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Step 4: Filing Annual Rate Comparability Review

Section 54.316 of the Federal Communications Commission's (FCC's) rules requires each state to review annually the comparability of residential rates in rural areas of the state served by non-rural incumbent local exchange carriers (ILECs) to urban rates nationwide.

Rate comparability review requirement for States

In the Order on Remand (FCC 03-249, released October 27, 2003), the FCC adopted a new annual state certification requirement that took effect for the first time on October 1, 2004. Section 54.316 of the FCC's rules requires each state to review annually the comparability of residential rates in rural areas of the state served by non-rural incumbent local exchange carriers (ILECs) to urban rates nationwide, and to certify to the FCC and the Universal Service Administrative Company (USAC) as to whether the rates are reasonably comparable.

Please note that the Rate Comparability Review certification is in addition to the annual certifications in which states certify to the use of High Cost universal service support, which are also due on October 1.

Effect of Failure to Certify
In the event that a state fails to certify, no eligible telecommunications carrier (ETC) in the state shall receive High Cost Model support pursuant to Section 54.309 of the FCC's rules.

For the rate comparability certification, states may use a safe harbor and presume for certification purposes that the residential rates in rural areas served by non-rural ILECs are reasonably comparable to urban rates nationwide, if the rates are below the nationwide urban rate benchmark. The nationwide urban benchmark is the most recent average urban rate plus two standard deviations, or $34.83 (September 26, 2007, FCC Reference Book), for the upcoming certification period. This benchmark amount will be adjusted annually.

If a State does not rely on the safe harbor provision, or certifies that the rates are not reasonably comparable, the state must fully explain its rate comparability analysis and provide data supporting its certification, including but not limited to, residential rate data for rural areas within the state served by non-rural ILECs. If a state certifies that the rates are not reasonably comparable, it also must explain why the rates are not reasonably comparable and explain what action it intends to take to achieve rate comparability.

Details of this requirement, along with rate comparability guidelines and a basic service rate template, can be found in the FCC's Order on Remand, Further Notice of Proposed Rulemaking, and Memorandum Opinion and Order, CC Docket No. 96-45, FCC 03-249, released on October 27, 2003.

Where to Send Rate Review Certifications
Rate Comparability Certifications should be filed with both the FCC and USAC at the addresses below:

Marlene H. Dortch
Office of the Secretary
Federal Communications Commission
445 - 12th Street, SW
Washington, DC 20554

Karen Majcher
Vice President, High Cost and Low Income Division
Universal Service Administrative Company
2000 L Street, NW, Suite 200
Washington, DC 20036

If you have any questions, please call (877) 877-4925 for assistance.