*Pages 1--165 from ž˙* Trends in Telephone Service Industry Analysis Division Common Carrier Bureau August 2001 This report is available for reference in the FCC’s Information Center at 445 12 th Street, S. W., Courtyard Level. Copies may be purchased by calling International Transcription Service, Inc. at (202) 857- 3800. The report can also be downloaded [file names: TREND101. ZIP, TREND101. PDF] from the FCC- State Link Internet site at . 1 i Table of Contents Introduction .................................................................................................. 1- 1 Access Charges ............................................................................................ 1- 3 Table 1.1 Interstate Per- Line Access Charges .......................................................................... 1- 5 Table 1.2 Interstate Per- Minute Access Charges ...................................................................... 1- 6 Table 1.3 Interstate Per- Line Access Charges by Carrier .......................................................... 1- 7 Table 1.4 Interstate Per- Minute Access Charges by Carrier ...................................................... 1- 8 Advanced Telecommunications .................................................................... 2- 1 Table 2.1 High- Speed Lines ..................................................................................................... 2- 3 Table 2.2 Advanced Services Lines .......................................................................................... 2- 3 Table 2.3 Residential and Small Business High- Speed Lines ...................................................... 2- 3 Table 2.4 High- Speed Lines by Technology .............................................................................. 2- 4 Consumer Expenditures ............................................................................... 3- 1 Table 3.1 Household Expenditures for Telephone Service ......................................................... 3- 3 Chart 3.1 Monthly Telephone Service Expenditures .................................................................. 3- 3 Table 3.2 Average Monthly Household Telecommunications Expenditures by Type of Provider ......................................................................................................... 3- 4 Earnings ....................................................................................................... 4- 1 Table 4.1 Interstate Rate- of- Return Summary ........................................................................... 4- 3 Employment and Labor Productivity ........................................................... 5- 1 Table 5.1 Annual Average Number of Employees in the Telephone Communications Industry ................................................................................................ 5- 3 Chart 5.1 Annual Average Number of Employees in the Telephone Communications Industry ................................................................................................ 5- 3 Table 5.2 Labor Productivity Index for the Telephone Communications Industry Measured in Output per Hour ............................................................................. 5- 4 Chart 5.2 Telephone Communications Industry (SIC 481) Labor Productivity Index .................. 5- 4 Table 5.3 Number of Telecommunications Service Providers That Are Small Businesses ....................................................................................................................... 5- 5 International Telephone Service .................................................................. 6- 1 Table 6.1 International Service from the United States to Foreign Points .................................... 6- 3 Table 6.2 International Telephone Service Settlements .............................................................. 6- 4 Table 6.3 International Message Telephone Service for 1999 .................................................... 6- 5 Chart 6.1 U. S. Billed Minutes by Country ................................................................................. 6- 5 Table 6.4 U. S. Billed Revenues of Facilities- Based and Facilities- Resale Carriers in 1999 ........................................................................................................................... 6- 6 Table 6.5 Top Providers of Pure Resale International MTS in 1999 .......................................... 6- 7 2 ii Lifeline and LinkUp Programs ..................................................................... 7- 1 Table 7.1 Lifeline Monthly Support by State or Jurisdiction ....................................................... 7- 5 Table 7.2 Lifeline Assistance - Subscribers by State or Jurisdiction ............................................ 7- 6 Table 7.3 LinkUp Assistance - Subscribers by State or Jurisdiction ........................................... 7- 7 Table 7.4 Lifeline Assistance Annual Payments by State or Jurisdiction ...................................... 7- 8 Table 7.5 LinkUp Assistance Annual Payments by State or Jurisdiction ..................................... 7- 9 Table 7.6 Universal Service Payments .................................................................................... 7- 10 Lines ............................................................................................................. 8- 1 Table 8.1 Total U. S. Telephone Lines ....................................................................................... 8- 3 Table 8.2 Telephone Loops of Incumbent Local Exchange Carriers by State ............................. 8- 4 Table 8.3 Telephone Loops of Incumbent Local Exchange Carrier by Holding Company ........... 8- 5 Table 8.4 Additional Residential Lines for Households with Telephone Service .......................... 8- 6 Table 8.5 Number of Payphones Owned by LECs and Independent Operators ......................... 8- 7 Local Telephone Competition ...................................................................... 9- 1 Table 9.1 Total End- User Lines Reported ................................................................................ 9- 5 Table 9.2 End- User Lines by Customer Type ........................................................................... 9- 5 Table 9.3 Reporting Competitive Local Exchange Carriers ........................................................ 9- 6 Table 9.4 Reporting Incumbent Local Exchange Carriers .......................................................... 9- 6 Table 9.5 End- User Lines Served by Reporting Local Exchange Carriers .................................. 9- 7 Table 9.6 Nationwide Local Service Revenues and New Competitors’ Share ............................ 9- 8 Table 9.7 Telephone Numbers Transferred or Ported ............................................................... 9- 9 Long Distance Telephone Industry ............................................................ 10- 1 Table 10.1 Toll Service Revenues by Carrier ........................................................................... 10- 5 Table 10.2 Intrastate, Interstate, and International Toll Revenues .............................................. 10- 8 Chart 10.1 Toll Revenues by Market Segment ......................................................................... 10- 8 Table 10.3 Residential and Nonresidential Toll Revenues ......................................................... 10- 9 Chart 10.2 Residential and Nonresidential Toll Revenues ......................................................... 10- 9 Table 10.4 Number of Toll Carriers ....................................................................................... 10- 10 Table 10.5 Number of Carrier Identification Codes (CICs) Assigned by North American Numbering Plan Administrator ................................................................... 10- 11 Table 10.6 Alternative Measures of Long Distance Carrier Development ................................ 10- 12 Table 10.7 AT& T, ILECs and Other Toll Service Providers' Toll Revenues ........................... 10- 13 Chart 10.3 AT& T’s Share of Toll Revenues .......................................................................... 10- 13 Table 10.8 Share of Total Toll Service Revenues - Long Distance Carriers Only ............................................................................................................ 10- 14 Table 10.9 Share of Total Toll Service Revenues - All Long Distance Toll Providers ............................................................................................................ 10- 14 Table 10.10 Residential Market Share: 1995 - 2000 ............................................................... 10- 15 Table 10.11 Market Share of Residential Direct- Dial Minutes by State: 2000 ......................... 10- 16 Table 10.12 BOC Applications to Provide In- Region InterLATA Service ............................... 10- 17 Minutes ....................................................................................................... 11- 1 Table 11.1 Dial Equipment Minutes ......................................................................................... 11- 3 3 iii Table 11.2 Line Usage per Day ............................................................................................... 11- 4 Table 11.3 Interstate Switched Access Minutes ....................................................................... 11- 5 Chart 11.1 Interstate Switched Access Minutes ....................................................................... 11- 5 Mobile Wireless Service ............................................................................. 12- 1 Table 12.1 Mobile Wireless Telephone Subscribers as Reported on FCC Form 477 ................ 12- 3 Table 12.2 Wireless Telephone Subscribers ............................................................................. 12- 4 Table 12.3 Wireless Telephone Service: Industry Survey Results .............................................. 12- 5 Price Indices for Telephone Services ......................................................... 13- 1 Table 13.1 Long- Term Changes for Various Price Indices ....................................................... 13- 3 Table 13.2 Annual Changes in Major Price Indices .................................................................. 13- 4 Chart 13.1 CPI All Items and Telephone Services ................................................................... 13- 4 Table 13.3 Annual Changes in Price Indices for Local and Long Distance Telephone Services ....................................................................................................... 13- 5 Chart 13.2 CPI Telephone Service Price Indices ..................................................................... 13- 5 Price Levels ................................................................................................ 14- 1 Table 14.1 Average Residential Rates for Local Service in Urban Areas ................................... 14- 3 Table 14.2 Average Local Rates for Businesses with a Single Line in Urban Areas ................... 14- 4 Table 14.3 Changes in the Price of Directly Dialed Five- Minute Long Distance Calls ................ 14- 5 Table 14.4 Average Revenue per Minute ................................................................................. 14- 6 Table 14.5 Indicators of Long Distance Prices ......................................................................... 14- 7 Residential Telephone Usage ..................................................................... 15- 1 Table 15.1 Distribution of Residential Toll Calls and Minutes .................................................... 15- 3 Table 15.2 Average Residential Monthly Toll Calling ................................................................ 15- 3 Table 15.3 Duration of Residential Long Distance Calls: 2000 ................................................. 15- 4 Table 15.4 Length of Haul of Intrastate Toll Calls ..................................................................... 15- 5 Table 15.5 Duration and Length of Haul of Interstate Toll Calls ................................................ 15- 5 Table 15.6 Distribution of Residential Long Distance Minutes by Day of Week in 2000 ............ 15- 6 Revenues ..................................................................................................... 16- 1 Table 16.1 Telecommunications Industry Revenues: 1999 ........................................................ 16- 3 Table 16.2 Telecommunications Revenues Reported by Type of Service .................................. 16- 4 Table 16.3 Number of Interstate Telecommunications Providers by Principal Type of Business ....................................................................................... 16- 5 Table 16.4 Gross Revenues Reported by Type of Carrier ........................................................ 16- 6 Table 16.5 Telephone Revenues by State ................................................................................ 16- 7 Subscribership ............................................................................................ 17- 1 Table 17.1 Household Telephone Subscribership in the United States ....................................... 17- 2 Table 17.2 Telephone Penetration by State .............................................................................. 17- 3 Table 17.3 Historical Telephone Penetration Estimates ............................................................. 17- 4 Chart 17.1 Percent of U. S. Households with a Telephone, Computer, and Internet Use ............ 17- 5 4 iv Technology Development ........................................................................... 18- 1 Table 18.1 Central Offices and Access Lines by Technology .................................................... 18- 5 Table 18.2 Features Available in Central Offices ...................................................................... 18- 6 Table 18.3 Local Transmission Technology .............................................................................. 18- 7 Table 18.4 Central Offices Converted to Equal Access ............................................................ 18- 8 Chart 18.1 Telecommunications Patents ................................................................................... 18- 9 Telephone Numbers ................................................................................... 19- 1 Table 19.1 Area Code Assignments ........................................................................................ 19- 3 Table 19.2 Telephone Numbers Assigned for Toll- Free Service ............................................... 19- 7 Table 19.3 Dialing Patterns of the United States ..................................................................... 19- 14 Universal Service ........................................................................................ 20- 1 Table 20.1 Universal Service Fund Payment History ................................................................ 20- 3 Table 20.2 Projected High- Cost Support Payments by State: 2000 .......................................... 20- 4 Table 20.3 Schools and Libraries Funding Commitments by State and by Type of Service ............................................................................................................ 20- 5 Table 20.4 Rural Health Care Funding Commitments and Authorizations for Payment by State ..................................................................................................... 20- 6 Table 20.5 Universal Service Fund Factors .............................................................................. 20- 7 Chart 20.1 Interstate Universal Service Fund Factors ............................................................... 20- 7 Chart 20.2 Intrastate Universal Service Fund Factors ............................................................... 20- 7 Appendix A – Sources of Telecommunications Information ..................... 21- A Appendix B – Contacting the Report Authors ........................................... 22- A 5 1- 1 Introduction Trends in Telephone Service is published by the Industry Analysis Division of the Federal Communications Commission’s Common Carrier Bureau. We have designed this report to provide answers to some of the most frequently asked questions about the telephone industry -- questions asked by consumers, members of Congress, other government agencies, telecommunications carriers, and members of the business and academic communities. To this end, the report contains summary information about the size, growth, and development of the telephone industry, including data on market shares, minutes of calling, number of lines, and telephone subscribership. The report also provides information about access charges, consumer expenditures for service, infrastructure, international telephone traffic, long distance carriers, telephone rates and price changes, and universal service support. Trends in Telephone Service summarizes a variety of information contained in other reports that are published periodically by the Industry Analysis Division. In most cases, these other reports give much more detailed information than that provided here. These reports can be accessed from our Internet site, FCC- State Link, at . In addition, to facilitate further information gathering by consumers and others, we have listed additional sources of information in Appendix A, and we have provided information on contacting the authors of this report in Appendix B. Highlights from sections in the report on advanced telecommunications services, international calling, local competition, telephone rates, subscribership, and toll- free numbers are shown below: Advanced Telecommunications Services · High- speed lines (over 200 kbps in at least one direction) connecting homes and small businesses to the Internet increased by 63% during the second half of 2000, to a total of 7.1 million lines (or wireless channels) in service from about 4.4 million in June 2000. · About 4.3 million high- speed lines provided speed of over 200 kbps in both directions, and thus met the Commission’s definition of advanced services, compared to about 2.9 million in June 2000. Local Telephone Competition · As of December 2000, Competitive Local Exchange Carriers (CLECs) provided 16.4 million (or 8.5%) of the approximately 194 million nationwide local telephone lines that were in service to end users as opposed to 8.3 million (or 4.4%) of nationwide local telephone lines at the end of 1999. This represents a 97% growth in CLEC market size during the year 2000. · About one- third of CLEC end- user lines are served over “local loop” facilities that the CLECs own. · Incumbent Local Exchange Carriers (ILECs) reported providing other carriers about 6.8 million lines on a resale basis at year- end 2000, compared to about 5.7 million lines six months earlier, and they provided about 5.3 million unbundled network element (UNE) loops at the end of the year 2000, an increase of 62% during the six months. Telephone Rates 6 1- 2 · Local phone rates have remained steady. The average monthly local residential charge for service was $20.78 in October 2000 as compared to $19.24 in 1990; for a business with a single phone line, the representative charge for service was $41.80 in October 2000 as compared to $41.21 in October 1990. Subscribership · More than twenty million households have been added to the nation's telephone system since November 1983. As of November 2000, 100.2 million households had telephone service. Toll- Free Numbers · There are currently four toll- free prefixes in use - 800, 888, 877, and 866 - with almost 24.5 million toll- free numbers assigned as of the end of July 2001. 7 1- 3 1 Access Charges Long distance companies rely on the loops, switches, and transport facilities of local telephone companies for access to their customers. As a result, local telephone companies recover a portion of their costs from long distance companies accessing their networks. Both the manner in which these access charges have been assessed and the proportion of the costs they have recovered have varied considerably over time. In the early 1980s, AT& T provided about three- quarters of the nation's local telephone service and almost all interstate long distance service. Because revenue sharing was largely an internal process for AT& T, it was able to charge prices above true economic cost for long distance calls and share the revenues with local telephone companies. These transfers, while reducing the pressures on the local companies to raise monthly rates, contributed to inefficiently high long distance rates. The high rates were responsible for suppressing demand for long distance calls and inducing large corporations to bypass the public switched network. Moreover, while such revenue sharing arrangements were sustainable in an industry where one firm monopolized both long distance and local service, they were not compatible with a competitive long distance industry. In mid- 1984 the FCC, in cooperation with a Federal- State Joint Board composed of both federal and state regulators, introduced sweeping changes in the way that local telephone companies charged for their services. The historic method of sharing revenues was replaced with a new system of access charges that provided a uniform method for local telephone companies to charge long distance carriers for the origination and termination of interstate traffic on their local networks. In addition, monthly subscriber line charges (SLCs) were introduced to recover a portion of the fixed costs of the local telephone companies’ loops directly from end users on a per- line basis. 1 Since local telephone companies were required to reduce their charges to long distance carriers -- dollar for dollar -- as SLCs were introduced, the pricing changes reduced the implicit subsidy from long distance use to local service. The rebalancing of prices between local service and interstate long distance calls during the 1980s had a fundamental impact on the telephone industry as the price of long distance service fell and the volume of long distance calling surged. In mid- 1997, as part of its implementation of the 1996 Telecommunications Act, the FCC introduced further interstate access charge reform. Prior to the 1997 reform, local carriers continued to recover part of their fixed costs in per- minute charges (from long distance carriers) and part from end users (in SLCs.) Presubscribed interexchange carrier charges (PICCs) were created in order to allow local carriers to recover the remaining portion of their fixed loop costs from long distance carriers on a per- line, instead of a per- minute, basis. Cost recovery on a per- line basis not only reduces the remaining inefficiency in the pricing of long distance access, but allows local companies to recover costs in a competitively neutral manner, consistent with the goals of the 1996 Act. As part of access charge reform, on May 31, 2000, the FCC eliminated PICCs and 1 Under the Commission's nomenclature, SLCs are called access charges even though they are collected from customers (end users) rather than long distance carriers. 8 1- 4 consolidated them with SLCs and all price- cap local exchange carriers reduced access charges paid by long distance carriers. Also as part of access charge reform, some of the large interexchage carriers agreed to eliminate monthly minimum usage charges. The impact of access charge reform on per- minute access charges by carriers is evident in the data presented in Tables 1.1 through 1.4 Average monthly SLCs and PICCs are shown in Table 1.1, and average per- minute rates charged to long distance carriers are shown in Table 1.2. Both tables report historical averages for all local exchange carriers (LECs) that file access tariffs subject to price- cap regulation and LECs in the National Exchange Carrier Association (NECA) pool. These LECs control over 98% of the industry's access lines. Current per- line charges and per- minute charges are reported for each of the carriers in Tables 1.3 and 1.4, respectively. The data in Table 1.2 clearly illustrate the effectiveness of access reform in reducing the prices long distance carriers pay per minute for access to the local telephone companies' networks. Per-minute access prices have continually decreased over time, a trend that continues with implementation of the 1997 and 2000 reforms. 9 Table 1.1 Interstate Per- Line Access Charges (National Average per Month per Line) 1/ Charged to End Users 2/ Charged to Long Distance Carriers 3/ (Subscriber Line Charges) (Presubscribed Interexchange Carrier Charges) Residential and Non- Primary Multiline Non- Primary Multiline Centrex From To Single- Line Residential Business Residential Business Business and Centrex 05/ 26/ 84 05/ 31/ 85 $0.00 $4.99 06/ 01/ 85 09/ 30/ 85 1.00 4.99 10/ 01/ 85 05/ 31/ 86 1.00 4.97 06/ 01/ 86 12/ 31/ 86 2.00 4.97 01/ 01/ 87 06/ 30/ 87 2.00 5.12 07/ 01/ 87 12/ 31/ 87 2.60 5.12 01/ 01/ 88 11/ 30/ 88 2.60 5.01 12/ 01/ 88 03/ 31/ 89 3.20 5.01 04/ 01/ 89 12/ 31/ 89 3.50 4.94 01/ 01/ 90 06/ 30/ 90 3.48 4.84 07/ 01/ 90 12/ 31/ 90 3.48 4.83 01/ 01/ 91 06/ 30/ 91 3.48 4.77 07/ 01/ 91 11/ 27/ 91 3.49 4.74 11/ 28/ 91 06/ 30/ 92 3.49 4.76 07/ 01/ 92 06/ 30/ 93 3.49 4.68 07/ 01/ 93 06/ 30/ 94 3.50 5.37 07/ 01/ 94 06/ 30/ 95 3.50 5.45 07/ 01/ 95 06/ 30/ 96 3.50 5.50 07/ 01/ 96 06/ 30/ 97 3.50 5.53 07/ 01/ 97 12/ 31/ 97 3.50 5.68 01/ 01/ 98 06/ 30/ 98 3.50 $4.98 6.92 $0.49 $1.50 $2.52 $0.35 07/ 01/ 98 12/ 31/ 98 3.50 4.99 7.11 0.49 1.38 2.38 0.38 01/ 01/ 99 06/ 30/ 99 3.50 5.88 7.05 0.49 1.38 2.22 0.32 07/ 01/ 99 12/ 31/ 99 3.50 5.84 6.94 0.95 1.77 2.78 0.42 01/ 01/ 00 06/ 30/ 00 3.50 5.81 6.94 0.92 1.70 2.44 0.35 08/ 11/ 00 06/ 30/ 01 4/ 4.28 5.99 6.88 0.00 0.00 2.30 0.37 07/ 01/ 01 12/ 31/ 01 4.78 6.66 0.00 0.00 1.35 0.22 Source: Industry Analysis Division, Monitoring Report and access tariff filings. 4/ Although the charges took effect on July 1, 2000, some companies made adjustments to the tariffs which did not take effect until August 11, 2000. Rates in Effect 1/ This table shows average rates (weighted by access lines) for all local exchange carriers (LECs) that file access tariffs subject to price- cap regulation and all LECs in the National Exchange Carrier Association (NECA) pool. 2/ Prior to 1/ 01/ 98, carriers did not charge separate subscriber line charge (SLC) rates for primary and non- primary residential lines. Therefore, the residential and single- line business average SLCs reported prior to 1/ 01/ 98 include all residential SLC charges. The average residential and single- line business SLC rate as of 1/ 01/ 98 excludes non- primary residential SLCs. Non- primary SLCs are now reported separately, except for the LECs in the NECA pool, which continue to charge a single residential SLC. Under price- cap regulation, as of July 1, 2001, the caps on SLCs for primary residential and single- line business, non- primary residential, and multiline business and Centrex lines equal $5.00, $7.00, and $9.20, respectively. For NECA pool companies, the residential SLC cap is $3.50, while the multiline business and Centrex SLC cap equals $6.00. 3/ On 1/ 01/ 98, price- cap carriers began to charge presubscribed interexchange carrier charges (PICCs). The reported PICCs are averages per line including both price- cap and NECA pool lines. While carriers did not charge different rates for Centrex and multiline business SLCs, they did charge different PICC rates for these lines. Therefore, the average multiline business and Centrex PICC rates are reported separately. However, multiline business line counts, used to compute average PICC rates, include Centrex lines for LECs in the NECA pool, which do not charge PICCs or distinguish in access filings between the two line types. On 7/ 01/ 00, price- cap carriers stopped charging residential and single- line business PICCs. Therefore, under price- cap regulation, as of July 1, 2000, the caps on PICCs for multiline business lines equal $4.31. Centrex groups of 9 or fewer lines are capped at the multiline business PICC rate of $4.31 per group. Centrex groups with more than 9 lines are capped at $0.48 per line (1/ 9th the multiline business rate). Residential and Single- Line Business 5.93 1 - 5 10 Table 1.2 Interstate Per- Minute Access Charges (National Average in Cents per Minute) 1/ Interstate Charges for Switched Access Service Total Charge per Conversation Minute 3/ 05/ 26/ 84 01/ 14/ 85 5.24 ¢ 5.24 ¢ 3.10 ¢ 17.26 ¢ 01/ 15/ 85 05/ 31/ 85 5.43 5.43 3.10 17.66 06/ 01/ 85 09/ 30/ 85 4.71 4.71 3.10 16.17 10/ 01/ 85 05/ 31/ 86 4.33 4.33 3.10 15.38 06/ 01/ 86 12/ 31/ 86 3.04 4.33 3.10 14.00 01/ 01/ 87 06/ 30/ 87 1.55 4.33 3.10 12.41 07/ 01/ 87 12/ 31/ 87 0.69 4.33 3.10 11.49 01/ 01/ 88 11/ 30/ 88 0.00 4.14 3.10 10.56 12/ 01/ 88 02/ 14/ 89 0.00 3.39 3.00 9.60 02/ 15/ 89 03/ 31/ 89 0.00 3.25 3.00 9.46 04/ 01/ 89 12/ 31/ 89 1.00 1.83 3.00 9.11 01/ 01/ 90 06/ 30/ 90 1.00 1.53 2.50 7.78 07/ 01/ 90 12/ 31/ 90 1.00 1.23 2.50 7.48 01/ 01/ 91 06/ 30/ 91 1.00 1.14 2.40 7.18 07/ 01/ 91 06/ 30/ 92 0.88 1.06 2.40 6.97 07/ 01/ 92 06/ 30/ 93 0.79 0.95 2.40 6.76 07/ 01/ 93 06/ 30/ 94 0.88 1.16 2.20 6.66 07/ 01/ 94 06/ 30/ 95 0.84 1.08 2.10 0.28 ¢ 6.89 07/ 01/ 95 06/ 30/ 96 0.74 0.89 1.96 0.21 6.16 07/ 01/ 96 06/ 30/ 97 0.72 0.89 1.95 0.17 6.04 07/ 01/ 97 12/ 31/ 97 0.64 0.84 1.63 0.14 5.18 01/ 01/ 98 06/ 30/ 98 0.68 0.23 1.29 0.21 4.04 07/ 01/ 98 12/ 31/ 98 0.91 0.20 0.99 0.30 3.82 01/ 01/ 99 06/ 30/ 99 0.82 0.16 0.98 0.32 3.71 07/ 01/ 99 12/ 31/ 99 0.37 0.10 0.86 0.28 2.82 01/ 01/ 00 06/ 30/ 00 0.32 0.10 0.86 0.31 2.85 08/ 11/ 00 06/ 31/ 00 4/ 0.23 0.07 0.52 0.26 1.91 07/ 01/ 01 12/ 31/ 02 0.15 0.07 0.48 0.24 1.71 Source: Industry Analysis Division, Monitoring Report and access tariff filings. 4/ Although the charges took effect on July 1, 2000, some companies made adjustments to the tariffs which did not take effect until August 11, 2000. 1/ This table shows average rates (weighted by minutes of use) for all local exchange carriers (LECs) that file access tariffs subject to price- cap regulation and all LECs in the National Exchange Carrier Association (NECA) pool. The average rates reported here do not include the average revenue per minute from subscriber line charges (SLCs) or primary interexchange carrier charges (PICCs), both of which are reported in Table 1.1. 2/ Non- traffic- sensitive charges include charges assessed on a per- month, per- unit basis. Prior to 07/ 01/ 94, these charges were included in the average traffic- sensitive rates. 3/ The total charge per conversation minute consists of charges on the originating end of the call, which are adjusted for dialing and call setup time, plus charges on the terminating end. Originating charges per conversation minute equal the carrier common line charge per originating access minute plus the traffic- sensitive charge per switched minute, both multiplied by 1.07 to account for dialing and call setup time, plus the non- traffic- sensitive charge per switched minute. Terminating charges per conversation minute equal carrier common line charges per terminating access minute plus both traffic- sensitive and non- traffic- sensitive charges per switched minute. Minute 1/ Carrier Common Line per Terminating Access Minute 1/ Carrier Common Line per Originating Access Minute 2/ Traffic Sensitive per Switched Minute Non- Traffic Rates in Effect From To Sensitive per Switched 1 - 6 11 Table 1.3 Interstate Per- Line Access Charges by Carrier (In Dollars per Month per Line) 1/ Rates Effective from 07/ 01/ 01 to 12/ 31/ 01 Subscriber Line Charges Presubscribed Interexchange Carrier Charges 2000 Average Monthly Access Lines 2/ (Thousands) Company Residential Non- Primary Multiline Residential Non- Primary Multiline Centrex Residential Non- Primary Multiline and Residential Business and Residential Business and Residential Business Single- Line and Single- Line Single- Line and Business Centrex Business Business Centrex BellSouth $5.00 $6.95 $7.84 0.00 0.00 $2.94 $0.32 15,105 2,615 6,675 Cincinnati Bell 5.00 6.07 5.32 0.00 0.00 0.00 0.00 653 86 293 Citizens 4.97 6.80 8.56 0.00 0.00 2.90 0.46 1,379 111 407 Global Crossing 4.71 5.91 8.03 0.00 0.00 1.02 0.28 644 93 264 Iowa Telecom 5.00 7.00 9.20 0.00 0.00 4.31 0.59 99 5 19 Qwest 4.97 6.53 7.87 0.00 0.00 0.69 0.18 10,031 1,864 4,763 SBC 4.75 4.84 5.21 0.00 0.00 0.19 0.04 30,776 6,991 18,550 Sprint 4.91 6.38 7.95 0.00 0.00 2.37 0.44 5,281 828 1,850 Verizon 4.99 6.39 7.37 0.00 0.00 2.19 0.56 33,959 7,059 16,595 Price Caps 4.91 5.93 6.69 0.00 0.00 1.41 0.22 97,927 19,652 49,416 NECA 3.50 NA 5.97 NA NA 0.00 NA 9,642 NA 2,163 Price Caps and NECA $4.78 $5.93 $6.66 $0.00 $0.00 $1.35 $0.22 107,569 19,652 51,579 NA - Not Available. Source: Access tariff filings. 1/ This table shows average rates (weighted by access lines) for all local exchange carriers (LECs) that file access tariffs subject to price- cap regulation and all LECs in the National Exchange Carrier Association (NECA) pool. Rates are composites of all regions and subsidiaries of each local exchange carrier. No information is available for those carriers that are not in the NECA pool, but are subject to rate- of- return regulation. 2/ Access line counts measure lines that companies report as qualified to receive subscriber line charges (SLCs). ISDN- BRI lines, which are charged non- primary SLC and PICC rates, are included in the non- primary residential line counts. ISDN- PRI lines, which are charged rates equal to five times the multiline business SLC and PICC rates, are multiplied by five and added to multiline business counts. 1 - 7 12 Table 1.4 Interstate Per- Minute Access Charges by Carrier (In Cents per Minute) 1/ Rates Effective from 7/ 1/ 01- 12/ 31/ 01 Year 2000 Minutes of Use Carrier (Millions) Common Line per Company Originating Access CCL CCL Local Minute Originating Terminating Switching BellSouth 0.00 ¢ 0.00 ¢ 0.36 ¢ 0.18 ¢ 1.10 ¢ 27,845 57,012 83,187 Cincinnati Bell 0.00 0.00 0.51 0.21 1.49 1,042 2,162 3,215 Citizens 0.57 0.00 0.87 0.65 3.69 2,747 2,865 5,680 Global Crossing 0.05 0.00 0.61 0.41 2.15 575 1,583 2,160 Iowa Telecom 0.81 0.00 0.84 0.15 2.90 134 185 331 Qwest 0.00 0.00 0.54 0.18 1.47 21,018 39,686 61,107 SBC 0.00 0.00 0.43 0.21 1.30 64,610 92,623 158,985 Sprint 0.03 0.00 0.63 0.17 1.68 10,375 15,681 26,235 Verizon 0.20 0.00 0.44 0.21 1.54 58,300 131,143 190,087 Price Caps 0.07 0.00 0.45 0.21 1.42 186,646 342,940 530,987 NECA 1.00 1.40 1.59 1.43 8.62 16,085 17,824 17,354 All Price Caps and NECA 0.15 ¢ 0.07 ¢ 0.48 ¢ 0.24 ¢ 1.71 ¢ 202,731 360,764 548,341 Source: Access tariff filings. 2/ Non- traffic sensitive charges include charges assessed on a per- month, per- unit basis. Prior to 07/ 01/ 94 these charges were included in the average traffic-sensitive rates. 3/ The total charge per conversation minute consists of charges on the originating end of the call, which are adjusted for dialing and call setup time, plus charges on the terminating end. Originating charges per conversation minute equal the carrier common line charge per originating access minute plus the traffic- sensitive charge per switched minute, both multiplied by 1.07 to account for dialing and call setup time, plus the non- traffic- sensitive charge per switched minute. Terminating charges per conversation minute equal carrier common line charges per terminating access minute plus both traffic- sensitive and non- traffic- sensitive charges per switched minute. Access Minute 2/ Access Minute 1/ This table shows average rates (weighted by minutes of use) for all local exchange carriers (LECs) that file access tariffs subject to price- cap regulation and all LECs in the National Exchange Carrier Association (NECA) pool. Rates are composites of all regions and subsidiaries of each local exchange carrier. No information is available for those carriers that are not in the NECA pool, but are subject to rate- of- return regulation. The average rates reported here do not include the average revenue per minute from subscriber line charges (SLCs) or primary interexchange carrier charges (PICCs), both of which are reported in Table 1.1. Access Minute Total Charge per Conversation Minute 3/ Switched Non- Traffic Sensitive per Carrier Common Line per Terminating Switched Traffic Sensitive per 1 - 8 13 2- 1 2 Advanced Telecommunications Congress directed the Commission and the states, in section 706 of the Telecommunications Act of 1996, to encourage deployment of advanced telecommunications capability in the United States on a reasonable and timely basis. To assist in its evaluation of such deployment, the Commission launched a formal data collection program (FCC Form 477) to gather standardized information about subscribership to high- speed services, including advanced services, from wireline telephone companies, cable TV companies, terrestrial wireless providers, satellite providers, and any other facilities- based providers of advanced telecommunications capability. A facilities- based provider of high- speed service lines (or wireless channels) in a given state reports to the Commission basic information about its service offerings and customers if the provider has at least 250 such lines in service in that state. While providers not meeting the reporting threshold may provide information on a voluntary basis, as some have done, we have no assurance that all such providers have reported data. Table 2.1 shows high- speed lines (over 200 kbps in at least one direction) for the following types of technology: Asymmetric digital subscriber lines (ADSL), wireline other than ADSL, coaxial cable, fiber, and satellite and fixed wireless. ADSL technologies provide speed in one direction greater than speed in the other direction. Wireline technologies other than ADSL include traditional telephone company high- speed services and symmetric DSL services that provide equivalent functionality. Coaxial cable includes the typical hybrid fiber- coax (HFC) architecture of upgraded cable TV systems. Optical fiber technologies are fiber to the subscriber’s premises (e. g., fiber- to- the- home, or FTTH). Satellite and fixed terrestrial wireless systems use radio spectrum to communicate with a radio transmitter attached to the subscriber’s premises. Table 2.2. shows advanced services lines (over 200 kbps in both directions) by the above technologies and Table 2.3 shows residential and small business high- speed lines (over 200 kbps in at least one direction) for the above technologies. Table 2.4 shows high- speed lines by state for the above technologies. 14 2- 2 15 Types of Technology 1/ December 1999 June 2000 2/ December 2000 ADSL 369,792 951,583 1,977,377 435 % 108 % Other Wireline 609,909 764,099 1,063,563 74 39 Coaxial Cable 1,414,183 2,284,491 3,576,378 153 57 Fiber 312,204 307,151 376,506 NM NM Satellite & Fixed Wireless 50,404 65,615 112,405 NM NM Total Lines 2,756,492 4,372,939 7,106,229 158 % 63 % Types of Technology 1/ December 1999 June 2000 2/ December 2000 ADSL 185,950 326,816 675,642 263 % 107 % Other Wireline 609,909 764,099 1,063,563 74 39 Coaxial Cable 879,671 1,469,130 2,194,002 149 49 Fiber 307,315 301,143 376,417 NM NM Satellite & Fixed Wireless 7,816 3,649 26,906 NM NM Total Lines 1,990,662 2,864,838 4,336,530 118 % 51 % Types of Technology 1/ December 1999 June 2000 2/ December 2000 ADSL 291,757 772,272 1,595,155 447 % 107 % Other Wireline 46,856 116,995 218,641 367 87 Coaxial Cable 1,404,600 2,215,259 3,288,034 134 48 Fiber 1,023 325 1,994 NM NM Satellite & Fixed Wireless 50,404 64,320 102,432 NM NM Total Lines 1,794,640 3,169,170 5,206,257 190 % 64 % (Over 200 kbps in at Least One Direction) Percent Change Percent Change (Over 200 kbps in at Least One Direction) High- Speed Lines Table 2.1 Dec 1999- Dec 2000 June 2000- Dec 2000 Percent Change (Over 200 kbps in Both Directions) Advanced Services Lines Table 2.2 Dec 1999- Dec 2000 June 2000- Dec 2000 NM - Not meaningful due to inconsistencies in reported data. Source: Form 477 Filings. 1/ The mutually exclusive types of technology are, respectively: Asymmetric digital subscriber line (ADSL) technologies, which provide speeds in one direction greater than speeds in the other direction; wireline technologies "other" than ADSL, including traditional telephone company high- speed services and symmetric DSL services that provide equivalent functionality; coaxial cable, including the typical hybrid fiber- coax (HFC) architecture of upgraded cable TV systems; optical fiber to the subscriber's premises (e. g., Fiber- to- the- Home, or FTTH); and satellite and (terrestrial) fixed wireless systems, which use radio spectrum to communicate with a radio transmitter at the subscriber's premises. 2/ Data for June 2000 have been revised. Residential and Small Business High- Speed Lines Table 2.3 Dec 1999- Dec 2000 June 2000- Dec 2000 2 - 3 16 December 1999 June 2000 Total Total ADSL Coaxial Cable Other 1/ Total Alabama 19,796 32,756 12,320 36,432 14,582 63,334 220 % 93 % Alaska 0 * 0 0 934 934 Arizona 58,825 111,678 32,395 * * 153,500 161 37 Arkansas 8,155 15,539 * * * 28,968 255 86 California 547,179 910,006 622,894 476,544 287,187 1,386,625 153 52 Colorado 36,726 64,033 42,810 * * 104,534 185 63 Connecticut 36,488 63,772 22,348 78,234 11,210 111,792 206 75 Delaware 1,558 3,660 * * * 7,492 381 105 District of Columbia 13,288 16,926 * * 13,627 27,757 109 64 Florida 190,700 244,678 115,133 255,978 89,684 460,795 142 88 Georgia 75,870 130,292 56,588 75,474 71,793 203,855 169 56 Hawaii * * * * * * Idaho * 8,070 * * * 15,908 97 Illinois 77,672 166,933 48,278 126,490 67,471 242,239 212 45 Indiana 20,059 49,702 6,442 37,052 17,000 60,494 202 22 Iowa 19,258 49,159 * 48,008 * 58,199 202 18 Kansas 26,179 42,679 14,281 48,541 5,921 68,743 163 61 Kentucky 23,570 24,237 16,327 * * 32,731 39 35 Louisiana 28,133 43,294 22,788 * * 74,950 166 73 Maine 19,878 17,864 * * * 26,266 32 47 Maryland 52,749 71,005 * 65,668 * 124,465 136 75 Massachusetts 114,116 185,365 53,700 210,019 25,728 289,447 154 56 Michigan 81,223 135,318 25,482 130,296 42,452 198,230 144 46 Minnesota 38,268 65,272 40,870 64,215 12,809 117,894 208 81 Mississippi * 6,514 * * * 12,305 89 Missouri 23,347 46,903 38,759 42,255 19,389 100,403 330 114 Montana * * 1,760 * * 7,378 Nebraska 36,748 44,188 * * 4,729 54,085 47 22 Nevada 23,514 40,582 10,023 * * 59,879 155 48 New Hampshire 22,807 33,045 3,339 * * 42,364 86 28 New Jersey 101,832 144,203 59,332 * * 285,311 180 98 New Mexico * 2,929 * * 21,207 28,497 873 New York 186,504 342,743 124,146 377,521 101,820 603,487 224 76 North Carolina 57,881 81,998 24,091 73,092 39,798 136,981 137 67 North Dakota * 3,467 * * 2,723 6,380 84 Ohio 160,792 156,980 55,046 121,196 47,603 223,845 39 43 Oklahoma * 163,703 * * 67,511 95,138 -42 Oregon 27,062 44,186 31,644 * * 76,839 184 74 Pennsylvania 71,926 79,892 60,083 85,104 31,483 176,670 146 121 Puerto Rico * * 0 0 * * Rhode Island * 20,628 * * * 30,919 50 South Carolina 25,229 32,824 5,168 44,812 13,934 63,914 153 95 South Dakota * 7,991 * * 10,264 11,799 48 Tennessee 66,307 87,317 13,705 77,760 31,016 122,481 85 40 Texas 152,518 276,087 158,513 227,070 136,955 522,538 243 89 Utah 11,635 19,612 17,352 * * 35,970 209 83 Vermont * 1,551 * * * 7,773 401 Virgin Islands 0 0 0 0 * * Virginia 51,305 72,436 26,750 78,585 34,580 139,915 173 93 Washington 71,930 118,723 79,130 * * 195,628 172 65 West Virginia * 1,835 * * 1,517 6,498 254 Wisconsin 18,599 34,262 8,623 * * 76,257 310 123 Wyoming * * * * * * Nationwide Reported Total 2,756,492 4,372,939 1,977,377 3,576,378 1,552,474 7,106,229 158 % 63 % NA - Not Available. NA NA NA NA NA Table 2.4 High- Speed Lines by Technology (Over 200 kbps in at Least One Direction) NA NA NA NA NA Percentage Change June 2000- Dec 2000 NA NA NA NA NA NA Source: Industry Analysis Division, High- Speed Services for Internet Access: Subscribership as of December 31, 2001. 1/ Other includes wireline technologies other than asymmetric digital subscriber line (ADSL), optical fiber to the subscriber's premises, satellite, and (terrestrial) fixed wireless systems. * Data withheld to maintain firm confidentiality. December 2000 Dec 1999- Dec 2000 NA NA NA NA NA 2 - 4 17 3- 1 3 Consumer Expenditures The Bureau of Labor Statistics conducts surveys of consumer expenditures, in part, to develop weights for CPI indices. Table 3.1 shows expenditures for telephone service for all consumer units. About 2% of all consumer expenditures are devoted to telephone service. This percentage has remained virtually unchanged over the past 15 years, despite major changes in the telephone industry and in telephone usage. Average annual expenditures on telephone service increased from $325 per household in 1980 to $849 in 1999. Bill harvesting data collected by TNS Telecoms, provide information on the telecommunications expenditures of households. Expenditures can be classified by the type of carrier providing the service. Table 3.2 presents average monthly household expenditures for local exchange, long distance and wireless carriers for 1995 through 2000. Further information on TNS Telecoms and the bill harvesting data can be found in Section 15. 18 3- 2 19 1981 $17,558 $360 2.1 % 1982 18,071 375 2.1 1983 19,692 415 2.1 1984 21,975 435 2.0 1985 23,490 455 1.9 1986 23,866 471 2.0 1987 24,414 499 2.0 1988 25,892 537 2.1 1989 27,810 567 2.0 1990 28,381 592 2.1 1991 29,614 618 2.1 1992 29,846 623 2.1 1993 30,692 658 2.1 1994 31,731 690 2.2 1995 32,264 708 2.2 1996 33,797 772 2.3 1997 34,819 809 2.3 1998 35,535 830 2.3 1999 36,995 849 2.3 Source: Consumer Expenditure Survey, Bureau of Labor Statistics. Table 3.1 Annual Expenditures for All Households Telephone Expenditures as a Percent of All Expenditures Chart 3.1 Year All Expenditures Telephone Expenditures Household Expenditures for Telephone Service Monthly Telephone Service Expenditures $0 $20 $40 $60 $80 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 3 - 3 20 Wireless Carriers 1995 $30 $21 $5 $56 1996 30 21 7 58 1997 32 25 8 65 1998 33 23 10 66 1999 34 21 9 64 2000 35 18 11 63 2/ This sample does not include households from Alaska and Hawaii. Source: Calculated by IAD staff with data provided by TNS Telecoms (formerly PNR and Associates), Telecoms Market MonitorTM . Table 3.2 3/ Includes incumbent local exchange carriers and competitive local exchange carriers. Does not include DSL or other high- speed services. Average Monthly Household Telecommunications Expenditures by Type of Provider 1/ 2/ 1/ Household payments to long distance and wireless carriers are based on monthly household bills for those households with wireline telephone service. Local Exchange Carriers 3/ Long Distance Carriers Total 3 - 4 21 4- 1 4 Earnings Beginning in the mid- 1980s, local exchange carriers that file access tariffs with the Commission were required to file rate of return reports (FCC Form 492). The first reports were filed for the monitoring period October 1, 1985 - December 31, 1986. Carriers filed reports for each subsequent two- year monitoring period (1987- 88 and 1989- 90). In 1991, carriers that became subject to price- cap incentive regulation began filing reports on a yearly basis. Non- price- cap carriers continued to file reports for each two- year monitoring period (1991- 1992, 1993- 1994, 1995- 1996, 1997- 1998, and 1999- 2000) as well as annual reports for 1991, 1993, 1995, 1997, and 1999. Rate- of- return reports were previously required for AT& T but have been discontinued. Table 4.1 is a summary of rates of return for 1991- 2000 for price- cap carriers. The rates of return were posted at the time of the carrier's individual Form 492 filings. They do not reflect revisions filed by the carriers at a later date. Thus, they are not necessarily the official versions for regulatory purposes, but they do illustrate general industry trends. Copies of the individual carrier's Form 492 reports are on file in the FCC's Reference Information Center, Courtyard Level, 445 12th Street S. W., Washington, D. C. 22 4- 2 23 Table 4.1 Interstate Rate- of- Return Summary * Years 1991 Through 2000 Price- Cap Companies Reporting FCC Form 492A (Final Reports for 1991 Through 1999 and Initial Report for 2000) Reporting Entity 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 AT& T Communications 1/ 13.40 % 12.77 % 13.49 % 13.26 % 1 BellSouth Telephone Companies 12.62 12.80 13.68 15.92 15.78 % 16.40 % 17.91 % 20.80 % 20.99 % 22.61 % 2 Qwest Corporation, Including Malheur and El Paso 2/ 3/ 12.40 12.41 13.62 12.40 12.00 13.64 15.41 16.56 19.06 19.78 SBC Communications, Inc. 4/ 3 Southwestern Bell Telephone Company 5/ 10.75 11.80 12.91 13.01 13.38 11.63 10.32 9.91 10.22 14.56 4 Ameritech Operating Companies 5/ 13.00 12.79 14.80 13.39 16.78 18.27 18.22 22.59 28.93 29.71 5 Nevada Bell 5/ 12.98 14.51 17.44 17.92 17.31 17.75 19.47 16.02 19.26 22.07 6 Pacific Bell 5/ 11.85 12.68 12.89 14.93 15.76 17.68 11.98 16.50 21.01 19.30 7 Southern New England Telephone Company 5/ 8.56 12.90 11.52 11.34 11.58 11.64 12.70 10.99 12.12 23.91 Verizon Companies 6/ 8 Bell Atlantic dba Verizon Communications 7/ 13.66 13.36 (Former Bell Atlantic Companies) Bell Atlantic 12.83 12.50 14.01 14.00 13.74 11.24 14.73 13.88 Bell Atlantic (NYNEX) 8/ 12.50 12.55 11.79 12.12 15.23 13.72 11.40 New England Telephone and Telegraph Co. 8.54 New York Telephone 9.82 (Former GTE Companies) 9/ 10/ 11/ 9 GTE South Inc. (Kentucky - COKY) 12/ 5.56 4.79 4.49 6.62 5.97 9.55 32.50 10 GTE South Inc. (N. Carolina - CONC) 12/ 10.75 14.16 11.98 16.63 12.78 19.87 17.77 GTE South Inc. (S. Carolina - COSC) 12/ 21/ 9.77 12.32 17.40 25.09 26.14 11 GTE South Inc. (Virginia - COVA) 12/ 23.45 23.18 30.90 33.65 35.19 34.74 40.96 12 GTE Systems of The South (Alabama - COAL) 12/ 12.58 11.88 9.69 15.31 7.97 10.88 14.96 GSTC - South (East South Contel) 12/ 9.67 9.90 15.09 13 GTE North Inc. (Illinois - COIL) 13/ 26.48 24.21 36.34 41.14 14.11 41.03 44.39 14 GTE North Inc. (Indiana - COIN) 13/ 22.44 23.27 29.02 33.26 34.61 41.40 47.71 GTE Midwest Inc. (COIA + COSI = COIT) 13/ 18.31 22.39 30.39 35.04 38.27 34.16 31/ 15 GTE Midwest Inc. (Missouri - COMO+ COCM+ COEM= COMT) 13/ 10.79 9.57 11.97 12.39 12.56 15.29 17.86 GTE Arkansas, Inc. (COAR+ COSA= COAT) 13/ 17.44 18.24 19.13 16.13 15.87 16.81 14/ Contel of Minnesota - COMN 13/ 22.12 23.81 32.38 33.81 30.00 32.07 14/ GSTC - Central (Central Contel) 13/ 11.22 10.24 16.28 16 GTE North Inc. (COPA+ COQS= COPT) 15/ 12.79 17.11 22.33 32.60 36.38 40.55 36.83 45.97 39.58 40.98 GTE Alaska, Inc. (Alaska - GTAK) 14.69 14.84 16.13 24.78 22.48 19.44 29.58 26.89 13.34 14/ 17 GTE California Inc. (California - GTCA) 12.45 10.73 7.05 9.08 6.95 13.72 17.68 17.19 22.01 26.45 18 GTE California, Inc. (California - COCA) 16/ 12.19 16.03 17.63 19.16 22.71 28.28 29.08 19 GTE California, Inc. (Arizona - COAZ) 16/ 6.24 2.95 4.15 14.17 13.80 15.57 12.17 20 GTE California, Inc. (Nevada - CONV) 16/ 27.39 19.15 25.50 31.44 24.01 20.57 28.79 Contel of California, Inc. 16/ 11.87 8.51 15.43 21 GTE Florida Inc. (Florida - GTFL) 12.64 9.52 7.36 7.36 8.56 15.17 19.14 14.58 18.93 21.81 22 GTE Hawaiian Telephone Co. Inc. (Hawaii - GTHI) 11.75 8.98 9.18 8.15 7.87 9.42 10.55 15.64 17.62 17.98 23 GTE North/ GTE South (GTIL+ GLIL= GAIL) 12.65 12.60 13.77 17.12 14.69 18.36 21.59 23.07 22.35 23.95 24 GTE North/ Contel Systems of South (GTIN+ GLIN= GAIN) 14.16 14.17 14.50 18.21 18.80 26.23 23.61 29.06 32.47 33.87 25 GTE North/ Contel Systems of South (GTMI+ GLMI= GAMI) 12.89 14.21 9.82 11.10 11.45 14.85 15.33 13.17 15.75 16.50 GTE Midwest Inc. (IOWA - GTIA) 17/ 19.05 16.49 22.68 25.59 23.59 22.71 14/ Contel of Minnesota - GTMN 17/ (0.04) (10.88) (13.13) 4.01 (1.33) 3.56 14/ GTE North Inc. (Total IA+ MN GTE) 17/ 9.97 13.69 13.16 26 GTE Midwest Inc. (Missouri - GTMO) 13.30 13.99 13.48 18.20 17.18 19.84 17.88 16.08 11.82 19.32 GTE Midwest Inc. (Nebraska - GTNE) 8.70 12.74 13.84 20.35 21.67 28.86 27.35 30.08 35.00 14/ 27 GTE North Inc. (Ohio - GTOH) 10.55 12.91 12.66 16.90 17.21 21.20 24.37 21.83 21.70 21.86 28 GTE North Inc. (Pennsylvania - GTPA) 12.82 12.42 11.72 14.81 14.02 18.91 20.62 14.67 21.41 22.06 29 GTE North Inc. (Wisconsin - GTWI) 10.43 13.00 13.85 13.65 13.96 17.99 18.75 16.08 17.85 17.04 30 GTE Northwest Inc. (Oregon - GTOR) 18/ 20/ 16.20 18.89 23.50 28.23 27.03 31.56 31.01 31 GTE Northwest Inc. (Washington- GTWA) 18/ 13.67 15.87 21.60 24.41 27.33 32.91 33.40 32 GTE Northwest Inc. (West Coast CA - GNCA) 18/ (15.37) (16.99) (24.03) (25.83) (6.85) (9.93) (8.40) GTE Northwest Inc. (Total OR+ WA+ NWCA GTE) 18/ 11.83 10.82 9.90 33 GTE Northwest Inc. (Idaho - GTID) 19/ 19.60 20.78 23.94 30.52 30.89 32.24 34.26 GTE Northwest Inc. (Montana - GTMT) 19/ 15.37 GTE Northwest Inc. (Total ID + MT GTE) 19/ 14.53 17.34 16.00 34 GTE Northwest Inc. (Washington - COWA) 20/ 18.07 22.24 29.43 31.85 30.41 39.17 39.42 GTE Northwest Inc. (Contel Oregon - COOR) 19/ 20/ 9.18 GTE Systems of Northwest (Northwest Contel) 20/ 8.96 10.26 18.09 35 GTE South Inc. (Alabama - GTAL) 21/ 11.83 11.39 17.68 23.49 17.59 22.23 20.48 36 GTE South Inc. (Kentucky - GTKY) 21/ 10.96 13.89 18.46 20.57 22.34 24.03 22.86 37 GTE South Inc. (North Carolina - GTNC) 21/ 19.02 14.99 23.83 24.48 27.92 24.85 26.43 GTE South Inc. (South Carolina - GTSC) 21/ 17.60 18.93 25.70 24.06 30.62 38 GTE South Inc. (GTSC+ COSC= GTST) 21/ 30.70 31.70 39 GTE South Inc. (Virginia - GTVA) 21/ 9.29 10.91 11.07 23.76 20.56 9.94 6.44 GTE South Inc. (Total South GTE) 21/ 11.50 12.61 11.91 GTE Southwest Inc. (Arkansas - GTAR) 22/ 0.65 (1.57) (1.97) 3.21 5.17 4.15 14/ GTE Southwest Inc. (New Mexico - GTNM) 22/ 10.00 17.18 24.60 24.21 31.79 39.34 14/ GTE Southwest Inc. (Oklahoma - GTOK) 22/ 6.44 6.70 10.77 14.90 15.97 18.86 14/ 40 GTE Southwest Inc. (Texas - GTTX) 22/ 7.24 7.11 11.53 14.81 16.43 21.42 21.74 GTE Southwest Inc. (Total Southwest GTE) 22/ 10.22 11.52 9.00 4 - 3 24 Table 4.1 Interstate Rate- of- Return Summary * Years 1991 Through 2000 Price- Cap Companies Reporting FCC Form 492A - Continued (Final Reports for 1991 Through 1999 and Initial Report for 2000) Reporting Entity 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 41 GTE Southwest Inc. (Texas - COTX) 15/ 10.22 9.64 17.89 8.29 14.62 22.42 18.10 14.96 17.13 12.87 GTE Southwest Inc. (New Mexico - CONM) 23/ 27.57 47.29 42.53 48.69 47.21 28.68 14/ Contel of the West dba GTE West (Arizona only - COWZ) 23/ 14.86 GTE West (West Contel) 23/ 10.51 13.81 17.26 42 Micronesian Telecomms. Corp. (N. Mariana Islands - GTMC) 24/ 2.53 7.49 15.49 21.17 34.45 29.24 1.87 GTE New York (New York Contel) 25/ 9.90 8.60 12.10 GSTC - North (East North Contel) 25/ 10.36 10.15 15.51 Sprint 43 Central Telephone of Nevada 26/ 12.44 14.23 18.90 20.46 20.42 17.07 17.79 21.15 19.29 44 Sprint - Florida 20.05 26.14 27.17 27.38 Central Telephone of Florida 26/ 11.44 14.66 15.93 17.16 17.85 United Telephone Co. of Florida 13.00 12.27 14.44 17.63 19.28 19.79 45 Sprint Local Telephone Cos. - Eastern (NJ & PA) 11.71 12.32 13.98 16.12 14.87 17.42 17.36 14.59 20.87 25.62 46 Sprint Local Telephone Cos. - Midwest (MO, KS, MN, NE, WY, TX) 19.97 19.66 17.69 18.88 Central Telephone of Texas 26/ 14.94 16.19 18.39 21.81 21.58 United Telephone - Midwest (MO, KS, MN, NE, WY, TX) 14.57 15.35 13.92 17.44 19.64 21.52 47 Sprint Local Telephone Cos. - North Carolina 16.54 12.55 15.92 22.23 Central Telephone of North Carolina 11.29 11.97 14.19 15.36 15.75 Carolina Telephone And Telegraph Company 11.43 10.14 11.10 15.39 17.77 15.38 48 Sprint Local Telephone Cos. - Northwest 17.27 17.72 19.39 29.32 34.17 34.55 30.59 32.54 31.86 32.77 49 Sprint Local Telephone Cos. - Southeast (TN, VA, & SC) 17.62 15.87 17.50 23.32 Central Telephone of Virginia 26/ 12.91 15.55 14.30 15.87 17.46 United Telephone - Southeast (TN, VA, & SC) 13.66 13.48 13.39 19.17 19.05 20.66 50 United Telephone Co. of Indiana, Inc. 14.06 14.93 15.55 18.41 20.33 24.30 26.13 24.19 28.98 38.21 51 United Telephone Co. of Ohio 12.75 12.33 13.15 16.54 15.93 16.12 13.91 17.33 20.16 20.03 Central Telephone of Illinois 26/ 27/ 11.54 10.18 18.87 19.55 18.40 18.92 All Other Companies 52 Aliant Communications Company (ALLTEL) 28/ 12.36 14.95 15.47 16.09 14.95 12.27 15.02 19.27 12.00 53 Cincinnati Bell Telephone Company 29/ 20.04 17.81 25.45 28.95 54 Citizens Telecommunications Cos. (Tariff 1) 30/ 15.42 9.77 17.87 16.71 19.68 55 Citizens Telecommunications Cos. (Tariff 2) 30/ 13.58 13.25 14.29 15.74 24.05 56 Citizens Telecommunications Cos. (Tariff 3) 15.56 16.12 57 Citizens Telecommunications Cos. (Tariff 4) 30.94 58 Citizens Telecommunications Cos. (Tariff 5) (11.23) 59 Frontier Telephone of Rochester, Inc. 31/ 32/ 11.82 12.11 11.63 12.02 11.87 10.20 13.19 18.37 16.77 18.91 60 Frontier Tier 2 Concurring Companies 32/ 16.42 17.69 19.32 26.91 31.93 45.45 43.42 38.95 61 Frontier Communications of Minnesota & Iowa 32/ 33/ 13.71 13.65 14.99 19.65 21.90 23.71 28.26 29.28 35.40 33.16 62 VALOR New Mexico #1164 20.57 63 VALOR New Mexico #1193 13.41 64 VALOR Oklahoma 11.17 65 VALOR Texas 6.70 Maximum Rate of Return 17.27 % 17.72 % 22.33 % 32.60 % 47.29 % 42.53 % 48.69 % 47.21 % 43.42 % 47.71 % Minimum Rate of Return 8.54 8.51 7.05 (15.37) (16.99) (24.03) (25.83) (6.85) (9.93) (11.23) Weighted Arithmetic Mean 11.78 12.42 13.12 13.58 14.02 15.15 15.60 16.52 18.50 19.53 Standard Deviation 1.49 0.96 1.76 2.59 3.03 3.64 3.96 5.13 5.96 5.99 * The interstate rates of return reported by carriers on the FCC Form 492A may not necessarily agree with the interstate rates of return reported by the carriers on other Commission forms. For example, price- cap carriers also report interstate rates of return on the Commission's Automated Reporting Management Information System's (ARMIS) 43- 01 report. The interstate rates of return reported by carriers on the ARMIS 43- 01 include revenues and costs for non- price- cap services. In addition they exclude adjustments, if any, for the previous year's sharing obligation or low- end adjustment. 4 - 4 25 Notes to Table 4.1 1/ AT& T Communications filed individual reports for 1991- 1994 ninety days after end of each calendar year. The local telephone companies filed final reports for each year fifteen months after the calendar year. 2/ U S WEST Communications, Inc. filed a revised report June 16, 1999 to correct the state and local composite tax rate. 3/ The merger between Qwest Communications International, Inc. and U S WEST was effective June 30, 2000. 4/ Southwestern Bell Telephone Co., Nevada Bell, and Pacific Bell filed revised reports June 25, 1999 reflecting the reassignment of expenses and revenues associated with ISP- bound traffic to the intrastate jurisdiction. 5/ Southern New England Telephone Company merged with SBC October 1998. Nevada Bell, and Pacific Bell, and Ameritech merged with SBC October 1999. 6/ Verizon Communications, Inc. was formed in 2000 by the merger of Bell Atlantic Corporation and GTE Corporation. 7/ Bell Atlantic filed revised reports August 12, 1999 reflecting the reassignment of expenses and revenues associated with internet service provider (ISP)- bound traffic to the intrastate jurisdiction. For 1999, Bell Atlantic filed a combined report. 8/ In 1992, NYNEX started to file a combined report. 9/ It should be noted that GTE in 1993 consolidated various study areas so that some individual company reports may not be totally consistent with prior years. 10/ In 1994, GTE reported many study areas by state. For the GTE companies, GTE of Alaska, California, Florida, Hawaii, Illinois, Indiana, Michigan, Missouri, Nebraska, Ohio, Pennsylvania, and Wisconsin are the only study areas that appear consistent between 1993 and 1994. 11/ GTE companies filed revised reports May 28, 1999 to properly report the expenses associated with funding the USAC- USF. 12/ In 1994, GSTC - South (East South Contel) was separated and became GTE South, Inc. (Kentucky only - COKY); GTE South, Inc. (N. Carolina only - CONC); GTE South, Inc. (S. Carolina only - COSC); GTE South, Inc. (Virginia only - COVA); and GTE Systems of the South (COAL only). The property for Georgia, which had also been included in 1993, was sold and not included in 1994. 13/ In 1994, GSTC - Central Region (Central Contel) was separated and became GTE North, Inc. (Illinois Contel); GTE North, Inc. (Indiana Contel); GTE Midwest, Inc. (Contel Iowa COIA + COSI); GTE Midwest, Inc. (Contel Missouri - COMO + COCM + COEM); Total Contel Arkansas (COAR + COSA); and Contel of Minnesota - COMN. In 1996, Total Contel Arkansas was renamed GTE Arkansas, Inc. 14/ Study area was sold. 15/ For the GTE Contel companies, GTE Pennsylvania (Contel) and GTE Texas (Contel) are the two companies that appear consistent between 1993 and 1994. In 1995, GTE of Pennsylvania (Contel) name changed to GTE North, Inc., (COPA + COQS); and GTE Texas (Contel) name changed to GTE Southwest, Inc. (Texas Contel). 16/ In 1994, Contel of California, Inc., was separated and became Contel of California (California only - COCA); Contel of California (AZ only - COAZ); and Contel of Nevada (NV only - CONV). In 1996, names were changed to GTE California, Inc., (California Contel), GTE California, Inc. (Arizona Contel), and GTE California, Inc. (Nevada Contel). 17/ In 1994, GTE of the North, Inc. (Total IA + MN GTE) was separated and became GTE Midwest, Inc. (Iowa only - GTIA) and Contel Minnesota - GTMN. 18/ In 1994, GTE of the Northwest, Inc. (Total OR+ WA+ NWCA GTE) was separated and became GTE of the Northwest, Inc. (Oregon only - GTOR); GTE of the Northwest, Inc. (Washington only - GTWA); and West Coast Telephone Co. of California - - GNCA. In 1995, GTE of the Northwest, Inc. (Contel Oregon - COOR) merged with GTE of the Northwest, Inc. (Oregon only - - GTOR). 19/ In 1994, GTE of the Northwest, Inc. (Total ID + MT GTE) was separated and became GTE of the Northwest, Inc. (Idaho only - GTID) and GTE of the Northwest, Inc. (Montana only - GTMT). GTE of the Northwest, Inc. (Montana only - GTMT) did not file a 1995 report because its property had been sold. 20/ In 1994, GTE Systems of Northwest (Northwest Contel) was separated and became GTE Northwest, Inc. (Contel Oregon - COOR); and GTE Northwest, Inc. (Contel Washington only - COWA). In 1995, GTE Northwest, Inc. (Contel Oregon - COOR) merged with GTE Northwest, Inc. (Oregon only - GTOR). 21/ In 1994, GTE South, Inc. (Total South GTE) was separated and became GTE South, Inc. (Alabama only - GTAL); GTE South, Inc. (Kentucky only - GTKY); GTE South, Inc. (North Carolina only - GTNC); GTE South, Inc. (South Carolina only - GTSO); and GTE South, Inc. (Virginia only - GTVA). The properties for Georgia, Tennessee, and West Virginia which had been included in GTE South, Inc. in 1993, were not included in 1994 because these properties had been sold. GTSC and COSC were combined in 1999 to form GTST. 22/ In 1994, GTE Southwest, Inc. (Total Southwest GTE) was separated and became GTE Southwest, Inc. (Arkansas only - GTAR); GTE Southwest, Inc. (New Mexico only - GTNM); GTE Southwest, Inc. (Oklahoma only - GTOK); and GTE Southwest Inc. (Texas only - GTTX). 23/ In 1994, GTE West (West Contel) was separated and became Contel of the West (New Mexico only - CONM) and Contel of the West dba GTE West (Arizona only - COWZ). Utah, which had been included in 1993 was not included in 1994; their property was sold. Contel of the West dba GTE West (Arizona only - COWZ) did not file a 1995 report because its property had been sold. In 1995, Contel of the West (New Mexico only - CONM) changed its name to GTE Southwest, Inc., (Contel New Mexico). 24/ Micronesian Telecommunications Corp. filed a rate- of- return report for the first time in 1994. 25/ GTE New York (New York Contel) and GSTC - North (East North Contel) did not file in 1994 because its property was sold. 4 - 5 26 Notes to Table 4.1 - Continued 26/ The Centel companies and Lincoln Telephone and Telegraph Company reported subject to price caps beginning 7/ 1/ 93. Rate of return for 1993 is for the filing period July through December. For 1992, information for these companies is from their final non- price- cap reports, filed 9/ 30/ 93 for the two- year 1992 monitoring period, 1991- 1992. 27/ Sold to Galatin River Communications, October 31, 1998. 28/ In 1996, Lincoln Telephone and Telegraph Company changed its name to Aliant Communications Company. 29/ Cincinnati Bell Telephone Company went price- cap in 1997. 30/ The Citizens Telecommunications Cos. became price- cap July 1, 1996; its reporting period for 1996 is July 1 - December 31, 1996. Rates for 1996 are from the initial report. 31/ The Rochester Telephone Corporation (now Frontier Telephone of Rochester) and Southern New England Telephone Company reported subject to price caps beginning 7/ 1/ 91. The rate- of- return report for each is for the filing period July 1 through December 31, 1991. 32/ The Rochester Telephone Corporation (now Frontier Telephone of Rochester), Rochester Telephone subsidiaries and and Frontier Communications of Minnesota and Iowa (name changed in 1994 from Vista Communications Co. of Minnesota and Iowa) did not have any changes to their original reports so they did not file final reports on March 31, 1995 for 1993. 33/ Reports for Frontier Communications of Minnesota and Iowa, formerly known as Vista Telephone Companies were filed by Rochester Telephone Company as of 7/ 1/ 92. For 1992, the rate of return is for 7/ 1/ 92- 12/ 31/ 92 when they reported subject to price- cap regulation. For 1991, Vista filed a rate- of- return report for Vista Telephone Company of Iowa and Vista Telephone Company of Minnesota. 4 - 6 27 5- 1 5 Employment and Labor Productivity The Bureau of Labor Statistics (BLS) publishes monthly data regarding the total number of employed workers in the communications industry. Specifically, BLS compiles employment statistics for the entire telephone communications industry (Standard Industrial Classification (SIC) 481) and for a subset of this industry, telephone communications minus radiotelephone (SIC 4813). The difference between these two figures yields the number of employees in the radiotelephone industry (SIC 4812). SIC 4813 includes establishments primarily engaged in furnishing telephone voice and data communications, except radiotelephone and telephone answering services. SIC 4812 includes establishments primarily engaged in providing two- way radiotelephone communication services, such as cellular telephone service. It also includes telephone paging and beeper services. Neither of these categories includes employees from establishments primarily engaged in furnishing telephone answering services, manufacturing equipment, or engineering and research services. Table 5.1 and the associated graph show the annual average employment figures in the telephone communications industry separately for SIC 4812 and SIC 4813 from 1951 to 2001. Since 1990, employment in the telephone communications industry has grown modestly. Most of the growth in employment over this period is the result of substantial increases in the radiotelephone industry, which grew at an annual average growth rate of approximately 20%. BLS also calculates an annual telecommunications industry labor productivity index. The BLS index of labor productivity relates output to the employee hours expended in producing that output. This index, presented in Table 5.2, rose an average 6.0% per year from 1951- 1999, with 1999 being the most recent data available. This average labor productivity factor is higher than the average in other industries (typically somewhere around 3 to 4%). This higher than average annual growth rate may be the result of telephone companies utilizing more efficient, advanced technology and increases in human capital. Table 5.2 and the associated graph illustrate the rising trend in telecommunications labor productivity since 1951. Table 5.3 presents estimates of the number of telecommunications service providers that are small businesses as defined by the Small Business Administration’s Office of Size Standards (i. e., 1,500 or fewer employees, including all affiliates). 28 5- 2 29 ` Table 5.1 Annual Average Number of Employees in the Telephone Communications Industry (In Thousands) All Other All Other All Other Year Radiotelephone Telephone Year Radiotelephone Telephone Year Radiotelephone Telephone 1951 15.2 628.8 1969 20.5 849.5 1987 21.1 880.8 1952 16.0 662.4 1970 22.2 919.9 1988 23.2 877.9 1953 16.6 685.6 1971 22.4 929.2 1989 1/ 29.9 856.0 1954 16.5 682.3 1972 22.5 933.6 1990 38.2 874.8 1955 16.6 690.1 1973 23.2 958.0 1991 45.6 863.6 1956 17.7 733.5 1974 23.6 977.2 1992 53.1 832.1 1957 18.1 750.1 1975 22.8 943.8 1993 63.1 815.9 1958 17.2 714.9 1976 22.5 930.7 1994 81.0 812.4 1959 16.7 690.4 1977 22.6 934.7 1995 102.5 797.2 1960 16.6 689.4 1978 23.4 971.4 1996 146.9 786.1 1961 16.3 677.0 1979 24.8 1023.4 1997 172.7 820.3 1962 16.2 671.3 1980 25.3 1046.9 1998 164.3 848.5 1963 16.2 669.3 1981 25.3 1052.0 1999 182.7 892.4 1964 16.6 689.5 1982 25.3 1046.5 2000 204.4 927.6 1965 17.3 717.9 1983 1/ 23.8 986.5 2001 2/ 257.1 971.3 1966 18.3 755.1 1984 22.4 931.0 1967 19.0 787.5 1985 21.6 899.1 1968 19.2 793.2 1986 1/ 20.7 862.7 1/ Due to Bell operating company employee strikes in 1983, 1986, and 1989, which lasted one month each, the reported annual average number of workers for those particular years is an average of the eleven months in which workers did not strike. 2/ The 2001 figures are preliminary. Source: Bureau of Labor Statistics. 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 0 200 400 600 800 1,000 1,200 1,400 Workers (Thousands) Chart 5.1 Annual Average Number of Employees in the Telephone Communications Industry 1951 - 2001 All Other Telephone Radiotelephone 5 - 3 30 Table 5.2 Labor Productivity Index for the Telephone Communications Industry Measured in Output per Hour (OPH) (Base Year 1987= 100) Year OPH Index Year OPH Index Year OPH Index 1951 12.0 1968 34.7 1985 88.9 1952 12.4 1969 35.3 1986 95.0 1953 12.6 1970 35.6 1987 100.0 1954 13.2 1971 38.3 1988 106.2 1955 14.3 1972 40.1 1989 111.6 1956 14.6 1973 42.7 1990 113.3 1957 16.1 1974 45.0 1991 119.8 1958 18.2 1975 49.3 1992 127.7 1959 20.3 1976 53.6 1993 135.5 1960 21.4 1977 57.3 1994 142.2 1961 23.3 1978 60.6 1995 148.1 1962 24.8 1979 63.5 1996 159.5 1963 26.6 1980 67.6 1997 160.9 1964 27.8 1981 71.1 1998 170.3 1965 28.9 1982 73.8 1999 189.1 1966 30.3 1983 84.6 1967 32.6 1984 84.5 Source: Bureau of Labor Statistics. Chart 5.2 Telephone Communications Industry (SIC 481) Labor Productivity Index 0 20 40 60 80 100 120 140 160 180 200 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 Output per Worker- Hour 5 - 4 31 Table 5.3 Number of Telecommunications Service Providers That Are Small Businesses Service Provider Category Number of Filers that in Filers that in Form 499- A Combination with Combination with Filers Affiliates Affiliates Have Have 1,500 or More Than 1,500 Fewer Employees Employees 1/ 1/ Incumbent Local Exchange Carriers (ILECs) 1,335 1,037 298 Competitive Access Providers (CAPs) 349 297 52 and Competitive Local Exchange Carriers (CLECs) Local Resellers 87 86 1 Other Local Exchange Carriers 60 56 4 All Competitors of ILECs 496 439 57 Total: Fixed Local Service Providers 1,831 1,476 355 Total: Payphone Providers 758 755 3 Wireless Telephony Including Cellular, 806 323 483 Personal Communications Service (PCS) and SMR Telephony Carriers Paging & Messaging Service 427 407 20 Specialized Mobile Radio (SMR) 212 211 1 Dispatch Wireless Data Service Providers 6 5 1 Other Mobile Service Providers 44 43 1 Total: Wireless Service Providers 1,495 989 506 Interexchange Carriers (IXCs) 204 163 41 Operator Service Providers (OSPs) 21 20 1 Prepaid Calling Card Providers 21 20 1 Satellite Service Carriers 21 16 5 Toll Resellers 454 423 31 Other Toll Carriers 17 15 2 Total: Toll Service Providers 738 656 82 All Filers 4,822 3,875 947 1/ Estimates were based on gross revenues information filed April 1, 2000 on FCC Form 499- A worksheets, combined with employment information obtained from ARMIS and Securities and Exchange Commission filings as well as industry employment estimates published by the Bureau of Labor Statistics. Actual Form 499- A filings are not available to the public. For this table, filers were considered to be affiliated based on information published in the Industry Analysis Division, Carrier Locator. The estimates do not reflect affiliates that do not provide telecommunications services or that operate only in foreign countries. Source: Form 499- A filers from Industry Analysis Division, Carrier Locator. 5 - 5 32 6- 1 6 International Telephone Service International telecommunications has become an increasingly important segment of the telecommunications market. International telephone calling -- propelled by technological innovation, increased international trade and travel, and stable or declining international telephone rates -- has skyrocketed. The number of calls made from the United States to other countries increased from 200 million in 1980 to 5.2 billion in 1999. Americans spent about $14 billion on international calls in 1999. On average, carriers billed 51 cents per minute for international calls in 1999, a decline of more than 50% since 1980. International private line revenues have also increased since 1980, but telex and telegraph services declined substantially over the same period. These trends are shown in Table 6.1. U. S. and foreign carriers compensate each other when one carries traffic that the other bills. Since 1980, the number of calls billed in the United States increased at a faster pace than calls billed in foreign countries, contributing to rapid increases in net settlement payments to foreign carriers. These net payments from the United States to other countries were $4.6 billion in 1999. Trends in settlement payments are shown in Table 6.2. International traffic data are available on a country- by- country basis. Table 6.3 summarizes traffic by region of the world. Five markets -- Canada, Mexico, the United Kingdom, Germany, and Japan -- currently account for about 44% of the international calls billed in the United States. Since 1985, when MCI began to compete with AT& T for international calls, numerous carriers have begun to provide international service. Fifty- six carriers provided international telecommunications service in 1999 by using their own facilities or lines leased from other carriers. These carriers provided $14.5 billion of international telephone service between the U. S. and foreign points and $1.2 billion of international private line service. Table 6.4 shows the U. S.- billed revenues for each of the 56 carriers. Together, AT& T, MCI WorldCom, and Sprint, accounted for 90% of the international service billed in the United States. In addition to the 56 carriers that owned or leased facilities, about 450 carriers reported the resale of international message telephone service. These carriers reported $4.5 billion of resale revenue in 1999. The revenues of the fifty largest resellers are shown in Table 6.5. The data compiled in Tables 6.1 - 6.5 are filed pursuant to Section 43.61 of the Commission's rules. Preliminary data are filed July 31st of each year and final data are filed October 31st. Additional information can be found in a number of international reports on the FCC- State Link web page. 33 6- 2 34 Table 6.1 International Service from the United States to Foreign Points (Minute, Message, and Revenue Amounts Shown in Millions) Telephone Service Other Services Billed Revenues Billed Revenues Minutes Messages Total Per Per Call Telex Telegraph Private Line Misc. Minute 1/ Services 1980 1,569 199 $2,097 $1.34 $10.53 $325 $63 $115 1981 1,857 233 2,239 1.21 9.61 350 62 126 1982 2,187 274 2,382 1.09 8.70 363 56 138 1983 2,650 322 2,876 1.09 8.92 379 54 154 1984 3,037 367 3,197 1.05 8.71 394 46 158 1985 3,350 411 3,435 1.03 8.37 415 45 172 1986 3,917 482 3,891 0.99 8.07 390 42 175 1987 4,480 570 4,559 1.02 8.00 360 35 191 1988 5,190 687 5,507 1.06 8.02 310 30 194 1989 6,109 835 6,517 1.07 7.80 243 27 208 1990 7,215 984 7,626 1.06 7.75 196 24 201 1991 8,986 1,371 9,096 1.01 6.63 200 15 303 $23 1992 10,156 1,643 10,179 1.00 6.20 155 16 313 24 1993 11,393 1,926 11,353 1.00 5.89 135 12 365 23 1994 13,393 2,313 12,255 0.92 5.30 123 12 432 55 1995 15,837 2,821 13,990 0.88 4.96 119 6 432 55 1996 19,119 3,485 14,079 0.74 4.04 119 5 649 26 1997 22,611 4,233 15,135 0.67 3.58 110 4 840 36 1998 24,026 4,439 14,154 0.59 3.19 64 2 902 21 1999 28,132 5,249 14,435 0.51 2.75 57 2 1,196 30 Note: Data represent traffic and circuits from domestic U. S. points to foreign points. 1/ Billed revenue per minute for international service differs in Table 14.5 and Table 6.1. Data in Table 14.5 are based on traffic to foreign points for all U. S. carriers serving all U. S. points and staff estimates of end- user revenues. Data for Table 6.1 are based on traffic for domestic U. S. points only and revenues billed by underlying carriers. The domestic U. S. includes Puerto Rico but excludes American Samoa, Guam, the Northern Mariana Islands, and the U. S. Virgin Islands. Source: Industry Analysis Division, Section 43.61 International Telecommunications Data. 6 - 3 35 Table 6.2 International Telephone Service Settlements (Revenue Amounts Shown in Millions) Average per Minute Settlement Settlement U. S. Owed to Due from Carrier Foreign Foreign Net Billed Owed to Retained Due from Net Net Carriers Carriers Revenues Revenues Foreign Revenues Foreign Settlements Revenues for U. S. for Foreign All Carriers Carriers Billed Calls Billed Calls Traffic 1980 $2,097 $1,063 $1,034 $716 ($ 347) $1,750 $0.68 $0.62 $0.64 1981 2,239 1,330 910 799 (531) 1,708 0.72 0.56 0.52 1982 2,382 1,674 708 961 (712) 1,670 0.77 0.60 0.44 1983 2,876 2,036 841 1,086 (950) 1,926 0.77 0.60 0.43 1984 3,197 2,269 928 1,066 (1,203) 1,994 0.75 0.54 0.40 1985 3,435 2,369 1,066 1,239 (1,130) 2,305 0.71 0.55 0.41 1986 3,891 2,802 1,089 1,387 (1,414) 2,476 0.72 0.56 0.39 1987 4,559 3,309 1,250 1,634 (1,675) 2,884 0.74 0.61 0.39 1988 5,507 3,868 1,640 1,840 (2,028) 3,480 0.75 0.62 0.41 1989 6,517 4,513 2,004 2,115 (2,398) 4,119 0.74 0.61 0.42 1990 7,626 5,079 2,547 2,317 (2,762) 4,863 0.70 0.60 0.42 1991 9,096 5,792 3,304 2,493 1/ (3,298) 5,798 0.64 0.49 0.42 2/ 1992 10,179 5,945 4,234 2,601 1/ (3,344) 6,835 0.59 0.46 0.43 2/ 1993 11,353 6,327 5,027 2,678 1/ (3,649) 7,704 0.56 0.43 0.44 2/ 1994 12,255 6,947 5,308 2,658 1/ (4,289) 7,966 0.52 0.40 0.39 2/ 1995 13,990 7,559 6,432 2,623 1/ (4,936) 9,054 0.48 0.35 0.39 2/ 1996 14,079 8,206 5,873 2,560 1/ (5,645) 8,434 0.43 0.30 0.30 2/ 1997 15,135 8,016 7,119 2,572 1/ (5,444) 9,691 0.35 0.26 0.30 2/ 1998 14,154 6,985 7,169 2,512 1/ (4,473) 9,681 0.29 0.21 0.27 2/ 1999 14,435 6,329 8,106 1,764 1/ (4,566) 9,869 0.22 0.15 0.25 2/ Note: Data are for traffic between domestic U. S. points and foreign points. 1/ Includes net settlement receipts for transiting traffic. 2/ Includes transiting traffic. Source: Industry Analysis Division, Trends in the International Telecommunications Industry; Section 43.61 International Telecommunications Data. 6 - 4 36 Table 6.3 International Message Telephone Service for 1999 (Figures Rounded to the Nearest Million) Traffic Billed in the United States Traffic Billed in Foreign Countries Total Originating or Terminating Transiting U. S. in the United States Carrier Number Number U. S. Owed to Retained Number Number Due from Retained Retained of of Carrier Foreign Revenues of of Foreign Revenues Revenues Region of the World 1/ Messages Minutes Revenues Carriers Messages Minutes Carriers Africa 180 907 $645 $401 $244 26 110 $59 $18 $321 Asia 837 4,860 3,089 1,723 1,366 223 983 275 13 1,655 Caribbean 300 1,909 956 643 313 88 351 124 7 443 Eastern Europe 163 1,074 593 266 327 25 108 34 6 367 Middle East 171 933 664 388 276 91 354 113 12 401 North and Central America 1,678 9,219 3,843 1,487 2,356 1,316 5,157 526 22 2,904 Oceania 110 589 356 150 205 60 537 50 12 268 South America 402 2,050 1,271 618 653 101 455 154 11 818 Western Europe 1,428 6,693 3,028 652 2,376 740 2,611 227 104 2,707 Other Regions 1 4 13 15 (3) * 6 1 * (2) Total for Foreign Points 5,249 28,132 14,435 6,329 8,106 2,661 10,631 1,558 205 9,869 Total for U. S. Points 20 106 21 13 8 8 42 5 * 13 Total for all International 5,269 28,238 $14,456 $6,342 $8,114 2,669 10,672 $1,563 $206 $9,883 Points * Denotes values that are less than half a million. 1/ The region totals include all traffic reported by carriers serving Alaska, Hawaii, Puerto Rico, and the conterminous United States, and include traffic between these points and offshore U. S. points such as Guam and the U. S. Virgin Islands. This traffic shown separately as the total for U. S. points, and also is included in the total for all international points. The total for all international points also includes traffic originating in American Samoa and the Northern Mariana Islands, which are excluded from the region totals. Chart 6.1 Source: Industry Analysis Division, Section 43.61 International Telecommunications Data. (5.9%) United Kingdom (15.2%) Canada (5.2%) Germany (14.4%) Mexico (2.9%) Japan (56.4%) All Other U. S. Billed Minutes by Country 6 - 5 37 Table 6.4 U. S. Billed Revenues of Facilities- Based and Facilities- Resale Carriers in 1999 1/ (Revenue Amounts Shown in Millions) International Service Total Telephone Private Telex, Telegraph, International Line and Other Billed Miscellaneous Revenues ABS- CBN Telecom North America, Inc. $6 $6 AM Telecom, LLC American Samoa Telecomm. Authority 2 2 American Tower Corp. $46 46 Andrew Telecom, Inc. 1 2 2 AT& T Corp. 6,755 556 $33 7,344 BellSouth Corporation 8 8 Communication TeleSys. Int'l./ WorldxChange 25 25 COMSAT Corporation 46 46 DirectNet Telecommunications 10 2 12 Energis (Switzerland) AG 1 1 Far East Gateway, Inc. * * Fedex International Transmission Corporation * * GE American Communications, Inc. 6 6 Geocomm Corporation * * GTE Corporation 51 4 * 55 Harris Corporation * * IDT Corporation 23 23 IMPSAT USA, Inc. 16 16 International Exchange Networks, Ltd. 2 15 16 Iridium North America 10 10 IT& E Overseas, Inc. 19 3 22 Japan Telecom America, Inc. 3 * 3 KDD America, Inc. 2 4 6 KPN- INS, Inc. 16 16 LC Communications - International Telecom Inc. 3 3 Level 3 Communications, LLC 1 1 Local Communications Network, Inc. 4 4 Madge. web International (C. I.) Limited 4 4 Masatepe Communications, U. S. A., L. L. C. 1 1 MCI WorldCom, Inc. 5,056 372 25 5,453 Medley International Teleport, Inc. 1 1 Melbourne International Comm., Ltd. * 2 3 Metromedia Fiber Network Services, Inc. 1 1 Mobile Satellite Communications, Inc. 1 * 1 Norlight Telecommunications, Inc. * * ntta. com, inc. 3 3 Pacific Gateway Exchange, Inc. 60 * 60 PanAmSat Comm. Carrier Services, Inc. * * Primus Telecommunications, Inc. 241 241 PSO, Inc. d/ b/ a Canal Uno * * RSL Communications, Ltd. 107 * 108 Satellite Communication Systems, Inc. * 3 3 SBC Communications, Inc. 2 2 4 Sprint 1,379 120 16 1,514 Star Telecommunications, Inc. 140 140 Startcomm Corporation * * Startec Global Communications Corp. 75 75 Telecomunicaciones Ultramarinas- Puerto Rico 1 1 Telefonica Larga Distancia, Inc. (TLD) 19 2 21 Telstra Incorporated * * TRICOM USA, Inc. 9 9 V- SAT Telecom, Inc. * * * Viatel, Inc. 212 212 Williams Communications, Inc. 5 5 World Access (FaciliCom International L. L. C.) 276 276 Total All Carriers 2/ $14,506 $1,216 $89 $15,812 * Represents revenues greater than $0 but less than $500,000. 1/ Totals exclude pure resale services. Data do not show settlement receipts for terminating foreign billed traffic. 2/ Includes revenues for American Samoa, Guam, the Northern Mariana Islands, and the U. S. Virgin Islands. Other tables in this section exclude this traffic. The data shown in this table include $50 million of revenues billed in these points as well as $21 million of revenues for calls between the domestic United States and these points. Source: Industry Analysis Division, Section 43.61 International Telecommunications Data. 6 - 6 38 Table 6.5 Top Providers of Pure Resale International MTS in 1999 Percent Number of Number of U. S. Carrier of Total Messages Minutes Revenues IMTS Resale Revenues Access Authority, Inc. 9,762,704 69,902,160 $20,870,738 0.46 % ACS Systems, Inc. d. b. a LD Exchange. com 44,781,532 203,974,633 58,847,458 1.30 ALLTEL Corporation 1,459,787 10,844,746 5,451,108 0.12 AT& T Corp. 141,932,631 884,898,390 254,016,193 5.61 BellSouth Corporation 34,045,495 106,471,859 28,799,468 0.64 Broadwing Companies 56,820,588 220,064,637 51,128,611 1.13 Business Telecom, Inc. (BTI) 9,102,584 45,516,432 12,553,650 0.28 CapRock Telecommunications Corporation 25,518,740 176,080,786 43,391,366 0.96 Capsule Communications d. b. a. US WATS, Inc. 10,394,537 29,554,920 8,751,116 0.19 Communication TeleSystems Int'l., d/ b/ a CTS and WorldxChange 150,245,283 1,032,966,114 192,876,638 4.26 DirectNet Telecommunications 50,822,341 272,088,214 75,924,324 1.68 eGlobe 3,148,536 30,418,884 7,549,525 0.17 Elephant Talk, Inc. 5,100,331 61,203,977 20,080,033 0.44 EqualNet Corporation 1,244,525 24,890,502 7,778,282 0.17 Global Crossing Telecommunications, Inc. 70,554,799 285,041,392 232,194,464 5.13 Globalcom, Inc. 1,222,766 24,455,318 7,642,287 0.17 GTE 26,143,969 171,350,567 151,444,931 3.34 Heritage Communications Corporation 8,105,820 84,071,750 9,510,190 0.21 Intellicall Operator Services, Inc., d/ b/ a ILD 1,559,620 16,696,575 5,571,310 0.12 Intermedia Communications, Inc. 1,491,609 29,832,176 9,322,555 0.21 Interoute Telecommunications, Inc. incl. American Telecom, Inc. 10,604,886 147,036,505 33,525,465 0.74 Lightyear Communications, Inc. 9,014,712 36,347,332 14,261,265 0.31 McLeodUSA 7,075,098 25,276,847 8,952,586 0.20 Netmoves Corp. 8,435,329 15,066,065 8,589,085 0.19 NET- tel Corporation 2,907,033 58,140,659 18,168,956 0.40 Network Plus, Inc. 56,781,157 181,699,704 62,751,000 1.39 NOS Communications, Inc. 9,447,895 76,807,277 26,239,729 0.58 Progress International, L. L. C. (Progress) 4,297,747 28,365,131 7,341,038 0.16 Qwest Communications Corporation incl. LCI International 108,301,660 492,344,044 177,850,185 3.93 Rapid Link USA, Inc. 20,955,533 180,068,686 24,240,358 0.54 RSL COM U. S. A., Inc. 78,967,849 579,213,182 126,721,682 2.80 SBC Communications, Inc. incl. SNET and CCPR Services 37,098,762 125,668,884 70,706,293 1.56 Sprint 102,531,423 533,332,140 243,736,675 5.38 Star Telecommunications, Inc. incl. PT- 1 601,503,888 4,135,593,245 922,797,050 20.38 Startec Global Communications Corporation incl. PCI Com. 7,991,148 59,762,003 20,495,290 0.45 Talk. com Holding Corp. 10,631,048 212,620,960 66,444,050 1.47 Teleglobe Companies incl Excel and Long Distance Wholesale Club 30,155,007 268,579,480 164,506,371 3.63 Teligent 26,667,030 50,003,799 7,752,479 0.17 U S West Communications, Inc. 6,239,560 124,791,200 38,997,250 0.86 United States Cellular Corporation 20,693,200 37,522,689 17,024,260 0.38 URSUS Telecom Corporation 5,201,718 19,096,929 12,547,739 0.28 USA Global Link, Inc. 6,369,622 32,541,627 10,526,082 0.23 USC Telecom, Inc. 2,042,191 40,843,814 12,763,692 0.28 VarTec Telecom, Inc. 17,583,515 67,676,456 62,434,785 1.38 Verizon Wireless 56,536,041 211,282,250 49,806,763 1.10 VoiceStream Wireless Corporation incl. Omnipoint Corporation 2,899,603 7,793,712 5,624,342 0.12 Winstar Communications, Inc. 3,053,257 10,767,053 5,378,260 0.12 Working Assets Long Distance 2,862,837 23,551,832 15,121,203 0.33 World Access Telecommunications Group, Inc. 211,462,004 1,238,406,098 329,380,477 7.28 WorldCom, Inc. 387,182,338 1,858,724,000 618,211,602 13.65 Total for 329 Carriers Not Shown Above 1/ 84,074,165 389,107,995 140,937,100 3.11 Total for all Reporting Carriers 2,593,025,453 15,048,355,630 $4,527,537,359 100.00 % 1/ Data are consolidated for affiliated carriers. A total of 379 companies made a total of 451 filings. The 50 companies shown in the table represent 85 filings. Source: Industry Analysis Division, Section 43.61 International Telecommunications Data. 6 - 7 39 7- 1 7 Lifeline and LinkUp Programs In 1984, the FCC, in conjunction with the states and local telephone companies, established a Lifeline program designed to promote universal service by providing low- income individuals with monthly discounts on the monthly cost of telephone service. In 1987, the FCC adopted LinkUp America, a program designed to help low- income households pay the initial costs of commencing service. In June 2000, the Commission further expanded the Lifeline and LinkUp programs to address the needs of those living on tribal lands. The LinkUp America program, which supports affordable connection to the network, has added 10.6 million telephone subscribers since 1987. In 2000, an estimated 5.9 million subscribers paid reduced local rates under the Lifeline program. The Commission’s rules are designed to satisfy the 1996 Telecommunications Act which mandates “affordable” rates for “low- income consumers” in all regions of the nation. The rules also make the contribution and distribution of low- income support competitively and technologically neutral by requiring equitable and nondiscriminatory contributions from all providers of interstate telecommunications services, and by allowing all eligible telecommunications carriers to receive support for offering Lifeline and LinkUp service. 1. Lifeline and LinkUp Support In states that provide state Lifeline support, Lifeline and LinkUp are available to all subscribers who meet those state standards. Although states have some latitude in selecting means tests, state commissions must establish narrowly targeted qualification criteria that are based solely on income or factors directly related to income for its low- income residents to be eligible for Lifeline and LinkUp. In addition, a state with eligible residents of tribal lands must ensure that its qualification criteria are reasonably designed to apply to eligible residents of tribal lands within the state. To receive Lifeline and LinkUp in a state that does not mandate state Lifeline support, consumers must certify that they participate in one of the following five federal programs: Medicaid, food stamps, Supplemental Security Income (SSI), federal public housing assistance, or the Low- Income Home Energy Assistance Program (LIHEAP). Eligible subscribers living on tribal lands qualify to receive federal Lifeline support if: (1) they qualify under state criteria in a state that provides Lifeline support; (2) they certify that they receive benefits from one of the five federal programs listed above; or (3) they participate in one of the following federal assistance programs: Bureau of Indian Affairs’ (BIA) general assistance program, Tribally Administered Temporary Assistance for Needy Families (TANF), National School Lunch Program’s free lunch program, or Head Start (meeting the income- qualifying standard). 40 7- 2 2. Lifeline Support Under the Commission’s rules, there are four tiers of federal Lifeline support. The first tier represents a waiver of the federal subscriber line charge, which may range from $3.50 to $5.00 per month. All eligible subscribers receive first tier support. Second tier support is a $1.75 per month reduction in the basic local rate, and it is available if all relevant non- federal regulatory authorities approve such a reduction. (All fifty states have approved.) The third tier of federal support is based on the amount of additional state support mandated by the relevant state or otherwise provided by carriers. Federal support is available to match one half of the non- federal support provided, up to a maximum of $1.75 in federal support, assuming that the carrier has all necessary approvals to pass on the full amount of this total support in discounts to subscribers. Eligible subscribers living on tribal lands also qualify to receive a fourth tier of Lifeline support if they meet the eligibility standards described above. Tier four support provides up to an additional $25 per month towards reducing basic local service rates. This enhanced support should bring basic monthly rates down to $1 for most Lifeline customers on tribal lands. 3. LinkUp Support The Commission’s LinkUp program provides qualified low- income individuals with a federally-financed 50% discount (up to a maximum $30 discount) on initial connection charges. These subscribers also may choose to schedule deferred payments of up to $200 over a one- year period, with the customary interest charges paid by federal support. In addition, eligible residents of tribal lands may receive support to fully cover any charges between $60 and $130, representing up to a maximum of $100 in discounts on initial connection charges of $130 or more. 4. Services Basic service must include, at a minimum: single- party service, voice- grade access to the public switched telephone network, Dual Tone Multifrequency signaling or its functional digital equivalent, access to emergency services, access to operator services, access to interexchange service, access to directory assistance, and toll limitation. The federal program compensates eligible telecommunications carriers for toll limitation based on the carrier's incremental cost of providing toll- limitation services (TLS). The FCC monitors subscriber participation and telephone usage to determine program benefits and costs. Historical tables for subscribership and carrier payments by state can be downloaded from the Monitoring Report’s section of the FCC- State Link web site, . 41 7- 3 Table 7.1 reports Lifeline monthly support by state or jurisdiction as of April 2001. The table shows both federal and state support, and indicates the additional contribution from the federal program to reduce local rates where states have authorized statewide or carrier specific intrastate local rate reductions. Table 7.1 indicates both the federal and state combined "minimum" local rate reduction. This table does not reflect changes in support that resulted from the implementation of the CALLS order. Table 7.2 reports annual historical Lifeline subscribership data by state or jurisdiction for years 1989 through 2000. Historical data from the inception of the program in 1985 through 1988 may be found on the Monitoring Report’s section of the FCC- State Link web site as mentioned above. Table 7.3 reports annual historical LinkUp subscribership data by state or jurisdiction for years 1989 through 2000. LinkUp program participation was first certified in 1987. Historical data for 1987 and 1988 are available in the Monitoring Report’s section of the FCC- State Link web site as mentioned above. Table 7.4 reports annual historical Lifeline payments to carriers in each state or jurisdiction and shows total reimbursements to each state or jurisdiction. The report provides Lifeline support totals for payments made to subscribers through local rate discounts. The payments shown in these tables include TLS and PICC data; however, these tables do not include state or local rate contributions. Table 7.5 reports annual historical data for the LinkUp connection assistance payments to carriers in each state or jurisdiction. The LinkUp program includes connection discounts reflected in the reimbursements to local carriers. Table 7.6 reports low- income support, by state or jurisdiction, for Lifeline and LinkUp payments between January 1998 and December 2000. Total carrier payments data include local rate reductions for the presubscribed interexchange carrier charges (PICCs), and the carrier's incremental cost of providing toll- limitation services in each state or jurisdiction. American Indian and Native American tribal data are also reported in this table showing the 2000 data. Data are not available for previous years due to the October 2000 implementation of $1.00 rate. Data will appear only for states where eligible subscribers living on tribal lands qualify to receive low- income support. 42 7- 4 43 Table 7.1 Lifeline Monthly Support by State or Jurisdiction (As of April 2001) Basic Additional Total Total Federal State or Jurisdiction Federal State Federal Federal and State Support Support Match Support Support Alabama $6.10 $3.50 $1.75 $7.85 $11.35 Alaska 6.10 3.50 1.75 7.85 11.35 American Samoa 6.10 0.00 0.00 6.10 6.10 Arizona 6.10 3.50 1.14 7.24 10.74 Arkansas 6.10 0.00 0.00 6.10 6.10 California 6.10 3.50 1.75 7.85 11.35 Colorado 6.10 3.50 1.75 7.85 11.35 Connecticut 6.10 1.17 0.58 6.68 7.85 Delaware 6.10 0.00 0.00 6.10 6.10 District of Columbia 6.10 3.50 1.75 7.85 11.35 Florida 6.10 3.50 1.75 7.85 11.35 Georgia 6.10 3.50 1.75 7.85 11.35 Guam 6.10 3.50 1.75 7.85 11.35 Hawaii 6.10 0.00 0.00 6.10 6.10 Idaho 6.10 3.50 1.75 7.85 11.35 Illinois 6.10 1.50 0.75 6.85 8.35 Indiana 6.10 0.00 0.00 6.10 6.10 Iowa 6.10 0.00 0.00 6.10 6.10 Kansas 6.10 3.50 1.75 7.85 11.35 Kentucky 6.10 3.50 1.75 7.85 11.35 Louisiana 6.10 0.00 0.00 6.10 6.10 Maine 6.10 3.50 1.75 7.85 11.35 Maryland 6.10 3.50 1.75 7.85 11.35 Massachusetts 6.10 6.00 1.75 7.85 13.85 Michigan 6.10 2.00 1.00 7.10 9.10 Minnesota 6.10 0.00 0.00 6.10 6.10 Mississippi 6.10 3.50 1.75 7.85 11.35 Missouri 6.10 0.00 0.00 6.10 6.10 Montana 6.10 3.50 1.75 7.85 11.35 Nebraska 6.10 3.50 1.75 7.85 11.35 Nevada 6.10 3.50 1.75 7.85 11.35 New Hampshire 6.10 0.00 0.00 6.10 6.10 New Jersey 6.10 0.00 0.00 6.10 6.10 New Mexico 6.10 3.50 1.75 7.85 11.35 New York 6.10 3.50 1.75 7.85 11.35 North Carolina 6.10 3.50 1.75 7.85 11.35 North Dakota 6.10 3.50 1.75 7.85 11.35 Northern Mariana Islands 6.10 0.00 0.00 6.10 6.10 Ohio 6.10 0.00 0.00 6.10 6.10 Oklahoma 6.10 1.17 0.58 6.68 7.85 Oregon 6.10 3.50 1.75 7.85 11.35 Pennsylvania 6.10 2.50 1.25 7.35 9.85 Puerto Rico 6.10 0.00 0.00 6.10 6.10 Rhode Island 6.10 3.50 1.75 7.85 11.35 South Carolina 6.10 3.50 1.75 7.85 11.35 South Dakota 6.10 0.00 0.00 6.10 6.10 Tennessee 6.10 3.50 1.75 7.85 11.35 Texas 6.10 3.50 1.75 7.85 11.35 Utah 6.10 3.50 1.75 7.85 11.35 Vermont 6.10 3.50 1.75 7.85 11.35 Virginia 6.10 3.50 1.75 7.85 11.35 Virgin Islands 6.10 7.05 1.75 7.85 14.90 Washington 6.10 3.50 1.75 7.85 11.35 West Virginia 6.10 2.00 1.00 7.10 9.10 Wisconsin 6.10 1.17 0.58 6.68 7.85 Wyoming 6.10 3.50 1.75 7.85 11.35 Source: Universal Service Administrative Company (USAC). 7 - 5 44 45 Table 7.2 Lifeline Assistance - Subscribers by State or Jurisdiction State or Jurisdiction 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Alabama 0 0 0 0 0 0 2,648 11,052 14,346 17,201 18,676 21,488 Alaska 0 0 0 0 0 887 1,445 1,684 1,761 2,530 4,321 8,897 American Samoa 0 0 0 0 0 0 0 0 0 156 427 657 Arizona 5,959 6,723 6,214 5,748 7,587 9,146 9,820 10,679 9,438 21,461 22,118 25,264 Arkansas 6,262 6,703 7,295 7,479 7,370 6,859 7,988 9,730 8,926 8,870 8,843 9,228 California 1,467,859 1,578,458 1,792,884 2,000,234 2,327,740 2,534,160 2,817,982 3,032,960 3,000,571 3,105,855 3,157,706 3,196,661 Colorado 0 9,897 17,871 20,110 18,814 18,136 16,992 22,195 22,452 21,950 23,995 26,644 Connecticut 0 0 0 0 15,294 50,510 62,982 62,610 61,683 59,547 61,437 64,745 Delaware 0 0 0 0 0 0 0 0 0 368 606 756 District of Columbia 2,964 2,894 2,866 5,422 12,344 11,572 10,252 9,888 7,580 9,404 10,593 11,236 Florida 0 0 0 0 0 61,442 108,431 134,258 129,723 131,749 129,980 134,263 Georgia 0 0 31,681 58,497 67,112 72,548 79,545 79,606 75,341 73,660 74,825 73,037 Guam 0 0 0 0 0 0 0 0 0 313 905 2,033 Hawaii 6,378 6,081 5,950 5,862 6,005 6,200 6,444 6,731 6,465 9,008 12,590 15,381 Idaho 7,861 8,186 8,411 8,149 8,212 7,090 7,347 7,526 7,408 6,907 14,780 19,696 Illinois 0 0 0 0 26 0 0 0 0 29,104 49,347 57,821 Indiana 0 0 0 0 0 0 0 0 0 12,439 19,058 19,471 Iowa 0 0 0 0 0 0 0 0 0 2,460 6,105 11,832 Kansas 0 0 0 0 0 0 0 0 0 4,260 5,591 8,540 Kentucky 26 0 0 0 0 0 0 0 0 5,044 25,040 39,550 Louisiana 0 0 0 0 0 0 0 0 0 5,838 10,435 15,476 Maine 33,308 44,392 53,020 63,411 70,029 68,482 62,949 61,177 63,553 63,407 67,401 75,186 Maryland 2,930 5,465 5,203 5,395 5,228 5,226 4,663 4,028 3,964 3,784 3,885 3,948 Massachusetts 0 87,285 131,635 143,216 160,221 165,723 167,182 162,384 156,294 161,657 167,699 165,520 Michigan 41,121 66,053 96,044 116,398 130,586 138,870 135,599 131,786 129,337 129,208 132,432 141,536 Minnesota 45,625 57,529 57,075 51,151 55,380 59,431 51,089 48,494 47,575 49,073 54,787 54,717 Mississippi 0 0 2,153 2,405 4,493 8,438 9,717 9,282 8,321 10,471 13,370 16,694 Missouri 15,187 14,639 16,980 17,295 17,356 15,807 13,897 11,272 10,368 7,885 10,709 18,980 Montana 5,023 5,507 5,405 5,698 6,617 6,744 6,813 8,031 7,613 7,963 9,570 11,060 Nebraska 0 0 0 0 0 0 0 0 0 9,650 11,434 14,728 Nevada 4,497 5,702 5,748 6,339 7,528 8,927 9,408 8,472 9,284 3,438 10,551 17,486 New Hampshire 0 0 0 0 0 0 0 0 0 2,581 5,205 6,453 New Jersey 0 0 0 0 0 0 0 0 0 5,478 6,434 29,095 New Mexico 11,722 12,770 15,190 18,660 28,742 32,244 28,380 30,075 30,314 30,816 32,843 36,859 New York 271,386 327,808 393,684 456,174 522,684 592,705 705,871 756,657 698,267 703,001 657,267 586,742 North Carolina 15,852 14,996 15,812 21,208 23,496 23,446 22,791 23,086 22,595 29,640 44,434 62,475 North Dakota 0 10,037 10,610 10,664 10,029 9,411 8,657 7,146 7,369 10,895 11,968 13,196 Northern Mariana Is. 0 0 0 0 0 0 0 0 0 192 494 427 Ohio 15,420 14,885 15,712 33,450 44,801 47,126 54,706 58,392 60,366 69,358 109,202 167,212 Oklahoma 0 0 0 0 0 0 0 532 532 1,521 2,454 17,101 Oregon 22,330 21,551 23,064 25,229 28,305 30,475 35,820 34,804 31,213 27,953 28,934 30,371 Pennsylvania 0 0 0 0 0 0 0 4,797 7,114 23,202 40,168 48,644 Puerto Rico 0 0 0 0 0 0 0 0 0 10,168 16,895 17,720 Rhode Island 14,017 15,757 23,765 26,906 38,672 39,992 40,835 42,524 43,881 45,066 46,244 47,412 South Carolina 0 0 0 0 0 0 10,624 16,498 18,386 22,222 21,091 20,820 South Dakota 4,657 4,764 4,924 5,018 5,076 3,561 3,690 3,718 3,708 10,698 11,532 13,255 Tennessee 0 0 0 18,749 20,419 20,721 19,934 19,926 18,819 22,915 30,347 38,839 Texas 21,055 33,698 48,453 96,405 103,232 136,352 165,609 190,095 193,444 210,672 236,934 258,810 Utah 14,746 16,006 21,565 27,717 28,379 28,157 26,930 24,088 22,625 20,096 19,237 19,394 Vermont 17,013 18,044 20,661 21,895 22,973 24,322 25,624 24,791 25,356 26,475 28,464 29,740 Virgin Islands 0 0 0 0 316 594 253 296 471 567 402 511 Virginia 14,895 16,201 17,365 19,143 21,293 22,100 20,744 22,180 23,187 22,040 22,306 21,658 Washington 34,685 49,985 68,235 74,879 85,571 90,148 87,276 84,149 63,965 61,563 61,809 68,142 West Virginia 4,930 4,490 4,262 4,115 4,160 4,704 4,230 4,336 5,164 5,320 5,546 5,294 Wisconsin 31 7 54,137 55,829 54,576 59,744 58,071 50,714 50,894 42,514 59,331 62,715 Wyoming 0 0 416 1,366 1,271 1,119 818 776 864 1,113 1,337 1,363 Industry Total 2,107,739 2,466,513 2,984,290 3,440,216 3,971,937 4,423,119 4,914,056 5,233,425 5,110,537 1/ 5,380,726 5,640,094 2/ 5,886,779 2/ 1/ Subscriber data was not actually collected in 1997. USAC used estimated number of subscribers for all states. 2/ Average number of subscribers reported for 1999 through 2000 for companies requesting reimbursement (including true- ups through March 2001). 99% of all eligible companies have reported to USAC for reimbursement at this time. Source: Universal Service Administrative Company (USAC). 7 - 6 46 Table 7.3 LinkUp Assistance - Subscribers by State or Jurisdiction State or Jurisdiction 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Alabama 1,810 1,927 2,182 1,381 736 308 276 362 NA 2,277 1,590 1,462 Alaska 0 0 0 0 0 395 777 732 NA 917 982 752 American Samoa 0 0 0 0 0 0 0 0 NA 122 89 53 Arizona 138 416 206 88 257 367 387 906 NA 528 4,805 4,884 Arkansas 4,846 5,240 6,522 7,067 12,082 16,124 8,549 11,577 NA 8,183 5,395 3,270 California 0 180 0 0 0 0 0 0 NA 1,542,297 1,325,904 1,216,706 Colorado 0 585 1,749 1,614 1,257 859 593 2,216 NA 2,537 1,278 1,113 Connecticut 2,737 3,499 6,661 9,164 10,316 17,176 18,410 13,934 NA 8,938 6,829 4,442 Delaware 0 0 0 0 0 0 7 406 NA 132 62 48 District of Columbia 531 514 510 1,145 1,863 1,675 1,920 1,784 NA 26 28 3 Florida 3,924 3,342 3,824 4,690 2,811 2,290 1,639 3,831 NA 9,799 9,266 9,652 Georgia 0 0 13,052 28,108 21,446 20,753 20,656 15,368 NA 10,701 8,723 4,348 Guam 0 0 0 0 0 0 0 0 NA 201 703 787 Hawaii 87 905 1,326 1,708 2,047 2,746 3,989 3,276 NA 6,408 10,126 10,511 Idaho 64 240 362 396 465 658 571 671 NA 793 1,231 2,169 Illinois 3,963 23,213 11,721 0 21,278 24,365 15,794 10,077 NA 12,304 12,934 12,949 Indiana 1,681 1,475 2,747 4,939 4,782 5,010 3,001 4,318 NA 4,605 5,507 5,978 Iowa 5,997 6,228 5,522 5,221 4,784 4,382 3,249 2,575 NA 2,093 1,449 1,158 Kansas 613 722 582 635 557 493 435 421 NA 1,385 1,483 3,014 Kentucky 6,951 6,633 8,931 11,660 10,963 11,819 13,902 14,173 NA 7,550 9,815 8,368 Louisiana 17,186 28,356 18,693 12,992 7,053 4,943 3,275 1,571 NA 3,911 1,358 989 Maine 7,244 10,128 12,132 5,576 14,450 19,363 14,798 20,783 NA 21,640 25,887 26,133 Maryland 243 4,985 3,540 3,168 2,772 2,837 2,613 2,091 NA 1,264 908 637 Massachusetts 0 8,569 4,366 4,661 17,390 19,464 18,601 11,727 NA 5,864 10,036 6,795 Michigan 7,572 23,675 36,639 40,339 36,512 34,640 26,198 20,097 NA 18,587 19,501 19,215 Minnesota 734 949 787 427 443 1,871 834 832 NA 1,058 521 354 Mississippi 1,558 1,663 1,369 932 2,371 4,236 4,151 2,974 NA 1,819 1,224 952 Missouri 2,067 1,105 840 766 735 1,633 742 627 NA 4,777 1,150 6,510 Montana 1,624 1,607 1,157 1,181 1,291 1,253 988 1,909 NA 1,676 1,539 2,014 Nebraska 438 526 688 878 650 522 496 331 NA 707 1,181 1,947 Nevada 79 324 487 562 866 685 708 640 NA 117 3,284 3,615 New Hampshire 351 407 1,009 1,544 1,805 1,570 1,312 1,246 NA 1,315 1,374 827 New Jersey 452 524 580 696 565 567 342 237 NA 1,541 474 1,086 New Mexico 2,461 3,173 4,178 5,848 9,963 12,600 12,277 9,171 NA 7,894 7,552 3,134 New York 44,221 188,182 241,477 290,856 238,856 290,922 327,123 346,089 NA 199,181 53,961 41,660 North Carolina 4,661 2,100 2,348 2,175 1,762 1,207 841 569 NA 2,408 3,237 3,474 North Dakota 499 313 373 337 398 355 355 220 NA 1,446 1,026 1,115 Northern Mariana Islands 0 0 0 0 0 0 0 0 NA 1,475 3,891 2,704 Ohio 11,838 11,157 18,239 37,191 46,028 40,071 29,338 23,196 NA 19,058 25,880 47,801 Oklahoma 0 728 1,582 1,271 1,281 1,087 1,040 1,260 NA 3,121 1,496 3,827 Oregon 1,352 3,664 3,657 4,588 6,335 7,144 8,043 7,862 NA 5,901 4,863 8,335 Pennsylvania 13,702 79,532 85,695 97,585 94,897 100,651 99,105 92,128 NA 63,713 54,251 28,728 Puerto Rico 2,519 5,523 4,308 3,886 3,138 3,455 4,116 3,640 NA 3,870 1,783 1,210 Rhode Island 584 1,023 960 1,483 2,002 2,808 2,728 2,100 NA 1,766 1,565 1,375 South Carolina 3,037 1,535 2,265 1,897 2,113 2,053 1,495 1,158 NA 2,270 2,052 1,699 South Dakota 1,038 542 443 439 362 451 369 221 NA 2,330 1,698 2,083 Tennessee 6,613 3,278 5,418 4,126 5,203 5,004 3,561 3,684 NA 4,190 6,023 5,139 Texas 15,553 22,587 30,915 41,381 44,184 66,010 72,210 75,708 NA 121,794 121,925 117,985 Utah 1,043 387 1,781 6,286 4,843 3,758 3,525 5,584 NA 2,880 2,061 1,242 Vermont 0 1,349 2,073 2,104 2,217 2,485 2,074 1,396 NA 1,366 1,500 2,384 Virgin Islands 0 0 0 0 38 111 35 13 NA 199 106 100 Virginia 5,957 9,598 14,642 14,523 15,701 15,797 15,847 14,428 NA 10,261 7,702 4,619 Washington 0 3,787 30,134 34,413 37,419 43,429 41,462 45,284 NA 27,780 27,456 29,003 West Virginia 481 327 363 322 586 577 657 997 NA 488 865 759 Wisconsin 17,555 36,444 40,515 40,942 37,380 34,903 28,209 21,937 NA 25,933 27,187 23,629 Wyoming 500 169 95 94 109 82 56 17 NA 21 50 199 Industry Total 206,504 513,335 639,645 743,285 737,362 837,964 823,679 808,354 NA 1/ 2,195,417 2/ 1,834,766 2/ 1,694,945 2/ NA - Not Available. 1/ Subscriber data was not actually collected in 1997. 2/ Subscribers are reported for January through December 2000 for companies requesting reimbursement. Only 95% of all eligible companies have reported at this time. Source: Universal Service Administrative Company (USAC). 7 - 7 47 Table 7.4 Lifeline Assistance Annual Payments by State or Jurisdiction Cumulative State or Jurisdiction 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total Alabama $0 $0 $0 $0 $0 $0 $56,744 $372,371 $602,521 $1,449,303 $1,590,349 $1,907,509 $5,978,797 Alaska 0 0 0 0 0 24,330 55,101 69,116 73,941 205,701 383,225 582,693 1,394,107 American Samoa 0 0 0 0 0 0 0 0 0 8,167 26,893 41,388 76,448 Arizona 117,744 136,518 127,419 144,290 188,216 307,699 346,595 383,752 396,391 1,606,287 1,720,671 2,045,764 7,521,346 Arkansas 251,116 276,742 301,087 316,837 310,979 295,293 301,808 362,497 374,881 585,933 594,392 596,488 4,568,053 California 29,082,569 32,228,252 36,072,671 40,381,514 47,512,283 52,461,134 57,460,181 62,231,440 63,011,988 244,372,788 249,506,436 264,488,604 1,178,809,860 Colorado 405,491 173,248 751,056 843,519 802,077 775,750 727,801 829,354 942,972 1,861,235 2,077,456 2,407,587 12,597,546 Connecticut 0 0 0 0 57,033 1,493,569 2,586,972 2,660,608 2,590,702 3,660,711 4,344,924 4,895,998 22,290,517 Delaware 0 0 0 0 0 0 0 0 0 23,198 38,185 51,796 113,179 District of Columbia 112,180 99,980 90,500 128,348 312,684 429,396 313,998 293,322 318,368 769,414 876,337 952,218 4,696,745 Florida 0 0 0 0 0 1,290,282 4,396,137 5,191,213 5,448,368 10,368,040 10,962,971 11,943,361 49,600,372 Georgia 0 0 794,088 2,247,925 2,764,461 3,003,777 3,315,787 3,383,638 3,164,320 6,187,332 6,313,688 6,461,239 37,636,255 Guam 0 0 0 0 0 0 0 0 0 18,061 68,177 170,743 256,981 Hawaii 203,052 198,943 186,490 182,555 190,166 196,554 202,107 273,471 271,524 551,150 805,625 1,074,352 4,335,989 Idaho 328,732 347,270 358,515 355,127 349,344 328,583 321,830 320,845 311,156 576,367 1,306,602 1,823,306 6,727,677 Illinois 0 18 414,457 0 0 0 0 0 0 1,856,606 3,285,371 4,419,690 9,976,142 Indiana 0 0 0 0 0 0 0 0 0 795,195 1,231,284 1,205,989 3,232,468 Iowa 0 0 0 0 0 0 0 0 0 161,566 409,513 751,517 1,322,596 Kansas 0 0 0 0 0 0 0 0 38 340,226 474,877 779,530 1,594,671 Kentucky 0 0 0 0 0 0 0 0 0 315,271 2,128,575 3,482,650 5,926,496 Louisiana 0 0 0 0 0 0 0 0 0 379,066 681,067 1,071,618 2,131,751 Maine 1,324,559 1,720,591 2,165,485 2,605,855 2,902,206 2,959,351 2,652,482 2,737,366 2,669,234 5,338,338 5,711,223 6,750,824 39,537,514 Maryland 120,042 220,346 216,947 213,303 221,574 218,052 211,819 180,079 166,473 317,814 326,288 352,177 2,764,914 Massachusetts 0 2,552,254 5,126,895 5,996,798 6,598,801 7,064,939 7,146,757 6,952,050 6,564,336 13,628,125 14,207,842 14,821,315 90,660,112 Michigan 433,487 1,348,992 2,163,526 2,742,396 3,081,708 3,351,293 3,288,234 3,203,533 3,104,079 9,761,204 10,059,023 11,399,192 53,936,667 Minnesota 1,658,815 2,256,567 2,416,108 2,258,780 2,295,299 2,332,178 2,170,211 2,080,597 1,998,168 3,534,194 3,471,610 3,650,772 30,123,299 Mississippi 0 0 16,962 29,506 109,841 339,633 399,633 401,106 349,468 887,098 1,136,422 1,489,290 5,158,959 Missouri 633,736 620,605 648,102 711,138 699,011 653,539 590,212 486,547 435,466 551,102 754,501 1,466,029 8,249,988 Montana 192,095 234,696 228,885 234,046 266,870 281,441 290,312 328,627 319,745 677,995 824,313 932,381 4,811,406 Nebraska 0 0 0 0 0 0 0 0 0 619,118 820,980 1,225,081 2,665,179 Nevada 113,400 122,289 134,038 147,595 172,658 194,440 206,654 196,662 215,016 214,714 754,020 1,319,500 3,790,986 New