternative access vendors, and
competitive local exchange companies
(CLECs) that hold an active certificate of public convenience and necessity
that was obtained prior to July 1, 2011, and all telecommunications companies
that obtain a certificate of authority after July 1, 2011. In addition, pay
telephone companies are defined.
Staff notes that
reference to interexchange telecommunications companies (IXCs) has been deleted
from the rule because IXCs are no longer regulated by the Commission.
The remaining company types, except pay telephone companies, fall within the
category of local telephone service providers, and for this reason are defined
as such in the recommended rule. Staff recommends that the Commission propose
these amendments in recognition of statutory changes to the Commission’s
jurisdiction.
Subsection
25-4.0161(1) currently states that, as provided by statute, each company shall
remit a fee based upon its gross operating revenue as provided therein. Six
company types are listed: local exchange company (ILEC), pay telephone service
provider, shared tenant service provider, IXC, alternative access vendor, and
CLEC. Under the current rule, the minimum annual RAF to be imposed is $100 for
shared tenant service providers and pay telephone service providers, $600 for
alternative access vendors and CLECs, and $1000 for ILECs. Subsection (1)
further states that each company shall pay a RAF in the amount of 0.0020 of its
gross operating revenues derived from intrastate business.
Renumbered Subsection
25-4.0161(2) (p. 14) of the recommended rule is amended to impose fees on
“local telephone service providers” and “pay telephone service providers,”
consistent with the definitions contained in new Subsection (1). The
recommended rule provides that the minimum annual RAF to be imposed on all
local telephone service providers is $600. Pursuant to Section 364.336, F.S.,
this minimum may be set as high as $1000. The minimum annual RAF for pay
telephone service providers remains $100. Additionally, an obsolete reference
to Subsection 364.02(12) is deleted from the rule language.
Renumbered
Subsection 25-4.0161(2) is further amended to provide that the RAF that each
company is required to pay is 0.0016 of its gross operating revenues derived
from intrastate business. To calculate the recommended RAF rate of 0.0016,
staff has projected the cost of regulating the telecommunications industry
based on the specific functions and activities required by statute. In
addition, staff has also projected the revenue base of the telecommunications
companies on which the RAF will be assessed. The regulatory assessment fee
rate for telecommunications was last increased for fiscal year (FY) 2005/2006.
The Commission’s telecommunications expenses for that fiscal year were $10.6
million. Staff is projecting $3.9 million of telecommunications expenses for
FY 2012/2013 for the purpose of setting the new RAF rate. This represents an
approximately 63 percent decrease in expenses from FY 2005/2006. Since FY
2005/2006, the revenue base has declined by approximately 50 percent. This
decline has accelerated in recent fiscal years. In the projection of revenues,
staff has assumed that the decline will not accelerate further. If the decline
is greater than staff has projected, then the RAF rate for telecommunications
companies will not be adequate to cover the projected cost of regulation.
Current rule
Subsection 25-4.0161(4) lists the six different RAF forms required to be filed
by each of the six company types listed in the current rule. Renumbered
Subsection 25-4.0161(5) (p. 16) is amended for clarity by adding the language
from current Subsection 25-4.0161(7) that states that the failure of a telecommunications
company to receive a return form shall not excuse the company from its
obligations to timely remit the RAF. Renumbered Subsection 25-4.0161(5) is
also amended to delete Forms PSC/RAD 34, PSC/RAD 153, PSC/RAD 1, and PSC/RAD 7,
and instead incorporate by reference four forms consistent with the suggested
amendments to renumbered Subsection (2). These four forms are as follows:
- Local Telephone Service
Provider Regulatory Assessment Fee Return (p. 21). This form would be
used by companies that pay RAFs that exceed $10,000 for the entire year
for 2011, and for all local telephone service providers beginning in 2012
and beyond. The companies that paid the first half of 2011 RAF were
assessed a RAF percentage of 0.0020 and will only be required to pay an
assessment percentage of 0.0016 for the second half of 2011. The form has
been significantly simplified by following the Uniform Systems of Accounts
and reducing the amount of detail required in the filing. This should
result in the form taking less time to fill out.
- Interim Local Telephone Service
provider Regulatory Assessment Fee Return (p. 23). This form will be
used by companies that pay annually, i.e., the RAF payment for the year
2010 did not exceed $10,000. The proposed RAF percentage assessed is an
average of the RAF rate for the first half of the year (0.0020) and the
second half of the year (0.0016) which results in a percentage assessment
of 0.0018. This form will only be used for the 2011 RAF filings and will
be obsolete thereafter.
- Pay Telephone Service Provider
Regulatory Assessment Fee Return (p. 25). This form will reflect the new
RAF percentage adopted by the Commission. Some minor corrections have
been made to the form to eliminate confusion for filers that are required
to calculate penalty and interest for late payment. Minor changes were
also made to the back of the form to make the telecommunications RAF forms
consistent with other industries’ RAF forms (water, electric, etc.).
- Interim Pay Telephone Service Provider
Regulatory Assessment Fee Return (p. 27). This form will be used by
companies that pay annually, i.e., the RAF payment for the year 2010 did
not exceed $10,000. The proposed RAF percentage assessed is an average of
the RAF rate for the first half of the year (0.0020) and the second half
of the year (0.0016) which results in a percentage assessment of 0.0018.
This form will only be used for the 2011 RAF filings and will be obsolete
thereafter.
Staff is
recommending these changes to the forms in order to be consistent with
suggested amendments discussed in this recommendation. In addition, it is
recommended that current Subsection 25-4.0161(7) should be amended to delete
language which allows for an automatic grant of an extension. Staff is recommending
that the Commission amend the rule in this respect because Subsection
350.113(5), F.S., requires a written request showing good cause for the
extension request. The above-named forms would require a written request
showing good cause for the extension request, consistent with Subsection
350.113(5), F.S.
Current
Subsection 25-4.0161(7) sets forth the requirements for a company to request an
extension of its RAF payment due date or for filing its return form. The
subsection currently provides that a company may request a 30-day extension of
its due date, and that the request will be granted as long as it has been
timely filed and there are no outstanding RAFs, penalties, or interest due from
a prior year. Renumbered Subsection 25-4.0161(8) (p. 17) is amended to state
that companies may request either a 15-day or a 30-day extension. In addition,
the automatic granting of the request for extension is eliminated in order to
comply with Subsection 350.113(5), F.S., which provides that the Commission may
grant such an extension for good cause shown. Form PSC /ADM 124 (p. 29),
Regulatory Assessment Fee Extension Request, is amended to require a statement
of good cause for an extension request. Staff notes that the elimination of
the automatic extension request applies to all RAF forms proposed in this
rulemaking proceeding. Renumbered Subsection 25-4.0161(8) is also rewritten
for clarity purposes. For these reasons, staff recommends that the Commission
propose the amendments to renumbered Subsection (8) of the rule as set forth in
the recommended rule.
Current Subsections
25-4.0161(10) and (11) address the procedure to be followed if a company fails
to pay its RAF within 15 days after receiving a delinquency notice and gives
the penalties to be imposed for violations by a company of a Commission rule,
order, or Florida statute. Current Subsection (11) provides for penalties for
failure to file a RAF return by the delinquency notice return date for first,
second, and third violations. Current Subsection (12) provides that for a
company’s fourth failure to pay the RAF after being sent a delinquency notice,
Commission staff shall file a recommendation to the Commission for further
action. Current Subsection (13) addresses, in part, a company’s payment of any
outstanding penalties before refiling for certification or registration.
Renumbered
recommended rule Subsections 25-4.0161(11), (12), (13) and (14) (pp. 18 – 20)
delete references to “registration” as obsolete, and, instead reference certification,
in order to be consistent with changes to statutory language. Renumbered
Subsection (11) is changed to state that a docket will be opened and
administrative action taken as set forth in the rule if a company fails to pay
the RAF within 20 days after receiving a delinquency notice, rather than after
15 days. Staff is recommending this change because staff’s analysis of
payments over the last five years shows that a twenty day window for payment
will be more cost effective for the Commission, as it will capture most
companies’ payments and minimize the expense of establishing a docket and
preparing administrative orders. For the above reasons, Staff recommends that
the Commission propose staff’s suggested amendments to these rule subsections.
Statutory Factors
As stated above,
Subsection 364.336(2), F.S., requires that the Commission consider four
specific factors when determining the required amount of the reduction to the
RAF. These factors and staff’s analysis of each follows.
(a)
The regulatory activities that are no longer required and the number of
staff currently assigned to such activities.
The Regulatory
Reform Act reduces the Commission’s jurisdiction over retail telecommunications
service. In light of the enactment of the Regulatory Reform Act, the
Commission contracted with the National Regulatory Research Institute to
prepare a report (NRRI Report)
assessing the organizational structure and work flow processes necessary to
implement the statutory changes. As set forth in the report:
The
Reform Act removes the [C]ommission’s limited jurisdiction over interexchange
(long-distance) providers, wireless Eligible Telecommunications providers
(ETCs), and operator service providers. It revises the definition of
telecommunications companies to remove operator services providers, and revises
the list of services exempted from oversight to include all retail wireline
Time Division Multiplexed (TDM) offerings, as well as retail bundled services
and service provided via internet protocol. The Reform Act also eliminates the
[C]ommission’s authority to oversee quality of service for its retail customers
and virtually eliminates its responsibility for adjudicating individual
customer complaints.
[footnotes not included.]
The NRRI Report also notes that
the law eliminates the requirement that providers file tariffs with the
Commission for anything other than access services.
At the end of FY
2010/2011, the Commission reduced the number of telecommunications staff by 12
full-time equivalent positions (FTEs). This reduction of 12 FTEs results from
the regulatory activities that are no longer required and the number of staff
previously assigned to such activities.
(b)
The number of staff necessary to carry out the reduced level of
regulatory responsibilities based on reductions in workload for the staff in
the Division of Regulatory Analysis, the Office Auditing and Performance
Analysis, and the Division of Service, Safety and Consumer Assistance.
The NRRI Report
states that the Commission retains jurisdiction over wholesale, or
carrier-to-carrier, disputes. As set forth in the report:
The
[C]ommission will continue to manage unbundling and the resale of
telecommunications services, certify CLECs, arbitrate and enforce
interconnection agreements, respond to complaints among carriers (including
slamming complaints brought by carriers on behalf of their customers), and
manage wholesale quality-of-service metrics. Staff will also continue to
prepare the annual competition report. . . . Interconnection agreement
arbitration and complaint adjudication remain key focuses for the staff of the
Regulatory Analysis Division, as do monitoring potential FCC actions to
ascertain their impact on Floridians, managing numbering filings and
reclamation activities, and reviewing ILEC Operational Support System (OSS)
change-management announcements to identify potential issues and disputes.
[footnote omitted.]
The NRRI Report also points out
that the Commission still has many duties and functions related to the
regulation of telecommunications companies. The report states:
In
the retail area, [C]ommission staff will continue to designate wireline ETC’s,
issue certificates for wireline companies operating in Florida, oversee
payphones (although the market for this product is declining significantly).
Staff will also oversee and manage the Telecommunications Relay Service (TRS)
process for the deaf, hard of hearing, and speech impaired, including testing
the service to ensure that the provider meets contract requirements for speed
of answer and accuracy. . . .
In
addition, the staff will retain its responsibility for reviewing and resolving
customer issues regarding Lifeline, and for assessing and collecting the
Commission’s RAF for certified carriers. The staff will continue to interface
with the FCC in the National Association of State Regulatory Utility
Commissioners and other bodies, and will remain responsible for keeping the
Commissioners up to date on Federal activities, drafting comments on pending rules,
and reviewing and providing input on issues that will affect Florida companies
and consumers. The staff will continue its limited participation in the
broadband adoption efforts sponsored by the Division of Management Services and
may also continue to support Lifeline outreach.
It is important
to recognize that there has been a steady decrease in telecommunications
workload since FY 2005/2006 due to legislative changes and changes in the
marketplace. Over this time period, staff assigned to telecommunications
regulation has decreased as the workload decreased. FCTA correctly points out
that much of the retail deregulation occurred prior to 2011 and is reflected in
the steady decrease in positions and costs in prior years. Most of the staff that
works on telecommunications matters were reorganized and consolidated into two
sections within the Division of Regulatory Analysis.
Staff believes
that the Commission currently has the appropriate number of staff necessary to
carry out the reduced level of regulatory responsibilities. As stated in the
Commission management’s comments on the NRRI Report:
The
Commission has been seeking cost savings and efforts to streamline regulatory
processes for at least 12 years. The origin of these streamlining efforts is
not limited to the emergence and evolution of competition in the
telecommunications industry. In fiscal year 1999/2000, the Commission had 401
full time equivalent (FTEs) positions and that number has been reduced to 296
in the 2011/2012 fiscal year, a reduction of 26.2 percent. The Commission
continues to seek ways to economize its resources while maintaining a high
quality work product for essential functions.
Staff agrees with the
conclusion of the NRRI Report that the telecommunications group is sized
correctly for current workload.
As is routinely done, staff will continue to monitor the level of
telecommunications workload to determine if the staffing level is appropriate.
(c)
The reductions in overhead associated with the [C]ommissioners’ offices,
the Office of General Counsel, the Office of Commission Clerk, the Office of
Information Technology Services, the Office of Public Information, and the
Office of Inspector General.
For internal
Commission purposes, overhead hours
are allocated to telecommunications regulation based on the direct hours of
regulating telecommunications as determined in section (b). Therefore, as the
number of direct hours recorded for regulating telecommunications decrease, the
associated overhead hours will decrease. This decrease is included in staff’s
proposed reduction to the RAF.
(d)
The reductions in direct and indirect costs, including allocations of
fixed costs.
For internal
Commission purposes, direct and indirect costs and the allocation of fixed
costs are allocated to telecommunications regulation based on the direct hours
of regulating telecommunications as determined in section (b). Therefore, as
the number of direct hours recorded for regulating telecommunications decrease,
the direct and indirect costs and allocation of fixed costs will decrease.
This decrease is included in staff’s proposed reduction to the RAF rate.
Workshop Participant Comments
FCTA, whose six
largest members are Atlantic Broadband, Advanced Cable, Bright House Networks,
Comcast, Cox, and Mediacom, represents cable telephony providers throughout the
state of Florida who provide, by and large, the only facilities-based mass
market telephony competition to Florida’s ILECs. FCTA states in its
post-workshop comments that staff’s recommended RAF percentage of 0.0016 should
be adopted by the Commission because it strikes the right balance between
consideration of the reduction in the Commission’s regulatory functions related
to retail service, as required by Section 364.336, F.S., and the need to
provide sufficient resources for the Commission’s invaluable oversight of
intercarrier disputes, as required by Section 364.16, F.S.
FCTA emphasizes that
the Commission’s oversight of intercarrier disputes has assisted in the
dramatic growth in cable telephony subscribership over the past decade. FCTA
states that Federal law establishes the Commission as the primary forum for
intercarrier competitive disputes
and that the Commission, which possesses institutional and subject matter expertise,
routinely resolves disputes much more quickly that the Federal Communications
Commission or a federal court. It notes that along with deregulating ILEC and
CLEC retail service in 2011, the Legislature retained and emphasized the
Commission’s “continued role” as an overseer and arbiter of disputes between
carriers.
FCTA concludes that the Commission’s main role is to ensure a level playing
field between competitors, so that the resulting competition can police both
service quality and price. FCTA believes that as cable telephony expands into
the business market, additional intercarrier disputes will arise, and that
wholesale disputes and interconnection matters, due to their complexity,
require a larger share of Commission resources than did retail matters.
FCTA points out that
as a result of substantial deregulation of ILEC service in 2008, the Commission
already had a small role in direct regulation of retail service. It states that
even before the deregulation resulting from the Consumer Choice Act of 2009,
the Commission rarely entertained retail regulation proceedings and that much
of the Commission’s workload from 2008 to present, apart from intercarrier
disputes, has involved proceedings to remove outdated retail pricing and
service quality rules. It notes that staff’s proposed FY 2012/2013 budget of
$3.89 million, after excluding state mandated service and trust fund charges,
based on a 0.0016 RAF rate, reflects a nearly 50 percent decrease from 2005,
when the Commission still engaged in proceedings such as carrier-of-last-resort
(COLR) and direct retail regulation, and a substantial reduction from 2010,
when the Commission’s telecommunication workload already consisted primarily of
intercarrier matters. Further, FCTA notes that the proposed 0.0016 RAF rate
represents a decrease in the RAF percentage of 20 percent from the prior year,
when the Commission’s workload already contained primarily intercarrier dispute
matters. FCTA believes the budget correctly provides for the Commission’s current
role in resolving intercarrier disputes and its other statutory duties, which
include numbering administration, Lifeline, and the annual Competition Report
to the Legislature.
At the August 22, 2011
staff rule development workshop, CompSouth, a compilation of CLECs, expressed
the concern that the Commission, in setting the reduced RAF rate, retain
sufficient resources, assets, and ability to oversee wholesale transactions.
To the extent that disputes arise between CLECs and ILECs, the Commission should
have sufficient funds to administer and promptly and judiciously resolve such
disputes, as historically has been the case.
In its
post-workshop written comments, CenturyLink states that the information
provided to the workshop participants was insufficient for it to evaluate
whether the staff reductions and continued expenditures reflect the reduction
in regulation resulting from the 2011 amendments to Chapter 364, F.S.
CenturyLink also states that the proposed structure of the RAF, where CLECs
likely will comprise the majority of companies subject to the minimum fee of
$600, while ILECs will continue to pay revenue-based fees that are many
multiples higher than the minimum, does not reflect the new regulatory reality
brought about by the 2011 legislation where the Commission’s primary focus will
be on wholesale relationships. CenturyLink recognizes that this rulemaking is
largely based on expectations, rather than actualities, and that experience
under the new deregulatory regime will provide more concrete guidance as to the
level of expenditures associated with carrying out the Commission’s continuing
regulatory authority. CenturyLink expects that over time the Commission will
continue to re-evaluate the expenditures necessary to fulfill its regulatory
responsibilities for telecommunications companies and the appropriate level of
the fee to reflect that responsibility.
CenturyLink
makes three additional points in its post-workshop comments. First,
CenturyLink notes that CLECs likely will comprise the majority of companies
subject to the minimum fee of $600. CenturyLink’s second point is that
although most CLECs will pay the minimum RAF fee of $600, ILECs will continue
to pay revenue-based fees. Staff agrees with the essential substance of these
two points, except to emphasize that the recommended rule does not distinguish
between CLECs and ILECs. CenturyLink itself agrees in its comments that “staff
appropriately reflects the intent of the 2011 legislation to eliminate the
regulatory distinctions among ‘local service providers’ by collapsing the
various categories of local providers reflected in the current rule into one.”
Thus, pursuant to the recommended rule, each company is required to pay a
revenue based RAF in the amount of 0.0016 of its gross operating revenues, as
set forth by statute, but, regardless of the gross operating revenue of a local
telephone service provider, a minimum annual RAF of $600 shall be imposed.
Rule 25-4.0161 sets a revenue based RAF, as required by Subsection 364.336(1),
F.S.
CenturyLink’s
third point is that “the proposed rate structure does not reflect the new
regulatory reality brought about by the 2011 legislation where the Commission’s
primary focus will be on wholesale relationships.” Notwithstanding other changes
to Chapter 364 as a result of the 2011 Legislative session, the Commission is
still required by Subsection 364.336(1), F.S., to set a revenue based RAF and a
minimum annual fee. For this reason, staff believes that the recommended rule
is consistent with current statutory requirements.
Statement of Estimated Regulatory Cost (SERC)
The SERC (Attachment
B) includes an economic analysis as required by Subparagraph 120.541(2)(a)1,
F.S. The SERC’s economic analysis concludes that the recommended rule
amendments are not likely to: a) have an adverse impact on economic growth,
private sector job creation or employment, or private sector investment in
excess of $1 million in the aggregate within 5 years after the implementation
of the rule; b) have an adverse impact on business competitiveness, including
the ability of persons doing business in the state to compete with persons
doing business in other states or domestic markets, productivity, or innovation
in excess of $1 million in the aggregate within 5 years after the
implementation of the rule; or c) increase regulatory costs, including any
transactional costs, in excess of $1 million in the aggregate within 5 years
after the implementation of the rule. Based upon this conclusion, staff
believes that there are no adverse impacts or regulatory costs exceeding any of
the Subparagraph 120.541(2)(a) criteria, and therefore the rule does not need
to be submitted to the Legislature for ratification.
Subparagraph
120.541(2)(b) requires a good faith estimate of the number of individuals and
entities likely to be required to comply with the rule, together with a general
description of the type of individuals anticipated to be affected by the rule.
The SERC identifies these entities as ten ILECs, 25 alternative access vendors,
298 CLECs, 106 pay telephone providers, and 20 shared tenant service
providers. The SERC also states that staff believes that the impact of the RAF
reduction on customers will be de minimus.
Subparagraph
120.541(2)(c) requires a good faith estimate of the cost to the agency, and to
any other state and local government entities, of implementing and enforcing
the proposed rule, and any anticipated effect on state or local revenues. The
SERC concludes that Commission implementation and enforcement costs are
primarily fixed costs that are expected to remain at approximately the same
levels as they have been in the past. The impact on state revenues is expected
to be a decrease of $1,185,115 in the first year of rule implementation, based
on the latest estimated gross intrastate revenues for 2012/2013. The impact on
local government revenue is expected to be de minimus.
Subparagraph
120.541(2)(d) requires a good faith estimate of the transactional costs likely
to be incurred by individuals and entities, including local government
entities, required to comply with the rule requirements. The SERC states that,
under the recommended rule, telecommunication companies that choose to revise
customer rates based on the revised RAF rates would have some minor expense
associated with implementing the rate changes. Staff believes that the impact
of the fee reduction on customers will be de minimus.
Subparagraph
120.541(2)(e) requires an analysis of the impact of the rule change on small
businesses, small counties and small cities. Staff believes that the impact of
the proposed RAF changes on small businesses, small counties, and small cities
will be de minimus.
Based upon the above,
staff recommends that the Commission propose the adoption of the amendments to
Rule 25-4.0161, F.A.C., as set forth in Attachment A.
Issue 2:
Should this docket be closed?
Recommendation:
Yes. If no requests for
hearing or comments are filed, the rule may be filed with the Department of
State, and then this docket may be closed. (Cowdery)
Staff Analysis:
If no requests for
hearing or comments are filed, the rule may be filed with the Department of
State, and then this docket may be closed. In the event a hearing is
requested, a rule hearing will be held on Tuesday afternoon, November 22,
2011. If a hearing is not requested, this hearing date will be canceled.
25-4.0161 Regulatory Assessment Fees; Telecommunications
Companies.
(1) For the purposes of this
rule and except for pay telephone service providers, all incumbent local
exchange companies, shared tenant service providers, alternative access
vendors, and competitive local exchange companies that hold an active
certificate of public convenience and necessity that was obtained prior to July
1, 2011, and all telecommunications companies that hold an active certificate
of authority obtained after July 1, 2011, are defined as local telephone
service providers. Companies classified as pay telephone service providers are
those companies that hold an active pay telephone certificate of public
convenience and necessity that was obtained prior to July 1, 2011, and those
companies that hold an active pay telephone certificate of authority obtained
after July 1, 2011.
(2) (a) (1) For
the interim period January 1, 2011 through December 31, 2011, as applicable and
as provided in Sections 350.113 and 364.336, F.S., each company shall remit a
fee based upon its gross operating revenue as provided below. Each company that
has paid by August 15, 2011, regulatory assessment fees for the period January
1, 2011 through June 30, 2011, shall pay a regulatory assessment fee in the
amount of 0.0016 of its gross operating revenues derived from intrastate
business during the period July 1, 2011 through December 31, 2011. Each
company that has not paid any regulatory assessment fees for the period January
1, 2011 through December 31, 2011, shall pay a regulatory assessment fee in the
amount of 0.0018 of its gross operating revenues derived from intrastate
business. The minimum regulatory assessment fees provided in subsection (2) (b)
shall apply and shall be filed in accordance with the schedules provided in
subsections (3) and (4). For the purpose of determining this fee, each
telecommunications company shall deduct from gross operating revenues any
amount paid to another telecommunications company for the use of any
telecommunications network to provide service to its customers.
(b) Effective January 1, 2012, as As applicable
and as provided in Sections 350.113,
364.02 (12) 364.02(13) and 364.336, F.S., each company
shall remit a fee based upon its gross operating revenue as provided below.
This fee shall be referred to as a regulatory assessment fee, and each company
shall pay a regulatory assessment fee in the amount of 0.0016 0.0020
of its gross operating revenues derived from intrastate business. For the
purpose of determining this fee, each telecommunications company shall deduct
from gross operating revenues any amount paid to another telecommunications
company for the use of any telecommunications network to provide service to its
customers. Regardless of the gross operating revenue of a company, a minimum
annual regulatory assessment fee shall be imposed as follows:
1. (a) Local Telephone Service Provider Exchange
Company – $600 $1,000; and
2. (b) Pay Telephone Service Provider – $100;
(c) Shared Tenant Service Provider – $100;
(d) Interexchange Company – $700;
(e) Alternative Access Vendor – $600;
(f) Competitive Local Exchange Company – $600.
(3) (2) Telecommunications companies that owed
gross regulatory assessment fees of $10,000 or more for the preceding calendar
year shall pay the fee and remit the appropriate form twice a year. The
regulatory assessment fee and appropriate form shall be filed no later than
July 30 for the preceding period of January 1 through June 30, and no later
than January 30 of the following year for the period of July 1 through December
31. Telecommunications companies that owed gross regulatory assessment fees of
less than $10,000 for the preceding calendar year shall pay the fee and remit
the appropriate form once a year. The regulatory assessment fee and appropriate
form shall be filed no later than January 30 of the subsequent year for the
current calendar year operations.
(4) (3) If the due date falls on a Saturday,
Sunday, or legal holiday, the due date is extended to the next business day. If
the fees are sent by registered mail, the date of the registration is the
United States Postal Service’s postmark date. If the fees are sent by certified
mail and the receipt is postmarked by a postal employee, the date on the
receipt is the United States Postal Service’s postmark date. The postmarked
certified mail receipt is evidence that the fees were delivered. Regulatory
assessment fees are considered paid on the date they are postmarked by the
United States Postal Service or received and logged in by the Commission’s
Division of Administration Services in Tallahassee. Fees are considered timely
paid if properly addressed, with sufficient postage, and postmarked no later
than the due date.
(5) (4) Commission Form PSC/RAD XX (XX/XX) PSC/RAD
25 (04/07), entitled “Local Telephone Service Provider Exchange
Company Regulatory Assessment Fee Return,” is available at [link];
Form PSC/RAD XX (XX/XX), entitled “Interim Local Telephone Service Provider
Regulatory Assessment Fee Return,” is available at [link]; Form PSC/RAD 26
(XX/XX) (04/07), entitled “Pay Telephone Service Provider Regulatory
Assessment Fee Return,” is available at [link]; and Form
PSC/RAD XX(XX/XX) (04/07), entitled “Interim Pay Telephone
Service Provider Regulatory Assessment Fee Return,” is available at [link].
; Form PSC/RAD 34 (04/07), entitled “Shared Tenant Service Provider Regulatory
Assessment Fee Return”; Form PSC/RAD 153 (04/07), entitled “Interexchange
Company Regulatory Assessment Fee Return”; Form PSC/RAD 1 (04/07), entitled
“Alternative Access Vendor Regulatory Assessment Fee Return”; and Form PSC/RAD
7 (04/07), entitled “Competitive Local Exchange Company Regulatory Assessment
Fee Return” These forms are incorporated into this rule by reference
and may also be obtained from the Commission’s Division of
Administrative Services. The failure of a telecommunications company to
receive a return form shall not excuse the company from its obligation to
timely remit the regulatory assessment fees.
(6) (5) Each telecommunications company shall have
up to and including the due date in which to submit the applicable form and:
(a) Remit the total amount of its fee, or
(b) Remit an amount which the company estimates is its full fee.
(7) (6) Where the company remits less than its full
fee, the remainder of the full fee shall be due on or before the 30th day from
the due date and shall, where the amount remitted was less than 90 percent of
the total regulatory assessment fee, include interest as provided by subsection
(9)(b) paragraph (8)(b) of this rule.
(8) (7) A company may request from the Division
of Administrative Services either a 15-day or a 30-day extension of
its due date for payment of regulatory assessment fees or for filing its return
form by submitting to the Division of Administrative Services Commission
Form PSC/ADM 124 (XX/XX) entitled “Regulatory Assessment Fee Extension Request,”
which is incorporated into this rule by reference and is available at [link].
This form may also be obtained from the Commission’s Division of Administrative
Services.
(a) The request for extension must be received by the Division
of Administrative Services at least two weeks before the due date. The
request for extension must be submitted on Form PSC/ADM 124 (01/05) and will be
granted if the company has applied for the extension within the time required
in paragraph (b) below and the company does not have any unpaid regulatory
assessment fees, penalties or interest due from a prior year. Form PSC/ADM 124
(01/05), entitled “Regulatory Assessment Fee Extension Request” is incorporated
into this rule by reference and may be obtained from the Commission’s Division
of Administrative Services.
(b) The request for extension will not be granted if the
company has any unpaid regulatory assessment fees, penalties, or interest due
from a prior period. The request for extension must be received by the
Division of Administrative Services at least two weeks before the due date.
(c) Where a telecommunications company receives an extension of
its due date pursuant to this rule, the telecommunications company shall remit
a charge as set out in Section 350.113(5), F.S., in addition to the
regulatory assessment fees. , as set out in Section 350.113(5), F.S.
(d) The return forms may be obtained from the Commission’s
Division of Administrative Services. The failure of a telecommunications
company to receive a return form shall not excuse the company from its
obligation to timely remit the regulatory assessment fees.
(9) (8) The delinquency of any amount due to the
Commission from the telecommunications company pursuant to the provisions of
Section 350.113, F.S., and this rule, begins with the first calendar day after
any date established as the due date either by operation of this rule or by an
extension pursuant to this rule.
(a) A penalty, as set out in Section 350.113, F.S., shall apply
to any such delinquent amounts.
(b) Interest at the rate of 12 percent per annum shall apply to
any such delinquent amounts.
(10) (9) The Division of Administrative Services
shall send by certified mail a regulatory assessment fee delinquency notice to
any company that fails to file a regulatory assessment fee return and that
fails to pay the regulatory assessment fee by the date specified in subsection (3)
(2), unless the company has met the requirements of subsections (7)
(6) and (8) (7).
(11) (10) If a company fails to pay the regulatory
assessment fee within 20 15 days after receiving a delinquency
notice, the Division of Administrative Services, in cooperation with the
Division of Regulatory Analysis and the Office of General Counsel, will
establish a docket and administratively issue a Notice of Proposed Agency
Action Order Imposing Penalties and Collection Costs, and Requiring Payment of
Delinquent Regulatory Assessment Fees, or Cancelling Certificates or
Removing From the Register for Violation of Rule 25-4.0161, F.A.C., and
Section 364.336, F.S. The company must pay the past due regulatory assessment
fees, the penalty and interest for late payment as provided in Section 350.113,
F.S., and as stated in subsection (9) (8) above, and must also
pay the applicable penalty stated in subsection (12) (11) for
failure to file the regulatory assessment fee return.
(12) (11) Pursuant to Section 364.285, F.S., the
Commission has the authority to impose a penalty or cancel a certificate or
registration if a company refuses to comply with Commission rules, orders,
or Florida Statutes. The penalty, which will include collection costs, for
failure to file the regulatory assessment fee return by the date stated in the
delinquency notice shall be as follows:
(a) First violation – $500;
(b) Second violation – $1,000;
(c) Third violation – $2,000.
Failure of the company to pay the full amount due and stated in
the Notice of Proposed Agency Action will result in the cancellation of the
company’s certificate. Certificate of Public Convenience and Necessity,
or will result in the cancellation of the company’s tariff and removal of its
name from the Commission’s register, whichever is applicable.
(13) (12) For a company’s fourth failure to pay the
regulatory assessment fee after being sent a delinquency notice, Commission
staff shall file a recommendation to the Commission for further action.
(14) (13) A company that reapplies for a
Certificate of Authority Public Convenience and Necessity, or refiles
for registration, must pay all prior unpaid regulatory assessment fees,
plus the penalty and interest defined in subsection (9) (8), and
any prior unpaid penalty assessed in accordance with subsection (11) (10).
Rulemaking Authority 350.127(2) FS. Law Implemented 350.113,
364.285, 364.336 FS. History–New 5-18-83, Formerly 25-4.161, Amended 10-19-86,
1-1-91, 12-29-91, 1-8-95, 12-26-95, 7-7-96, 11-11-99, 12-7-04, 10-6-05, 4-16-07,
xx-xx-xx.
State of Florida
Public Service Commission
Capital Circle Office Center ● 2540 Shumard Oak Boulevard
Tallahassee, Florida 32399-0850
-M-E-M-O-R-A-N-D-U-M-
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DATE:
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September 8, 2011
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TO:
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Kathryn Gale Winter Cowdery, Senior
Attorney, Office of the General Counsel
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FROM:
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William B. McNulty, Economic
Analyst, Division of Economic Regulation
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RE:
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Statement of Estimated Regulatory
Costs for Proposed Rule Amendments to Rule 25-4.0161, F.A.C., Regulatory
Assessment Fees; Docket No. 110224-TP
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Summary of the Rule
Rule 25-4.0161, F.A.C. Regulatory
Assessment Fees (RAFs) sets the rate at which telecommunications companies are
assessed for regulatory costs. Currently, the assessed rate is 0.20 percent of
a certificated company’s gross operating revenues derived from intrastate
business and minimum rates are specific to each type of telecommunications
company.
The draft rule would decrease the
telecommunications companies’ RAF rate to 0.16 percent in response to statutory
requirements of the Regulatory Reform Act passed by the 2011 Legislature and
signed into law by the Governor. Minimum annual RAFs for local exchange
companies would be decreased from $1,000 to $600. Minimum annual RAFs for
Shared Tenant Providers’ would increase from $100 to $600. All other types of
telecommunication companies’ minimum rates would not change (i.e. Competitive
Local Exchange Companies’ and Alternative Access Vendors’ minimum annual RAFs
would remain at $600, and pay telephone providers’ minimum annual RAFs would
remain at $100). In addition, no RAF revenue would be collected from
interexchange companies since they are now deregulated. These changes are
designed to reflect the reductions in regulatory activities resulting from the
amendments to Chapter 364 which took effect on July 1, 2011.
The following items address Section
120.541, F.S., requirements regarding the Statement of Estimated Regulatory
Costs (SERC) presented as part of Staff’s recommendation in this proceeding.
Economic Analysis Showing Whether The Rule Is Likely To
Have An Adverse Impact On Either Economic Growth Or Business Competitiveness In
Excess Of $1 Million Within 5 Years
Section 120.541(2)(a)1 requires an
economic analysis showing whether the draft rule directly or indirectly is likely
to have an adverse impact on economic growth, private sector job creation or
employment, or private sector investment in excess of $1 million in the
aggregate within 5 years after the implementation of the rule. Similarly,
Section 120.541(2)(a)2 requires an economic analysis showing whether the draft
rule directly or indirectly is likely to have an adverse impact on business
competitiveness in excess of $1 million in the aggregate within 5 years after
the implementation of the rule. Since the intent of the draft rule is to
reduce the RAF rates rather than to increase them, economic growth, private job
sector employment, private sector investment, and business competitiveness are
not expected to be adversely impacted during the five year period identified in
the statute. One notable exception to the proposed decrease in RAF rates is
the proposed rate for shared tenant service providers. Shared tenant service
providers have typically paid the minimum annual RAF rate, but that rate is
proposed to increase from $100 to $600 since such entities have become local
exchange companies under the new legislation.
Economic Analysis Showing Whether The Rule Is Likely To
Increase Regulatory Costs In Excess Of $1 Million Within 5 Years
Section 120.541(2)(a)3 requires an
economic analysis showing whether the draft rule directly or indirectly is
likely to increase regulatory cost, including any transactional costs, in
excess of $1 million in the aggregate within 5 years after the implementation
of the rule. RAF revenue during the first year of rule implementation
(2012-2013) is expected to decrease by $1,185,115 based on the proposed RAF
rates relative to the existing RAF rates. RAF revenue collected in each of the
following 4 years is expected to likewise be substantially reduced relative to
what would be collected under existing RAF rates. Thus, the regulatory costs
are expected to be reduced in the aggregate for the 5 years following the
enactment of the rule.
Estimated Number Of Entities Required To Comply And
General Description Of Individuals Affected
Section 120.541(2)(b) requires a
good faith estimate of the number of individuals and entities likely to be
required to comply with the rule, together with a general description of the
types of individuals anticipated to be affected by the rule. The number of
telecommunications companies which are required to comply with the rule as of
July 1, 2011, include:
10 incumbent local exchange
companies,
25 alternative access vendors,
298 competitive local exchange companies,
106 pay telephone providers, and
20 shared tenant service
providers.
The proposed minimum annual RAF
rate for competitive local exchange companies, alternative access vendors, and
pay telephone service providers are the same as the current minimum annual RAF
rate. In 2010, 341 of 417 such companies paid the minimum annual RAF rate. A
similar or slightly lower number of companies is expected to pay the minimum
annual RAF fee in 2012-2013.
At the August 22, 2011, staff rule
development workshop, staff solicited feedback from the telecommunications
companies regarding the expected impact of the draft rule on their customers.
No responses to the requests for expected customer impacts were received.
Staff believes that the impact of the fee reduction on customers will be de
minimus.
Rule Implementation And Enforcement Cost And Impact On
Revenues For The Agency And Other State And Local Government Entities
Section 120.541(2)(c) requires a
good faith estimate of the cost to the agency, and to any other state and local
government entities, of implementing and enforcing the proposed rule, and any
anticipated effect on state or local revenues. The rule development process
includes a sequence of actions by the agency which vary according to the rule
being implemented. These steps include rule drafting; a rule development
workshop; preparing, filing, and presenting a rule recommendation (including a
SERC); Commission consideration of the draft rule recommendation at an Agenda
Conference; a rule hearing if one is requested; a possible additional agenda
conference for those cases where a rule hearing is conducted or written
comments are filed; and ultimately, filing the rule with the Secretary of
State. Most of the costs to the agency associated with these rule development
actions, including a possible rule hearing, are fixed costs and not likely to
be affected substantially for the level of complexity associated with the
development of this rule. Enforcement costs with the rule change are also primarily
fixed costs and should remain at approximately the same levels as they have
been in the past.
The impact on state revenues is
expected to be a decrease of $1,185,115 in revenues in the first year of rule
implementation, based on the latest estimated gross intrastate revenues for
2012-2013:
Estimated 2012-2013 Gross
Intrastate Revenues: $2,962,787,000
Estimated 2012-2013 RAF Revenue at
0.20 %: $5,925,574
Estimated 2012-2013 RAF Revenue at
0.16 %: $4,740,459
Change in RAF Revenue at 0.16%:
($1,185,115)
The impact on local government
revenue is expected to be de minimis.
Estimated Transactional Costs To Individuals And Entities
Section 120.541(2)(d) requires a
good faith estimate of the transactional costs likely to be incurred by
individuals and entities, including local government entities, required to
comply with the requirements of the rule. Under the draft rule,
telecommunication companies would be required to prepare revised RAF forms
similar to the current RAF forms in terms of the required information.
Companies which choose to revise the rates they charge their customers based on
the revised RAF rates would have some minor expense associated with
implementing the rate changes.
At the August 22, 2011, staff rule
development workshop, staff solicited feedback from the telecommunications
companies regarding the expected impact of the draft rule on their customers.
No responses to the requests for expected customer impacts were received.
Staff believes that the impact of the fee reduction on customers will be de
minimus.
Impact On Small Businesses , Small Cities, Or Small Counties
Section 120.541(2)(e) requires an
analysis of the impact of the proposed rule change on small businesses as
defined by Section 288.703, F.S., and an analysis of the impact on small
counties and small cities as defined in Section 120.52, F.S. Staff solicited
written comments on this matter from the telecommunications companies at the
August 22, 2011 rule development workshop. No comments were received. Staff
believes the impact of the proposed RAF fee changes on small businesses, small
counties, and small cities will be de minimus.
Additional Information Deemed Useful By The Agency
None.
cc: Chuck Hill
Beth Salak
Dale Mailhot
Marshall Willis
