It’s a good time to start thinking about your 2014 FCC Form 499 revenue projections, particularly if you are an interconnected VoIP provider. Many VoIP providers have historically calculated their interstate revenues based on the FCC’s VoIP “safe harbor” of 64.9%. Those revenues are subject to the Federal Universal Service Fund (FUSF) fee as well as other federally imposed fees. Combined, these fees currently amount to roughly 17% of a carrier’s interstate revenues, so it makes sense to consider ways to minimize those revenues and the associated fees.
One way a VoIP carrier can to do this is to conduct a traffic study to determine whether its traffic patterns justify a lower interstate allocation. For instance, if the interstate percentage of a carrier’s VoIP traffic is actually 50%, rather than the 64.9% safe harbor, the carrier would could reduce reported interstate revenues by almost $150,000 for every $1 million in total VoIP revenue, saving over $25,000 in federal assessments.
Now is a good time for VoIP carriers to consider whether switching from the safe harbor to a traffic study interstate allocation would help their bottom lines. On the next 499Q, due November 1, carriers will report projected revenues for the first quarter of 2014, so changing allocation methods on that report will provide for a full year under the new method. Keep in mind that under the FCC’s 499 reporting instructions, a VoIP provider’s choice of interstate allocation methods (e.g., safe harbor vs. traffic study) must be consistent between the quarterly projections on the 499Qs and the following year’s 499A true up. So, a carrier that uses the safe harbor method on the November 1 499Q for Q1 2014 projected revenues would have to likewise use the safe harbor for Q1 2014 actual revenues on the 499A filed in 2015, even if it subsequently switched to a traffic study allocation method for its Q2 – Q4 projections.
Confusing? No one ever said federal regulations were straightforward! But understanding the rules is crucial if you want to stay competitive by minimizing your federal assessments.
Technologies Management, Inc. is hosting the 2013 Fall Regulatory Seminar October 24 & 25, in Maitland, FL, and FCC Form 499 will be just one of the featured topics in the Seminar curriculum.