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United States General Accounting Office: 
GAO: 

Report to the Ranking Minority Member, Subcommittee on 
Telecommunications and the Internet, Committee on Energy and Commerce, 
House of Representatives. 

February 2002: 

Telecommunications: 

Federal and State Universal Service Programs and Challenges to Funding: 

GAO-02-187: 

GAO Highlights: 

Highlights of GAO-02-187, a report to the Ranking Minority Member, 
Subcommittee on Telecommunications and the Internet, Committee on 
Energy and Commerce, House of Representatives. 

Why GAO Did This Study: 

GAO was asked to provide an overview of current federal and state 
universal service support programs and to discuss the potential impact 
of emerging Internet-based voice communications on how these programs 
are funded. The long-standing goal of universal service—affordable 
residential telephone service for all Americans—has resulted in a 
variety of federal and state support programs. Over the years, these 
programs have evolved as the telephone industry’s structure changed and 
universal service benefits were extended to new groups, such as schools 
and libraries. 

What GAO Found: 

Federal and state universal service programs have helped make telephone 
service affordable to a wide range of beneficiaries: low-income and 
hearing-and speech-impaired customers; schools, libraries, and rural 
health care providers; and rural localities where the costs of providing
telephone service are high. The funding mechanisms for these programs
generally depend on the revenues of telecommunications carriers. The
emergence of new Internet-based voice communications may pose 
challenges to how these programs are funded in the future. 

Federal universal service programs are funded by mandatory 
contributions made by telecommunications carriers and certain other 
providers of telecommunications. The amount of the carriers’ 
contributions is a percentage, approved by FCC, of their interstate and
international telecommunications revenues. Carriers can and often do 
pass these costs to their customers. State universal service programs, 
which supplement the federal programs, also can be funded with fees 
that are passed on to consumers. In addition, states promote universal
service through various rate-setting strategies, such as setting 
business rates significantly higher than residential rates in order to 
subsidize residential customers. 

Under current federal regulations, revenues from Internet services are 
not included in the calculations for universal service contributions. 
Although this new technology is not widespread yet, it may eventually 
become an attractive alternative and could affect the revenue base from 
which universal service programs are funded. Some industry analysts 
question the long-term viability of the current funding mechanisms for 
universal service and believe that these mechanisms should be 
reassessed in light of the changing telecommunications environment. 

FCC agreed with the information presented in the report. 

Figure: Universal Service: Current Funding Mechanisms and 
Beneficiaries: 

[See PDF for image] 

Carriers and Customers: 
Traditional telephony: Residential and Business; Universal service 
contribution; 
Internet-based telephony: Residential and Business; No universal 
service contribution. 

Government: 
Federal: Funds administered by nonprofits; 
State: programs. 

Beneficiaries: 
Low-income; 
Hearing and speech impaired; 
Rural and high-cost areas; 
Schools and libraries; 
Rural health care providers. 

[End of figure] 

This is a test for developing highlights for a GAO report. The full 
report, including GAO's objectives, scope, methodology, and analysis is 
available at [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-187]. 
For additional information about the report, contact Peter Guerrero 
(202-512-2834). To provide comments on this test highlights, contact 
Keith Fultz (202-512-3200) or E-mail HighlightsTest@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Five Federal Programs Are Designed to Further Universal Service: 

States Implement a Variety of Programs Designed to Further Universal 
Service: 

States Use Several Rate-Setting Mechanisms to Promote Affordable Basic 
Local Telephone Service: 

Converging Communications Technologies Pose Long-Term Challenges to 
Federal Funding of Universal Service: 

Conclusion: 

Scope and Methodology: 

Agency Comments: 

Appendix I: Description of Sample Design, Local Telephone Rates, and 
Estimated Costs of Providing Service: 

Subsidies in Local Telephone Rates: 

Sample Design for Gathering Local Telephone Rate and Cost Data: 

Local Telephone Rates: 

The Cost of Providing Local Telephone Service and FCC’s Hybrid Cost 
Proxy Model: 

Appendix II: Aggregate Results of Survey of Public Utility Commissions: 

Appendix III: State-Level Universal Service Programs: 

Appendix IV: Local Telephone Rates: 

Appendix V: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Acknowledgments: 

Tables: 

Table 1: Summary of the Federal Universal Service Programs: 

Table 2: Presence of State-Level Universal Service Programs for Each 
State and the District of Columbia: 

Table 3: Residential and Single-Line Business Monthly Tariff Local 
Telephone Rates for Sampled Places by State: 

Figures: 

Figure 1: Universal Service Funding Mechanisms and Beneficiaries: 

Figure 2: State-Level Universal Service Programs in all 50 States and 
the District of Columbia: 

Figure 3: Average Residential Rates and Estimated Costs for Suburbs and 
Rural Places (Percent Difference from Central City): 

Figure 4: Average Monthly Single-Line Business and Residential Local 
Telephone Rates for Central City, Suburb, and Rural Places: 

Abbreviations: 

ETC: eligible telecommunications carrier: 

FCC: Federal Communications Commission: 

IP: Internet Protocol: 

MSA: Metropolitan Statistical Area: 

NECA: National Exchange Carrier Association: 

TRS: Telecommunications Relay Services: 

USAC: Universal Service Administrative Company: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

February 4, 2002: 

The Honorable Edward J. Markey: 
Ranking Minority Member: 
Subcommittee on Telecommunications and the Internet: 
Committee on Energy and Commerce: 
House of Representatives: 

Dear Mr. Markey: 

Universal service traditionally has meant providing residential 
customers with affordable, nationwide access to basic telephone 
service. Two factors pose challenges for achieving universal service. 
First, low-income households subscribe to basic telephone service at 
lower levels than households with higher incomes. For example, while 
approximately 94 percent of all households have telephone service, only 
80 percent of households with incomes below $5,000 have telephone 
service. Second, as population density decreases, the cost of providing 
basic telephone service increases. Rates based on cost would be higher 
for customers in rural areas than for customers in more densely 
populated areas. As a result, universal service programs traditionally 
targeted support to low-income customers and customers in rural and 
other areas where the costs of providing basic telephone service are 
high. Through the Telecommunications Act of 1996, the Congress extended 
universal service support to include services for eligible schools, 
libraries, and rural health care providers. Universal service programs 
are generally funded through mandatory contributions from 
telecommunications companies. However, 6 years after the 1996 act, 
emerging technologies pose challenges for long-term funding of these 
programs. 

Because of your interest in universal service policy, you requested 
that we provide information on (1) the federal universal service 
programs and how they operate; (2) the state universal service programs 
and how they operate; (3) how states set local telephone rates among 
various types of customers and services to promote affordable service 
and how rates and costs vary across urban, suburban, and rural areas; 
and (4) how telephone service via Internet-based technology is 
developing and its potential impact on funding universal service 
programs. 

To respond to the first objective, we interviewed officials from the 
Federal Communications Commission (FCC) and two not-for-profit 
organizations that administer the day-to-day operations of federal 
universal service programs within FCC’s framework of orders and rules. 
We also reviewed relevant documents regarding the funding and operation 
of the federal universal service programs. To assess state-level 
universal service programs, we surveyed 51 public utility commissions 
in all 50 states and the District of Columbia regarding their universal 
service programs. We asked the commissions whether their states 
operated various universal service programs and how those programs are 
funded. We received responses from all commissions. For the third 
objective, we asked the commissions about various aspects of their rate-
setting mechanisms and about the rates for local telephone service in a 
sample of places throughout each state. In addition, we used a model 
developed by FCC that provides estimates of the cost of providing local 
telephone service to discern how cost varies across urban, suburban, 
and rural areas. Finally, to respond to the fourth objective, we 
conducted semi-structured interviews with industry participants and 
academics familiar with the development of telephone service via 
Internet-based technology and researched the technical and regulatory 
aspects of the provision of these services. Our scope and methodology 
are discussed in more detail at the end of this letter. 

Background: 

Title 1 of the Communications Act of 1934 sets forth the nation’s 
telecommunications policy, including making communication services 
available “so far as possible, to all the people of the United States.” 
Early efforts by FCC, state regulators, and industry to promote 
universal service generally began in the 1950s.[Footnote 1] At that 
time, increasing amounts of the costs associated with providing local 
telephone service were recovered from rates for long distance services. 
This had the effect of lowering local telephone rates and raising long 
distance rates, which was intended to make basic local telephone 
service more affordable. Because American Telephone and Telegraph 
Company (AT&T) provided both nationwide long distance service and local 
telephone service to approximately 80 percent of the nation’s telephone 
subscribers, universal service was largely promoted by shifting costs 
between different customers and services. 

Following the divestiture of AT&T’s local telephone companies in 1984, 
[Footnote 2] FCC made several changes to universal service policy. 
First, the costs associated with local telephone service could no 
longer be shifted internally within AT&T. FCC therefore implemented 
federal access charges—fees that long distance companies pay to local 
telephone companies to originate and terminate long distance telephone 
calls over the local telephone network. Access charges were intended to 
not only recover the cost of originating and terminating long distance 
telephone calls over the local telephone network, but also to subsidize 
local telephone service. Second, FCC initiated several federal programs 
that targeted support to low-income customers to bring the rates for 
basic telephone service within their reach. At this time, federal 
universal service programs were for the most part funded through 
charges imposed on long distance companies. 

Twelve years after divestiture, the Congress made significant changes 
to universal service policy through the Telecommunications Act of 1996. 
First, the 1996 act provided explicit statutory support for federal 
universal service policy. Second, the 1996 act extended the scope of 
federal universal service—beyond the traditional focus on low-income 
consumers and consumers in rural and high-cost areas—to include 
eligible schools, libraries, and rural health care providers. Third, 
the 1996 act altered the federal mechanism for funding universal 
service. Every telecommunications carrier providing interstate 
telecommunications services was required to contribute to federal 
universal service, unless exempted by FCC; and their contributions were 
to be equitable, nondiscriminatory, and explicit. In addition, FCC was 
authorized to require any other providers of interstate 
telecommunications to contribute if the public interest so requires. 
Contributions from both sources are deposited into the federal 
Universal Service Fund, from which disbursements are made for the 
various federal universal service programs. 

Both the federal and state governments implement universal service 
programs. This dual federal-state implementation of universal service 
arises from sections 2(b) and 254 of the Communications Act of 1934. 
[Footnote 3] At the federal level, FCC has issued numerous orders to 
implement the universal service reforms enunciated in the 1996 act. The 
Universal Service Administrative Company (USAC)[Footnote 4] 
administers, on behalf of FCC, the day-to-day operations of federal 
universal service programs, although FCC retains responsibility for 
overseeing the operations of the programs and ensuring compliance with 
its rules. At the state level, public utility commissions generally 
regulate local telephone rates and rates for intrastate long distance 
services. Additionally, these commissions implement many universal 
service programs initiated at the state level. 

Five Federal Programs Are Designed to Further Universal Service: 

At the federal level, universal service programs target support to high-
cost areas, schools and libraries, low-income customers, and rural 
health care providers. In addition, another program—Telecommunications 
Relay Services (TRS)—administered by the National Exchange Carrier 
Association (NECA) furthers universal service by providing hearing-and 
speech-impaired customers with functional equivalent access to 
telephone services.[Footnote 5] USAC and NECA administer two funds, the 
Universal Service Fund and the Interstate TRS Fund, respectively, into 
which specified companies deposit contributions and from which USAC and 
NECA distribute funds for the High Cost, Schools and Libraries, Low 
Income, Rural Health Care, and TRS programs. In the year 2000, NECA and 
USAC disbursed[Footnote 6] approximately $4.45 billion for the five 
federal programs. NECA disbursed $47 million to the 11 providers that 
offer interstate TRS. USAC disbursed approximately $4.4 billion for the 
four programs that it administers. To receive universal service support 
from USAC, a common carrier must be designated as an eligible 
telecommunications carrier (ETC).[Footnote 7] State commissions have 
the primary responsibility for making the ETC designation. Section 
214(e)(1) of the act requires that, to be designated an ETC, the common 
carrier must (1) offer the services that FCC identified as eligible for 
universal service support throughout the service area for which the 
designation is received;[Footnote 8] (2) advertise the availability of 
those services; and (3) use at least some of its own facilities to 
deliver those services. In addition to ETCs, Internet service providers 
and equipment vendors can receive support from USAC for Internet access 
and internal connections associated with the schools and libraries 
program. 

Federal universal service programs and TRS are not funded with annual 
appropriations; rather, funding comes from mandatory contributions made 
by various telecommunications companies pursuant to the act.[Footnote 
9] These contributions can be, and it appears that many of these 
contributions are, passed on to customers, sometimes in the form of a 
line item on customers’ monthly telephone bills. For the TRS program, 
NECA generally collects funds from every common carrier that provides 
interstate telecommunications services, based on each carrier’s 
interstate end-user telecommunications revenues. For the federal 
universal service programs, USAC collects funds from telecommunications 
carriers and certain other providers of interstate telecommunications, 
based on these providers’ interstate and international end-user 
telecommunications revenues, in accordance with FCC regulations. 
[Footnote 10] There are several exceptions to FCC’s contribution 
regulations for the federal universal service programs. Based on 
interim guidance from FCC, wireless providers may elect to contribute 
based on certain “safe harbor” percentages.[Footnote 11] These safe 
harbor percentages range from 1 to 15 percent, depending on the type of 
service provided. FCC also has implemented rules and guidelines meant 
to reduce administrative burdens for interstate companies whose annual 
contributions would be less than $10,000. These companies are not 
required to make contributions to USAC. Furthermore, companies with 
interstate end-user telecommunications revenues that constitute less 
than 8 percent of their combined interstate and international end-user 
telecommunications revenues are required to make contribution to USAC, 
based on their interstate revenues only. Some companies, who currently 
are treated as providers of “information services,” are not required to 
make contributions to universal service. For example, providers of some 
new technologies that are beginning to substitute for traditional 
interstate telecommunications services, such as telephone service via 
Internet-based technology, are not required to contribute to universal 
service, as shown in figure 1. 

Figure: Universal Service: Current Funding Mechanisms and 
Beneficiaries: 

[See PDF for image] 

Carriers and Customers: 
Traditional telephony: Residential and Business; Universal service 
contribution; 
Internet-based telephony: Residential and Business; No universal 
service contribution. 

Government: 
Federal: Funds administered by nonprofits; 
State: programs. 

Beneficiaries: 
Low-income; 
Hearing and speech impaired; 
Rural and high-cost areas; 
Schools and libraries; 
Rural health care providers. 

Source: GAO analysis of FCC and NECA documents. 

[End of figure] 

In table 1, we provide a summary of the federal universal service 
[Footnote 12] programs. 

Table 1: Summary of the Federal Universal Service Programs: 

Programs and subprograms: (1) High Cost; 
Program description: Assists customers living in high-cost, rural, or 
remote areas through financial support to telephone companies, thereby 
lowering rates for local and long distance service; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Based on size and cost characteristics of the companies 
providing service to customers; 
How support reaches beneficiaries: Support allows eligible telephone 
companies to charge lower telephone rates than otherwise would be 
available to customers in high-cost, rural, or remote areas; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: $2.22 billion. 

Programs and subprograms: (1) High Cost; High-Cost Loop Support; 
Program description: Assists rural local telephone companies with high 
local loop costs. Support provided for the intrastate portion of the 
local loop; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Rural companies with local loop costs exceeding 115 
percent of the national average; 
How support reaches beneficiaries: Support allows rural companies to 
charge lower rates for intrastate services (e.g., local telephone 
rates);
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (1) High Cost; High-Cost Support; 
Program description: Assists non-rural local telephone companies with 
high costs, based on FCC’s Hybrid Cost Proxy model of forward-looking 
costs. Support provided for the intrastate portion of the costs; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Non-rural companies in states with a statewide average 
cost per line that exceeds 135 percent of the national average; 
How support reaches beneficiaries: Support allows non-rural companies 
to charge lower rates for intrastate services (e.g., local telephone 
rates); 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (1) High Cost; Local-Switching Support; 
Program description: Assists local telephone companies serving 50,000 
or fewer customers. Support provided to offset a portion of the local 
switching costs; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Small companies serving 50,000 or fewer customers; 
How support reaches beneficiaries: Support allows small companies to 
charge lower rates for intrastate services (e.g., local telephone 
rates); 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (1) High Cost; Long-Term Support; 
Program description: Assists local telephone companies subject to rate-
of-return regulation that participate in NECA’s Common Line Pool with 
high local loop costs. Support provided for the interstate portion of 
the local loop; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Rate-of-return regulated companies that participate in 
NECA’s Common Line Pool; 
How support reaches beneficiaries: Support allows companies subject to 
rate-of-return regulation to charge lower rates for interstate access 
services; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (1) High Cost; Interstate Access Support; 
Program description: Assists local telephone companies subject to price-
cap regulation with high costs. Support provided for the interstate 
portion of the network; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Price-cap regulated companies with high costs; 
How support reaches beneficiaries: Support allows companies subject to 
price cap regulation to charge lower rates for interstate access 
services; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: Program took effect 
July 1, 2000. 

Programs and subprograms: (1) High Cost; Interstate Common Line 
Support; 
Program description: Assists local telephone companies subject to rate-
of-return regulation with high costs. Support provided for the 
interstate portion of the network; 
Administrator: USAC; 
Intended beneficiaries: All customers living in high-cost, rural, or 
remote areas; 
Eligibility: Rate-of-return regulated companies with high costs; 
How support reaches beneficiaries: Support allows companies subject to 
rate-of-return regulation to charge lower rates for interstate access 
services; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: Program adopted 
October 11, 2001, for implementation on July 1, 2002; funding not 
included in total for High Cost programs. 

Programs and subprograms: (2) Schools and Libraries (Federal E-Rate 
Program); 
Program description: Assists eligible schools and libraries through 
discounted telecommunications and information services. Discounts 
available for local and long distance telephone service, Internet 
access, and internal connection projects (e.g., wiring and networking 
schools and libraries). Discounts are between 20 and 90 percent; 
Administrator: USAC; 
Intended beneficiaries: Public and private kindergarten through 12th 
grade schools with endowments less than $50 million; libraries whose 
budgets are not part of a school’s budget; 
Eligibility: Based on economic disadvantage of the population served by 
the school or library as measured by the number of students eligible to 
participate in the national school lunch program and designation of the
location of the school or library as urban or rural; 
How support reaches beneficiaries: Eligible companies are reimbursed 
for providing discounted services to schools and libraries; 
Service provider: Providers of local and long distance services; 
Internet access services; and internal connections; 
Amount paid or due to service providers in 2000: $1.65 billion. 

Programs and subprograms: (3) Low Income; 
Program description: Assists qualifying low-income consumers through 
discounted installation and monthly telephone services and free toll 
limitation service; 
Administrator: USAC; 
Intended beneficiaries: Low-income consumers; 
Eligibility: Based on the consumer’s income or factors directly related 
to income, with criteria established by the state, unless the state 
does not have a program, in which case eligibility is based on 
participation in one of several federal programs; 
How support reaches beneficiaries: Carriers receive support to provide 
discounted or free services for low-income consumers; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: $523 million. 

Programs and subprograms: (3) Low Income; Link-Up; 
Program description: Reduces installation fees for qualifying low-
income consumers. Installation fees are reduced 50 percent, up to $30. 
On tribal lands, an additional $70 is available; 
Administrator: USAC; 
Intended beneficiaries: Low-income consumers; 
Eligibility: [Empty]; 
How support reaches beneficiaries: Carriers are reimbursed for 
providing discounted installation services; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (3) Low Income; Lifeline Support; 
Program description: Reduces monthly fees for qualifying low-income 
consumers. Depending on matching support from the state, monthly fees 
are reduced between $5.25 and $11.35. On tribal lands, an additional 
$25 reduction per month is available; 
Administrator: USAC; 
Intended beneficiaries: Low-income consumers; 
Eligibility: [Empty]; 
How support reaches beneficiaries: Carriers are reimbursed for 
providing discounted telephone service; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (3) Low Income; Toll Limitation Service; 
Program description: Provides free blocking/limitation service to low-
income consumers to prevent or limit the amount of long distance 
telephone calls; 
Administrator: USAC; 
Intended beneficiaries: Low-income consumers; 
Eligibility: [Empty]; 
How support reaches beneficiaries: Carriers are reimbursed for 
providing toll limitation service; 
Service provider: ETC; 
Amount paid or due to service providers in 2000: [Empty]. 

Programs and subprograms: (4) Rural Health Care; 
Program description: Assists health care providers located in rural 
areas through discounts for telecommunications services. Discounts are 
provided to make rates for facilities in rural areas reasonably 
comparable to those in nearby urban areas; 
Administrator: USAC; 
Intended beneficiaries: Citizens and health care providers in rural 
areas; 
Eligibility: Public and not-for-profit health care providers located in 
rural areas; 
How support reaches beneficiaries: Companies are reimbursed for 
providing discounted services to eligible rural health care providers; 
Service provider: Providers of telecommunications services; 
Amount paid or due to service providers in 2000: $5 million. 

Programs and subprograms: (5) Telecommunications Relay Services (TRS); 
Program description: Assists hearing-and speech-impaired customers 
through communications assistants relaying the content of calls between 
users of text telephones and users of traditional telephones. TRS is 
intended to provide “functionally equivalent” access to the telephone 
network for hearing- and speech-impaired individuals; 
Administrator: NECA; 
Intended beneficiaries: Hearing-and speech-impaired customers and 
customers wishing to communicate with hearing- and speech-impaired 
customers; 
Eligibility: [Empty]; 
How support reaches beneficiaries: Companies receive support to provide 
relay service; 
Service provider: Providers of TRS; 
Amount paid or due to service providers in 2000: $47 million 
(Obligated). 

Note 1: USAC is the Universal Service Administrative Company. 

Note 2: NECA is the National Exchange Carrier Association. 

Note 3: ETC is Eligible Telecommunications Carrier. 

Note 4: Rural local telephone companies are generally smaller and serve 
fewer customers than non-rural local telephone companies. 

Note 5: The local loop is the connection between the telephone 
company’s facility and the customer’s premises. 

Note 6: A switch is a piece of equipment that routes telephone signals 
between users. 

Note 7: NECA’s Common Line Pool is a mechanism where NECA submits a 
single, averaged tariff for interstate access charges to FCC on behalf 
of typically small local telephone companies. NECA distributes the 
revenues derived from the access charges paid for by long distance 
companies and end-user subscriber line charges (SLC) to participating 
companies. 

Source: GAO’s analysis of FCC, USAC, and NECA information. 

[End of table] 

States Implement a Variety of Programs Designed to Further Universal 
Service: 

In addition to the federal programs, state governments implement a 
variety of programs designed to further universal service. In figure 2, 
we illustrate the number of states, including the District of Columbia 
that implement various universal service programs, based on our survey 
of public utility commissions (see app. III for program availability by 
state); we only considered state programs that are independent of or 
supplement a similar federal program.[Footnote 13] Some state-level 
programs target similar beneficiaries as the federal programs, 
including deaf and disabled customers, low-income customers, and 
schools and libraries. There are several reasons for this. First, FCC 
ensures that TRS services are available, sets minimum standards, and 
certifies state-level TRS programs. Second, the federal Lifeline 
Program for low-income customers provides additional matching support 
for state-level programs. In addition, some states also have programs 
for high-cost and small local telephone companies and state 
communications networks that allow schools, libraries, government, and 
community facilities to receive discounted services. 

Figure 2: State-Level Universal Service Programs in all 50 States and 
the District of Columbia: 

[See PDF for image] 

This figure is a vertical bar graph depicting the following 
approximated data: 

Program: Deaf and disabled; 
Number of states: approximately 51. 

Program: Low income- establish service; 
Number of states: approximately 24. 

Program: Low income- lower monthly rate; 
Number of states: approximately 38. 

Program: High-cost local telephone company; 
Number of states: approximately 20. 

Program: Small local telephone company; 
Number of states: approximately 14. 

Program: State e-rate program; 
Number of states: approximately 12. 

Program: State communications network; 
Number of states: approximately 16. 

Source: GAO’s survey of public utility commissions (May – Sept. 2001). 

[End of figure] 

We found that state governments use a variety of approaches to 
implement state-level universal service programs. Public utility 
commissions implement many of the programs we identify in figure 2. In 
our survey of commissions, the two most common approaches that state 
governments use to fund state-level universal service programs are (1) 
a fee or tax levied directly on consumers and (2) a fee or tax levied 
on telecommunications or other service companies that the companies are 
permitted to pass on to consumers. 

States Use Several Rate-Setting Mechanisms to Promote Affordable Basic 
Local Telephone Service: 

In addition to state-level universal service programs, there are 
several rate-setting mechanisms that public utility commissions use to 
subsidize various aspects of local telephone service. These rate-
setting mechanisms subsidize rural, residential, and basic telephone 
service. These subsidies are made possible through rates set for urban 
and business telephone service as well as rates set for “vertical” 
services—such as caller identification (caller ID) and call waiting. 

Many States Use Geographic Rate Averaging and Value-of-Service Pricing 
to Promote Lower Local Telephone Rates in Rural and High-Cost Areas: 

Geographic rate averaging and value-of-service pricing are intended to 
promote lower rates in rural and high-cost areas. With geographic rate 
averaging, customers across a geographic area pay the same local 
telephone rate, although rates for residential customers are generally 
different than rates for business customers. These geographic areas can 
be either small or large, in some instances there is a single 
geographic area for the entire state. If the geographic area is large, 
customers in areas where the cost of providing service is low, 
typically urban areas, will pay rates higher than they would if the 
area was small and only included customers with low costs. Conversely, 
customers in areas where the cost of providing service is high, 
typically rural areas, will pay rates lower than they would if the area 
was small and only included customers with high costs. With value-of-
service pricing, local telephone rates are based on the number of 
customers that can be called with local telephone service. In rural 
areas where there are fewer customers to call, rates are set at a 
relatively low level because the perceived “value” of the local 
telephone service is lower than in more populous areas where there are 
greater numbers of customers to call with local telephone service. 

We found that state regulators use both geographic rate averaging and 
value-of-service pricing in setting local telephone rates. In our 
survey of public utility commissions, 15 commissions report that local 
telephone rates are the same throughout the service territory of the 
largest local telephone company in their state. That is, there is a 
single, large geographic area over which the commission averages local 
telephone rates. Among other commissions, 19 report that local 
telephone rates for the largest local telephone company are the same in 
areas with a similar geographic size or number of lines, thereby 
implying that there are multiple geographic areas over which the 
commission averages local telephone rates.[Footnote 14] In 40 states 
where one or more local telephone companies have multiple geographic 
areas over which regulators average rates, 22 commissions report using 
value-of-service pricing to establish the relative rates for different 
geographic areas. Thus, local telephone rates in some states will be 
lower in rural and less populous areas, relative to rates in urban 
areas. 

The relationship between local telephone rates and estimates of the 
cost of providing service in central city, suburban, and rural places 
illustrates the influence of geographic rate averaging and value-of-
service pricing. In figure 3, we illustrate how local telephone rates 
and the estimated cost of providing service for suburban and rural 
places differs from the rates and estimated costs for central city 
places.[Footnote 15] We gathered these data from public utility 
commissions and FCC’s Hybrid Cost Proxy Model (see app. I for a 
discussion of our sample design, rate data, and FCC’s model). There is 
no statistical difference in residential local telephone rates between 
central city, suburban, and rural places. However, the estimated cost 
of providing local telephone service, as measured by FCC’s model, 
increases significantly from central city places to suburban and 
especially rural places. The estimated cost of providing local 
telephone service is approximately 61 percent higher and 195 percent 
higher in suburban and rural places, respectively, than in central 
cities. The results in figure 3 are consistent with geographic averaged 
rates and value-of-service pricing— local telephone rates on average do 
not appear to be highly related to the differences in the cost of 
providing service. 

Figure 3: Average Residential Rates and Estimated Costs for Suburbs and 
Rural Places (Percent Difference from Central City): 

[See PDF for image] 

This figure is a multiple vertical bar graph depicting the following 
approximated data: 

Suburb: 
Percentage higher/lower, Residential rates: 5%; 
Percentage higher/lower, Estimated costs: 60%. 

Rural: 
Percentage higher/lower, Residential rates: 2%; 
Percentage higher/lower, Estimated costs: 180%. 

Source: GAO’s survey of public utility commissions (May – Sept. 2001) 
and GAO’s analysis of FCC’s Hybrid Cost Proxy Model. 

[End of figure] 

Single-Line Business Rates Exceed Residential Rates in Most States: 

Local telephone rates for single-line business customers are almost 
uniformly set above rates for residential customers. In our survey of 
public utility commissions, all states except Wyoming report that 
single-line business rates are higher than residential rates.[Footnote 
16] In figure 4, we report the average residential and single-line 
business local telephone rates for central city, suburb, and rural 
places (see app. I for a discussion of our sample design and rate 
data). For every type of place, average single-line business rates are 
approximately twice as high as residential rates. Conversely, the cost 
of providing service is not likely to be significantly different 
between business and residential customers.[Footnote 17] Thus, these 
results indicate that single-line business customers are subsidizing 
residential local telephone service because their rates are 
approximately twice as high as residential customers’ rates for local 
telephone service while the cost of providing the service is most 
likely to be similar. 

Figure 4: Average Monthly Single-Line Business and Residential Local 
Telephone Rates for Central City, Suburb, and Rural Places: 

[See PDF for image] 

This figure is a multiple vertical bar graph depicting the following 
approximated data: 

Central city: 
Monthly rate, residential customers: $14; 
Monthly rate, single-line business customers: $34. 

Suburb: 
Monthly rate, residential customers: $15; 
Monthly rate, single-line business customers: $32. 

Rural: 
Monthly rate, residential customers: $13; 
Monthly rate, single-line business customers: $25. 

Note: These are the monthly local telephone tariff rates. The rates do 
not include the Federal Subscriber Line Charge, which was capped at 
$5.00 per month for each primary residential and single-line business 
line, federal and state surcharges to fund universal service programs, 
federal and state taxes, and long distance charges. 

Source: GAO’s survey of public utility commissions (May – Sept. 2001). 

[End of figure] 

Vertical Services Often Subsidize Basic Local Telephone Service: 

Many public utility commissions establish rates for vertical services 
to subsidize basic local telephone service. Vertical services are 
options that customers can add to their basic local telephone service. 
Examples of vertical services include caller ID, call waiting, and 
conference calling. In our survey of public utility commissions, 40 
commissions reported that they regulate the rates for vertical 
services, and 32 of these commissions reported that rates for vertical 
services are set above the cost of providing the service to subsidize 
basic local telephone service. 

Intrastate Long Distance Access Charges May Also Subsidize Local 
Telephone Service: 

Some public utility commissions use intrastate long distance access 
charges to subsidize local telephone service. This subsidy can benefit 
local telephone service by allowing the local telephone company to 
cover the costs not recovered from local rates. Twenty-three 
commissions reported setting intrastate access charges above cost to 
subsidize basic local telephone service, while 21 commissions reported 
that intrastate access charges do not subsidize basic local telephone 
service.[Footnote 18] 

Converging Communications Technologies Pose Long-Term Challenges to 
Federal Funding of Universal Service: 

The last decade has seen a rapid increase in the use of digital 
technologies and Internet Protocol (IP) networks for communications. 
Applications now exist to convert traditional analog voice services to 
digital, to break the digital voice into “packets,” and to send the 
voice packets over the Internet or other IP networks. However, under 
the current regulatory structure, providers of these IP voice services 
do not have to contribute to the Universal Service Fund for the IP 
voice services. Therefore, as these new voice services gain popularity, 
concerns exist of whether federal funding levels for universal service 
might eventually decline. In addition, there is much debate about 
whether the current federal regulatory framework for funding universal 
service—with its reliance on interstate telecommunications revenues—is 
appropriate for digital communications, where voice, video, and data 
are carried in the same manner over networks that lack 
intrastate/interstate designations. 

“IP Telephony” Is a Small but Growing Service in Both Business and 
Residential Markets: 

In the last few years, Americans have increasingly been communicating 
through applications, such as e-mail, that make use of the Internet or 
IP networks. Some of these applications allow for real-time voice 
communications, much like a traditional telephone call. Several 
different names have been applied to these applications, including “IP 
telephony,” “voice over IP (VoIP),” “Internet telephony,” “packet 
voice,” and others.[Footnote 19] 

Essentially, these applications convert analog voice to digital and 
then break the digital information into “packets,” which are routed 
over an IP network.[Footnote 20] Packets may be reassembled at the 
location of the recipient or converted back to analog prior to reaching 
the recipient. If packet loss and delay can be controlled and 
minimized, the quality of an IP telephony call can be comparable to the 
traditional public switched telephone network.[Footnote 21] 

IP telephony is already in use today in a variety of ways. Experts with 
whom we spoke said that the first uses of IP telephony were by 
consumers making voice calls using their personal computers,[Footnote 
22] and by companies providing international long distance calling. At 
times, the companies providing international service are wholesalers to 
the traditional long distance carriers. Thus, consumers may make an 
overseas call that is at some point converted to digital without ever 
knowing about the conversion, and usually without knowing that their 
call was handled by a company other than their own long distance 
service provider.[Footnote 23] We were told that international calling 
is the most prevalent use of IP telephony today. Even so, a number of 
the experts we interviewed estimated that IP telephony represents only 
a tiny percentage of current worldwide voice traffic.[Footnote 24] 

Several of the industry representatives with whom we spoke believed 
that business users are likely to drive the deployment of IP telephony 
services. Industry representatives said that there were some cost 
savings to be realized from a transition to IP telephony, particularly 
because voice and data would be delivered over a single network, 
avoiding the duplicative deployment and maintenance costs of separate 
voice and data networks. For companies with a large number of branch 
offices, IP telephony gives them the ability to keep their interoffice 
calls completely off the traditional telephone network.[Footnote 25] We 
were told that an even more significant benefit of IP telephony is the 
range of new applications it allows and the ease with which these new 
applications can be introduced. One industry representative stated that 
IP telephony should not be thought of as merely a substitute for 
traditional telephone service—it has much greater potential for new 
features and functions than traditional telephone service. For example, 
“virtual intelligent assistants” may provide many more options for 
handling incoming calls than today’s voice mail, and Web sites may 
allow consumers to contact a customer service representative through a 
voice call from their computer. 

Although business users will likely be the first to adopt IP telephony 
technologies, residential users will continue to have the opportunity 
to use IP telephony in the long-haul services, such as international 
calls and domestic long distance. Local telephone companies, however, 
have significant investment in their current networks and technologies 
and may be slower to roll out new services, such as IP telephony. 
Nonetheless, several people whom we interviewed mentioned the 
possibility that Windows XP™ may promote residential use of IP 
telephony, because it has the ability to turn instant messaging into a 
voice application. Also, competitive voice service providers, such as 
cable television companies, may use IP telephony over their networks. 
[Footnote 26] Several industry representatives cautioned, however, that 
IP voice services are not yet a market substitute for traditional 
residential voice service. IP telephony might not provide lifeline 
services during emergency situations, such as power outages, and does 
not generally offer E-911 functionality.[Footnote 27] The offering of 
IP telephony as a competitive residential telephone service, therefore, 
may be limited to secondary line service at the present time and will 
likely be bundled with other offerings, such as video or data services. 

IP Telephony May Not Be an Immediate Threat to Federal Funding of 
Universal Service but May Threaten Its Long-Term Viability: 

The assessment and recovery of universal service contributions are 
governed by a statutory framework established by Congress in the 
Communications Act of 1934 (as amended by the Telecommunications Act of 
1996). The Communications Act is “stovepiped,” or compartmentalized, 
meaning various types of services (e.g., telephone, cable, wireless) 
are held to different rules and regulations.[Footnote 28] As discussed 
earlier, funding for federal universal service generally comes from 
providers of interstate “telecommunications services,” but may also be 
assessed upon other providers of interstate telecommunications if the 
public interest so requires. IP telephony is an application that has, 
to date, been treated in effect as an “information service.”[Footnote 
29] Therefore, companies offering IP telephony are not currently 
required to make contributions to the universal service fund from 
revenues for IP telephony services.[Footnote 30] As the deployment of 
IP telephony technologies moves forward, and more businesses[Footnote 
31] and consumers begin to substitute IP telephony for traditional 
telephone service, the question arises as to whether a decline in the 
funding for universal service could result. Some of the industry 
representatives we interviewed believed that IP telephony is not an 
immediate threat to universal service funding because there is so 
little IP telephony today.[Footnote 32] While providers of IP telephony 
do not pay into the fund at present, this has yet to produce a 
perceptible financial impact on the fund. 

One industry representative pointed out that, as a practical matter, it 
makes little sense to try to extend the current system—a system based 
on the amount of interstate telecommunications revenues—to information 
services such as IP telephony. First, measurement of IP voice revenues 
would require a means of identifying which packets are voice packets. 
We were told that, at present, packets are sometimes labeled 
“priority,” but they are not identified as “voice,” “data,” or 
“video.”[Footnote 33] We were told such packet identification likely 
could be done, although several experts pointed out that just because 
it is technologically possible does not mean it is affordable or that 
it makes sense from a network engineering standpoint. Second, 
measurement of IP voice revenues would require a means of identifying 
packets as “intrastate” or “interstate.” We were told that this makes 
little sense in the world of the Internet, where geographic boundaries 
are difficult to determine. 

However, a number of the industry representatives we interviewed 
believed that increasing amounts of voice communications will be deemed 
“information services” because of the manner in which they are 
provided. Under the current universal service regulatory structure, 
which primarily relies on assessment of revenues from interstate 
“telecommunications services,” this transformation might eventually 
have a noticeable and negative effect on the universal service funding 
mechanism. But universal service has not been a static system. As the 
telecommunications industry has evolved, so too has the funding 
mechanism for universal service. For example, the system for universal 
service financing changed when the long distance market became 
competitive following the divestiture of AT&T and has continued to be 
modified as new providers of voice services, such as wireless carriers, 
entered the market and were required to pay into the fund. The classes 
of supported services have also changed over the years. With the 
establishment of the Schools and Libraries Program, Congress chose to 
cover “advanced services” such as Internet access. Nonetheless, the 
basic concept of relying primarily on revenues from interstate 
telecommunications services for the financing of explicit universal 
service programs or for the implicit subsidization of certain rates has 
remained in place.[Footnote 34] 

In the face of growing usage of IP telephony, there are mixed views on 
whether information service providers should begin contributing to the 
Universal Service Fund. Some in the industry argue that the system 
should be technologically neutral—if it looks like traditional voice 
service, it should be treated as such and generate contributions to the 
Universal Service Fund. Others are concerned that the present 
regulatory system not be force-fit onto information service providers. 
Among the experts we interviewed, there was agreement that universal 
service is a valid policy goal.[Footnote 35] This led several of those 
with whom we spoke to point out that these new technologies may 
actually promote the goals of universal service by lowering the costs 
of providing communications technologies to all Americans. 

Conclusion: 

Whether Congress and FCC should continue to rely largely on providers 
of interstate telecommunications services for the funding of federal 
universal service is an increasingly important debate as the world 
continues to migrate to digital communications technologies and IP 
networks. In several of our recent reports, we noted that convergence 
in communications markets is presently occurring as many different 
communications networks are redesigned or built to provide an array of 
services.[Footnote 36] Ultimately, these various networks will each 
carry voice, video, and data packets. Yet, as we said in October 2000, 
the Communications Act was originally structured and remains a 
“stovepiped,” or compartmentalized, law in which particular 
communications services are governed under particular provisions of the 
law. The resulting regulatory structure holds different types of 
networks to different rules—even when they are used to provide similar 
services. Fundamentally, universal service funding has been carried out 
under laws and regulations pertaining to “telecommunications services.” 
It is unclear what rules should apply for voice applications that could 
be defined as “information services,” or more importantly, whether such 
service distinctions should remain. We previously noted that 
policymakers may face challenges in deciding how, under the present 
structure of communications law, functionally similar services are 
governed over different networks. IP telephony and its effect on 
universal service funding is another example of this increasing 
dilemma. 

FCC has undertaken a proceeding to examine how to streamline and reform 
both the manner in which it assesses carrier contributions to the 
Universal Service Fund and the manner in which carriers may recover 
those costs from their customers. Most commenters in FCC’s proceeding 
urged the Commission to retain some form of a revenue-based assessment 
based on interstate and international revenues.[Footnote 37] A few 
commenters argued for moving to a flat fee, line-item approach. 
Although FCC has not yet issued an order in this proceeding, the 
Commission noted that it has an obligation to ensure that the universal 
service contribution system remains consistent with the statute, is 
reflective of current market trends and technologies, is simple for 
carriers to administer, and does not shift more than an equitable share 
of carrier contributions to any class of customers.[Footnote 38] 
Nonetheless, the basic framework of funding universal service via 
contributions from “every telecommunications carrier that provides 
interstate telecommunications services” is a statutory mandate 
established by Congress. This statutory framework also permits FCC to 
require any other provider of interstate telecommunications to 
contribute, if the public interest so requires. If it was determined 
that universal service contributions should also be collected from 
companies and services operating outside that framework—or if the 
funding framework itself was found to be inadequate going forward—FCC 
or Congress might need to revisit how best to provide universal service 
to all Americans. 

Scope and Methodology: 

To provide information on the federal universal service programs, we 
interviewed officials from FCC, NECA, and USAC. We also reviewed 
documents from FCC, NECA, and USAC regarding the funding and operation 
of the federal universal service programs. Additionally, we reviewed 
documents from academics and industry participants regarding the 
federal universal service programs. 

We conducted a mail survey of public utility commissions to gather 
information on state-level universal service programs and rate-setting 
mechanisms. In the survey, we asked questions about state programs for 
deaf and disabled consumers; high cost and small local telephone 
companies; low-income consumers; and discounted telecommunications 
services for schools, libraries, and other government-related 
facilities. We pretested the survey with staff at five commissions to 
help ensure that (1) the questions in the survey were clear and 
unbiased, (2) the terms used in the survey were precise, and (3) the 
survey was not unduly burdensome. The survey was mailed to staff at 
public utility commissions in all 50 states and the District of 
Columbia. We received 51 completed questionnaires, a response rate of 
100 percent. We conducted the survey from May to September 2001. 

In addition, to provide information on local telephone rates and the 
costs of providing service, we asked public utility commissions for 
local telephone rates and used a model developed by FCC that provides 
forward-looking estimates of the cost of providing local telephone 
service. We asked commissions for the local telephone rates for 
residential and single-line business customers in randomly selected 
places throughout each state and the District of Columbia (see app. I 
for a discussion of the sample and local telephone rate data). We also 
used a model developed by FCC to determine the estimated costs of 
providing service in the same randomly selected places (see app. I for 
a discussion of FCC’s model and our use of the model). 

Finally, to assess the development of telephone service via Internet-
based technology and the future funding of universal service programs, 
we conducted semistructured interviews with 26 industry participants 
and academics familiar with the development of IP telephony. These 
industry participants included three providers of IP telephony 
services, two Internet backbone providers, two long distance companies, 
one Regional Bell Operating Company, six equipment manufacturers, five 
academics, two industry analysts, three associations involved in IP 
telephony issues, one government agency, and one representative of 
large business end-users. In addition, we reviewed relevant documents 
from various government, industry, and academic sources. We performed 
our review from January through November 2001 in accordance with 
generally accepted government auditing standards. 

Agency Comments: 

We provided a draft of this report to FCC for their review and comment 
and subsequently spoke with the Chief of FCC’s Accounting Policy 
Division. FCC officials stated that they were in agreement with the 
information presented in the report, and provided technical comments 
that were incorporated as appropriate. 

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 7 days 
after the date of this letter. At that time, we will provide copies to 
interested congressional committees, the Chairman of FCC, and other 
interested parties. We also will make copies available to others upon 
request. 

If you or your staff have any questions about this report, please call 
me at (202) 512-2834. Key contributors to this report are listed in 
appendix V. 

Sincerely yours, 

Signed by: 

Peter Guerrero: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Description of Sample Design, Local Telephone Rates, and 
Estimated Costs of Providing Service: 

In this appendix, we provide information on (1) the objectives and 
limitations in measuring subsidies in local telephone rates, (2) the 
sample design we used to select locations to gather local telephone 
rate and cost data, (3) the local telephone rate data that we gathered, 
and (4) our use of the Federal Communications Commission’s (FCC) Hybrid 
Cost Proxy Model for estimates of the cost of providing local telephone 
service. 

Subsidies in Local Telephone Rates: 

As part of our analysis on how public utility commissions set local 
telephone rates, we were asked to report on rates throughout the United 
States. Additionally, we were asked to examine how rates and the costs 
of providing local telephone service varied throughout the United 
States. To respond to these objectives, we gathered data on local 
telephone rates and the estimated costs of providing service for 
sampled locations throughout all 50 states and the District of 
Columbia. 

Due to limitations in the available data, we did not make a comparison 
between local telephone rates and the estimated cost of providing 
service to determine the amount of a subsidy in local telephone service 
for particular locations. There are two reasons why we do not make this 
comparison. First, we only consider the monthly tariff rates for local 
telephone service, which exclude several additional charges paid for by 
consumers that provide additional funding for local telephone service. 
Second, the costs of providing local telephone service are estimated 
costs, based on FCC’s model of an efficient provider using current 
technology at current prices. The estimated costs are used by FCC to 
determine and allocate federal universal service support, not to price 
network elements, and are not the local telephone companies’ accounting 
costs. Additionally, industry participants identified several 
weaknesses associated with the model regarding cost estimates for 
specific locations. 

Sample Design for Gathering Local Telephone Rate and Cost Data: 

To gather local telephone rate and cost data, we began with all 50 
states and the District of Columbia. State governments, typically 
through a public utility commission, regulate many aspects of local 
telephone service within their states. These public utility commissions 
regulate the rates for local telephone service that many companies 
charge residential and business customers. Because public utility 
commissions regulate local telephone rates, we began our data gathering 
at the state level. This was necessary to collect data on local 
telephone rates and also to ensure that we had observations from every 
rate-setting jurisdiction, in this case every state. 

Within each state, we sampled places[Footnote 39] from three broad 
categories associated with population density. While public utility 
commissions regulate local telephone rates, these rates can vary 
between different areas within states. To incorporate the different 
rates within states, we sampled places within each state. We chose to 
conduct a sample, as opposed to a census, because of the large number 
of places. In addition, the cost of providing local telephone service 
varies inversely with population density. To incorporate the 
differences in the cost of providing local telephone service, we 
defined and sampled places from three broad categories that roughly 
represent different categories of population density: central city, 
suburb, and rural places.[Footnote 40] We classified places in 
metropolitan statistical areas (MSA)[Footnote 41] as either central 
city or suburb. The Census Bureau reports a central city for each MSA. 
We classified all other places within an MSA, excluding the central 
city, as suburbs. Finally, we classified rural places as those outside 
an MSA. 

To sample the central cities and suburbs, we first identified all MSAs 
within each state and the District of Columbia. We arrayed the MSAs 
within each state by population and established state-specific strata, 
based on the MSA population. For most states, we established three 
strata (large, medium, and small MSA). For states with many MSAs 
(California, Florida, Michigan, and Texas), we established four or five 
strata, depending on the number of MSAs in the state. Within each 
stratum, we randomly selected an MSA. For states with three or fewer 
MSAs, we simply selected all the MSAs in the state. This sampling 
approach ensured that we included at least three MSAs from each state, 
except for states where there were fewer than three MSAs, and that we 
included MSAs with varying populations from each state. 

Once the MSAs for each state and the District of Columbia were 
selected, we selected the central city, suburb, and rural places. The 
central cities were selected by default—the Census Bureau reports the 
central city for each MSA. Therefore, once the MSAs were selected, the 
central cities were also selected. We randomly sampled one place, 
excluding the central city, within the selected MSAs for inclusion as 
the suburb.[Footnote 42] We also only included central city and 
suburban places that were served by local telephone companies 
identified by FCC as non-rural carriers. Non-rural carriers are local 
telephone companies that do not meet the definition of rural 
carrier.[Footnote 43] This exclusion was necessary because FCC uses its 
Hybrid Cost Proxy Model only for non-rural carriers in each state. 
Finally, we generally sampled three rural places in each state; two 
rural places served by a non-rural carrier and one rural place served 
by a rural carrier. 

Because we used a sample to develop the estimates of local telephone 
rates and estimated costs presented throughout this report, each 
estimate has a measurable precision, or sampling error, that may be 
expressed as a plus or minus figure. A sampling error indicates how 
closely we can reproduce from a sample, the results that we would 
obtain if we were to take a complete count of the population we are 
analyzing using the same measurement methods. By adding the sampling 
error to and subtracting it from the estimate, we can develop upper and 
lower bounds for each estimate. This range is called a confidence 
interval. Sampling errors and confidence intervals are stated at a 
certain confidence level—in this report, 95 percent. For example, a 
confidence interval at the 95-percent confidence level means that in 95 
out of 100 instances, the sampling procedure used would produce a 
confidence interval containing the universe value we are estimating. 

Local Telephone Rates: 

There are three common forms of service provided by local telephone 
companies: unlimited service, message service, and measured service. 
With unlimited service, the customer pays a monthly recurring service 
charge and pays no additional charge for an unlimited number of local 
telephone calls each month. Message service also includes a monthly 
recurring service charge; however, the customer also pays a charge for 
each local telephone call, or message. With measured service, the 
customer pays a monthly recurring service charge and pays a charge for 
each local telephone call, with the charge determined by the duration 
of the call. The monthly recurring service charge is lower with message 
and measured service than with unlimited service, reflecting the charge 
imposed on the local telephone calls with message and measured service. 
In addition, message and measured service can include a monthly 
allowance, a certain number of local calls, units, or dollars, that the 
customer can incur before the per-call charges begin. 

We gathered local telephone rate data for the places selected in our 
sample from public utility commissions. We asked for rates (the 
recurring service charge, monthly allowance, and cost of a 5-minute 
business day call) for both residential and single-line business 
customers. For each type of customer, we asked for the unlimited 
service rate and the message or measured service with the lowest rate. 

Throughout the report, we provide information and analysis based on 
local telephone tariff rates for unlimited service. These rates do not 
include the federal Subscriber Line Charge, typically $3.50 to $5.00 
per month for the primary line;[Footnote 44] state and local surcharges 
for items such as state universal service funding, 911 service, and 
taxes; the federal excise tax; and long distance fees and associated 
universal service surcharges and other taxes. Where offered, we use the 
tariff rate for unlimited service (the recurring service charge). 
However, in some states, unlimited service is not available. In those 
instances, we calculated a monthly fee for a “representative customer” 
using the message rate. Consistent with previous FCC analysis, we 
assumed that a “representative customer” makes 100 5-minute calls per 
month for residential customers and 200 5-minute calls per month for 
single-line business customers. Therefore, the monthly fee in these 
instances is the monthly recurring service charge plus the charge 
associated with making either 100 or 200 calls per month for 
residential and single-line business customers, respectively. 

The Cost of Providing Local Telephone Service and FCC’s Hybrid Cost 
Proxy Model: 

FCC developed a cost model, called the Hybrid Cost Proxy Model, to 
distribute support among non-rural carriers for the high-cost component 
of the federal universal service program. FCC’s model is a synthesis 
model, based on FCC’s staff-developed model and incorporating elements 
from two industry-sponsored models (the HAI Model sponsored by AT&T and 
MCI and the Benchmark Cost Proxy Model sponsored by US West, Sprint, 
and BellSouth). FCC’s model calculates an estimated cost at the wire 
center[Footnote 45] level. To calculate the estimated cost of providing 
service for each wire center, FCC’s model assumes that an efficient 
provider constructs the most efficient network to serve existing 
customers from the existing wire center locations. We did not evaluate 
the operation of FCC’s model. 

For each place in our sample, we used the estimated cost directly from 
FCC’s Hybrid Cost Proxy Model or calculated a weighted-average 
estimated cost. First, we identified all wire centers located in the 
sampled places. This was accomplished using the street address of 
switches from Telcordia Technologies, Inc.’s Local Exchange Routing 
Guide (LERG), May 2001 edition. In some suburban and rural sampled 
places, there was no wire center located in the place. In those 
instances, we found telephone numbers for government offices or schools 
in the place and used the LERG to identify the wire center serving the 
place. When we could not find a telephone number for a government 
office or school in the place, we chose the closest switch to the place 
to identify the wire center serving the place. Second, once we 
identified the wire centers located in or serving the place, we could 
determine the estimated cost for that place. If there was only a single 
wire center located in or serving the place, the estimated cost for 
that wire center was the estimated cost used in our analysis. However, 
if more than one wire center was located in or served the place, we 
calculated a weighted-average estimated cost, based on the proxy cost 
for each wire center, with the number of lines at each wire center 
serving as the weight. Because wire center boundaries do not exactly 
match political boundaries, there are possible biases introduced in the 
analysis. 

For a variety of reasons, we believe these biases do not significantly 
influence our results.[Footnote 46] 

We discussed our use of FCC’s Hybrid Cost Proxy Model with both FCC 
staff and industry participants, representing both local and long 
distance telephone companies. In general, they told us that our use of 
FCC’s model, namely comparing relative costs between central city, 
suburban, and rural places, was an acceptable use of the model. Some 
industry participants identified several weaknesses with FCC’s model. 
Weaknesses cited by more than one participant include (1) problems with 
public data used in the model (e.g., wire center boundaries could be 
inaccurate, Census block data from the 1990 Census could be dated); (2) 
customers are assumed to be uniformly distributed along roads, versus 
using actual customer locations; (3) certain expenses are allocated on 
a per-line basis; and (4) input expenses generally are nationwide, 
rather than company-specific values. We believe that the weaknesses the 
industry participants identified are not significant for our use of the 
model. Because we are comparing relative costs between central city, 
suburban, and rural places, many potential problems associated with 
calculating a cost estimate for a given place are not relevant because 
these problems will affect our estimate for each place in a similar 
manner. 

[End of section] 

Appendix II: Aggregate Results of Survey of Public Utility Commissions: 

This appendix provides the aggregate results for our survey of public 
utility commissions. For each question, the numbers indicate the number 
of commissions selecting each response. Because some questions were not 
answered by all respondents and because some questions allow multiple 
responses, the totals do not necessarily add to 51 commissions. 

GAO: Survey on Local Telephone Universal Service, 5/01/01: 

Introduction: 

The U.S. General Accounting Office (GAO), a federal agency that reviews 
programs for the U.S. Congress, is surveying public utility commissions 
in the 50 states and the District of Columbia. This survey asks 
questions about state universal service programs and policies and basic 
local exchange service rates. We plan to include the information from 
this survey and other sources in a report on the universal service 
program, both the federal and state components. 

We recognize that this survey is one of many that you receive, 
including others from our agency. As a result, we have simplified the 
questions and omitted information that requires extensive research. 

If you have questions about this survey, please call Mike Clements at 
202-512-7763, Jim Sweetman at 202-512-3347, or the GAO analyst who 
contacted you. 

Thank you for your assistance 

Please provide the following information. 

Name:
Title:
Phone:	
State: 
	
Instructions: 

Please complete all questions that are relevant for your state. 
Question 38 asks for residential and business local telephone rates in 
randomly selected communities throughout your state. As such, the 
information sought is of a different nature than the questions that 
precede it and might be completed by a different staff member. 

In the near future, a GAO analyst will call you, or your designated 
staff member, to set up a convenient time to discuss and record your 
Commission's responses. It should take less than one hour to complete 
this telephone call. After this telephone call, please fax the local 
telephone rate information (answers to question 38) to Mike Clements at 
fax number 202-512-7477. 

Abbreviations/Definitions 

CLEC: competitive local exchange carrier EAS extended area service: 

FCC: Federal Communications Commission: 

ILEC: incumbent local exchange carrier: 

LEC: local exchange carrier: 

TRS: telecommunications relay service: 

Geographic Rate Averaging: 

1. We are interested in the extent of geographic rate averaging for 
residential consumers in your state. For the three largest ILECs that 
your commission regulates, based on the number of wireline access lines 
in your state, please provide information on the extent of geographic 
rate averaging for basic local exchange service for each company. 

ILEC: 
Check one for each column: 

1. Rates are the same throughout the company's service territory: 
Largest	ILEC (a): 15; 
Second Largest ILEC (b): 14; 
Third Largest ILEC (c): 16. 
			
2. Rates are the same in broad geographic areas (e.g., different rates 
are set for urban, suburban, and rural areas): 
Largest	ILEC (a): 9; 
Second Largest ILEC (b): 5; 
Third Largest ILEC (c): 5. 

3. Rates are the same in rate areas with a similar geographic size or 
number of access lines: 
Largest	ILEC (a): 19; 
Second Largest ILEC (b): 16; 
Third Largest ILEC (c): 14. 

4. Rates are the same in narrow geographic areas (e.g.,	different rates 
are set for each wire center): 
Largest	ILEC (a): 0; 
Second Largest ILEC (b): 3; 
Third Largest ILEC (c): 1. 
			
5. Other (Please specify below): 
Largest	ILEC (a): 8; 
Second Largest ILEC (b): 5; 
Third Largest ILEC (c): 5. 

2. For ILECs identified in question 1 with multiple rate areas, what 
approach best describes the philosophy for establishing the relative 
rates in the different rate areas? 

If no ILEC has multiple rate areas, please check this box and skip to 
question 3. [11] 
[22] Value of service
[8] Cost of service
[10] Other (Please specify) 

Residential and Business Rates:	 

3. For residential and single-line business consumers in the same 
geographic area, what are the predominant relative rates for basic 
local exchange service in your state? (Check one) 

[1] Residential and business rates are the same.
[50] Residential rates are lower than business rates.
[0] Business rates are lower than residential rates. 

Vertical Services: 

Vertical services are options that consumers can add to their basic 
local exchange service. Examples of vertical services include call 
forwarding, caller ID, call waiting, and three-way calling. 

4. Does your commission regulate the rates for any or all vertical 
services? (Check one) 

[40] Yes
[10] No (Please skip to question 6). 

5. For regulated vertical services, are rates predominantly set above 
cost (as you have defined or measured cost) to subsidize basic local 
exchange service? (Check one) 

[32] Yes.
[5] No. 

Intrastate Long Distance Access Charges 

6. Are intrastate long distance access charges predominantly set above 
cost (as you have defined or measured cost) to subsidize basic local 
exchange service? (Check one) 

[23] Yes.
[21] No. 

Administration of Universal Service Fund: 

7. If your state has a universal service fund, who administers the 
fund? (Check one) 

If your state does not have a universal service fund, please check this 
box and skip to question 8. [27] 

[8] State commission;
[1] Other state agency;
[8] National Exchange Carrier Association (NECA);
[5] Other third party administrator;
[2] Other (Please specify). 

Telecommunications Relay Service (TRS) and Other Services for Disabled 
Consumers: 

8. Does your state have a program or programs that provide services for 
deaf or disabled consumers? Only consider state programs that are 
independent of or that supplement the federal program. (Check one) 

[51] Yes;
[0] No (Please skip to question 12). 

9. For the state portion of the program that provides services for deaf 
or disabled consumers, how is the program funded? (Check one) 

[26] Fee or tax levied directly on consumers;
[16] Fee or tax levied on telecommunications or other service; 
companies; companies are permitted to pass the fee or tax onto consumers
[3] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[0] Voluntary contributions from consumers; 
[0] Appropriation from state legislature (Please skip to question 11); 
[6] Other (Please specify). 

10. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for the services for deaf or 
disabled consumers? (Check all that apply) 

[47] ILECs or their customers; 
[41] CLECs or their customers; 
[14] Long distance telephone companies or their customers; 
[15] Wireless telephone companies or their customers; 
[0] Internet Service Providers or their customers; 
[6] Other (Please specify). 

11. What was the amount of state funding in the year 2000 for services 
that provide assistance to deaf or disabled consumers? 

If this figure is not available, please check this box and skip to 
question 12. [24] 

High Cost LEC Support: 

12. Does your state have a program or programs that provide assistance 
to high cost LECs? Only consider state programs that are independent of 
or that supplement the federal program. (Check one) 

[21] Yes; 
[30] No (Please skip to question 16). 

13. For the state portion of the program that provides assistance to 
high cost LECs, how is the program funded? (Check one) 

[4] Fee or tax levied directly on consumers; 
[14] Fee or tax levied on telecommunications or other service 
companies; companies are permitted to pass the fee or tax onto 
consumers; 
[1] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[0] Voluntary contributions from consumers;
[0] Appropriation from state legislature (Please skip to question 15); 
[2] Other (Please specify). 

14. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for assistance to high cost 
LECs? (Check all that apply) 

[19] ILECs or their customers; 
[18] CLECs or their customers; 
[19] Long distance telephone companies or their customers; 
[11] Wireless telephone companies or their customers; 
[1] Internet Service Providers or their customers; 
[4] Other (Please specify). 

15. What was the amount of state funding in the year 2000 for 
assistance to high cost LECs? 

If this figure is not available, please check this box and skip to 
question 16. [9] 

Small LEC Support: 

16. Does your state have a program or programs that provide assistance 
to small LECs? Only consider state programs that are independent of or 
that supplement the federal program. (Check one) 

[14] Yes; 
[37] No (Please skip to question 20). 

17. For the state portion of the program that provides assistance to 
small LECs, how is the program funded? (Check one) 

[2] Fee or tax levied directly on consumers; 
[10] Fee or tax levied on telecommunications or other service 
companies;, companies are permitted to pass the fee or tax onto 
consumers; 
[1] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[0] Voluntary contributions from consumers; 
[0] Appropriation from state legislature (Please skip to question 19); 
[1] Other (Please specify). 

18. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for assistance to small LECs? 
(Check all that apply) 

[11] ILECs or their customers; 
[9] CLECs or their customers; 
[13] Long distance telephone companies or their customers; 
[4] Wireless telephone companies or their customers; 
[0] Internet Service Providers or their customers; 
[4] Other (Please specify). 

19. What was the amount of state funding in the year 2000 for 
assistance to small LECs? 

If this figure is not available, please check this box and skip to 
question 20. [8] 

Programs for Low-Income Consumers: 

In this section, we are interested in two types of programs: programs 
that provide assistance to establish service and programs that provide 
assistance to lower monthly rates. The first four questions address 
programs that provide assistance to establish service. 

20. Does your state have a program or programs that provide assistance 
to low-income consumers to establish service (e.g., a Linkup program)? 
Only consider state programs that are independent of or that supplement 
the federal program. (Check one) 

[24] Yes; 
[27] No (Please skip to question 24). 

21. For the state portion of the program that provides assistance to 
low-income consumers to establish service, how is the program funded? 
(Check one) 

[4] Fee or tax levied directly on consumers; 
[8] Fee or tax levied on telecommunications or other service companies; 
companies are permitted to pass the fee or tax onto consumers; 
[2] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[1] Voluntary contributions from consumers; 
[0] Appropriation from state legislature (Please skip to question 23); 
[9] Other (Please specify). 

22. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for assistance to low-income 
consumers to establish service? (Check all that apply) 

[21] ILECs or their customers; 
[15] CLECs or their customers; 
[7] Long distance telephone companies or their customers; 
[4] Wireless telephone companies or their customers; 
[0] Internet Service Providers or their customers; 
[4] Other (Please specify). 

23. What was the amount of state funding in the year 2000 for services 
that provide assistance to low-income consumers to establish service?
If this figure is not available, please check this box and skip to 
question 24. [16] 

The following four questions address programs that provide assistance 
to lower monthly rates. 

24. Does your state have a program or programs that provide assistance 
to low-income consumers to lower monthly rates (e.g., a Lifeline 
program)? Only consider state programs that are independent of or that 
supplement the federal program. (Check one) 

[39] Yes; 
[12] No (Please skip to question 28). 

25. For the state portion of the program that provides assistance to 
low-income consumers to lower monthly rates, how is the program funded? 
(Check one) 

[9] Fee or tax levied directly on consumers; 
[12] Fee or tax levied on telecommunications or other service 
companies; companies are permitted to pass the fee or tax onto 
consumers; 
[2] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[1] Voluntary contributions from consumers; 
[0] Appropriation from state legislature (Please skip to question 27); 
[15] Other (Please specify). 

26. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for assistance to low-income 
consumers to lower monthly rates? (Check all that apply) 

[33] ILECs or their customers; 
[24] CLECs or their customers; 
[13] Long distance telephone companies or their customers; 
[12] Wireless telephone companies or their customers; 
[0] Internet Service Providers or their customers; 
[8] Other (Please specify). 

27. What was the amount of state funding in the year 2000 for services 
that provide assistance to low-income consumers to lower monthly rates? 

If this figure is not available, please check this box and skip to 
question 28. [19] 

Support for Schools, Libraries, Health Care Facilities, and Other 
Government/Community Facilities: 

In this section, we are interested in programs that discount or 
subsidize telecommunications or Internet services, such as a state 
communications network or an e-rate or similar program. The first four 
questions address a state communications network that provides 
discounted or subsidized telecommunications or Internet services. 

28. Does your state have a communications network that provides 
discounted or subsidized telecommunications or Internet services for 
schools, libraries, health care facilities, or other 
government/community facilities? (Check one) 

[17] Yes; 
[34] No (Please skip to question 33). 

29. Which types of facilities does the state communications network 
support? (Check all that apply) 

[16] Schools; 
[13] Libraries; 
[7] Health care; 
[10] Government; 
[7] Community/Non-profit; 
[4] Other (Please specify). 

30. How is the state communications network funded? (Check one) 

[0] Fee or tax levied directly on consumers; 
[2] Fee or tax levied on telecommunications or other service companies; 
companies are permitted to pass the fee or tax onto consumers; 
[0] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[0] Voluntary contributions from consumers; 
[5] Appropriation from state legislature (Please skip to question 32); 
[10] Other (Please specify). 

31. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for the state communications 
network? (Check all that apply) 

[5] ILECs or their customers; 
[3] CLECs or their customers; 
[3] Long distance telephone companies or their customers; 
[2] Wireless telephone companies or their customers; 
[1] Internet Service Providers or their customers; 
[6] Other (Please specify). 

32. What was the amount of state funding in the year 2000 for the state 
communications network? 

If this figure is not available, please check this box and skip to 
question 33. [11] 

The following four questions address an e-rate or similar program that 
provides discounted or subsidized telecommunications or Internet 
services. 

33. Does your state have an e-rate or similar program that discounts or 
subsidizes in some way the costs of telecommunications or Internet 
services for schools, libraries, health care facilities, or other 
government/community facilities? Only consider a state program that is 
independent of or that supplements the federal program. (Check one) 

[13] Yes; 
[38] No (Please skip to question 38). 

34. Which types of facilities does the state e-rate or similar program 
support? (Check all that apply) 

[13] Schools; 
[11] Libraries; 
[4] Health care; 
[2] Government; 
[3] Community/Non-profit; 
[3] Other (Please specify). 

35. For the state portion of the e-rate or similar program that 
discounts or subsidizes telecommunications or Internet services, how is 
the program funded? (Check one) 

[2] Fee or tax levied directly on consumers; 
[4] Fee or tax levied on telecommunications or other service companies; 
companies are permitted to pass the fee or tax onto consumers; 
[0] Fee or tax levied on telecommunications or other service companies; 
companies are not permitted to pass the fee or tax onto consumers; 
[0] Voluntary contributions from consumers; 
[1] Appropriation from state legislature (Please skip to question 37); 
[6] Other (Please specify). 

36. What telecommunications or service companies, or customers of these 
companies, contribute to state funding for the e-rate or similar 
program that discounts or subsidizes telecommunications or Internet 
services? (Check all that apply) 

[8] ILECs or their customers; 
[6] CLECs or their customers; 
[5] Long distance telephone companies or their customers; 
[3] Wireless telephone companies or their customers; 
[0] Internet Service Providers or their customers; 
[5] Other (Please specify). 

37. What was the amount of state funding in the year 2000 for the state 
e-rate or similar program that provides discounts or subsidize 
telecommunications or Internet services? 

If this figure is not available, please check this box and skip to 
question 38. [8] 

Residential and Single-Line Business Rates: 

In this section, we are interested in ILECs' basic local exchange 
service rates. We seek information on rates for residential and single-
line business consumers in randomly selected central city, suburban, 
and rural places. 

38. For the communities identified on the following page or pages, 
please provide the requested information. Below are instructions and 
descriptions of the row and column categories. 

For purposes of determining the service, please provide information on 
basic local exchange service for residential and single-line business 
consumers with the following features: 

* primary line; 
* single party dial-tone service; 
* touch tone or equivalent capability. 

Columns: For each community, please provide information for the 
following types of services, to the extent the services are available 
in your state and in specified communities: 

* unlimited/flat rate service, excluding any optional extended area 
service (EAS) plan; 

* lowest rate message or measured service (if both, provide information 
on the lowest rate service). 

Rows 2 and 8: The "recurring service charge" is the monthly rate in the 
ILEC's tariff. 

Rows 3 and 9: The "federal subscriber line charge" is the monthly, per 
line charge the Federal Communications Commission (FCC) allows the ILEC 
to include on end-user consumers' bills. 

Rows 4 and 10: The "state surcharges" are state commission approved 
charges to support intrastate telephone service, including state 
subscriber line charges and charges for support of state universal 
service programs. Do not include state or local 911 and related fees 
and excise, sales, or gross receipts taxes. 

Rows 5, 6, 11, and 12: The "units" or "dollars or units in the base 
rate" include the number of calls, dollar amount, or minutes of use 
that consumers with message or measured rate service can incur before 
the imposition of per call or per minute charges begins. 

[End of section] 

Appendix III: State-Level Universal Service Programs: 

This appendix provides information on the presence of state-level 
universal service programs in the 50 states and the District of 
Columbia. We gathered this information from our survey of public 
utility commissions. In table 2, a check mark [Check] indicates the 
presence of the program in the state. 

Table 2: Presence of State-Level Universal Service Programs for Each 
State and the District of Columbia: 

State: Alabama: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Alaska:
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Arizona: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Arkansas: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: California: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Check]. 

State: Colorado: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Connecticut: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Delaware: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: District of Columbia: [Check]; 
Deaf or disabled customers: [Empty]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Florida: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Georgia: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Hawaii: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Check]. 

State: Idaho: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Illinois: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Indiana: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Iowa: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Kansas: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Kentucky: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Louisiana: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Maine: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Maryland: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Massachusetts: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Michigan: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Minnesota: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Mississippi: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Missouri: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Montana: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Check]. 

State: Nebraska: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Nevada: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: New Hampshire: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: New Jersey: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: New Mexico: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: New York: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: North Carolina: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: North Dakota: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Ohio: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Oklahoma: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Oregon: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Pennsylvania: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Rhode Island: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: South Carolina: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: South Dakota: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Tennessee: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Check]. 

State: Texas: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Check]. 

State: Utah: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Vermont: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Virginia: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Empty]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: Washington: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Empty]. 

State: West Virginia: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Empty]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Empty]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

State: Wisconsin: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Empty]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Check]; 
State E-Rate program: [Check]. 

State: Wyoming: 
Deaf or disabled customers: [Check]; 
High-cost local telephone company: [Check]; 
Small local telephone company: [Check]; 
Low income – establish service: [Check]; 
Low income – lower monthly rate: [Check]; 
State communications network: [Empty]; 
State E-Rate program: [Empty]. 

Note: A check mark [Check] indicates the presence of the program in the 
state. 

Source: GAO’s survey of public utility commissions (May – Sept. 2001). 

[End of table] 

[End of section] 

Appendix IV: Local Telephone Rates: 

This appendix provides the residential and single-line business local 
telephone rates for sampled places (see app. I for detailed information 
regarding the sample design). We gathered the monthly tariff rates for 
the sampled places from public utility commissions in all 50 states and 
the District of Columbia. 

The rates listed below are based on responses from the public utility 
commission and do not include the weights used to generate the point 
estimates and confidence intervals reported in the letter. The rates 
listed below are the monthly tariff rates. Where unlimited service was 
available, we report the tariff rate for that service. If unlimited 
service was not available, we report the tariff rate for message 
service, assuming 100 5-minute calls per month for residential 
customers and 200 5-minute calls per month for single-line business 
customers. Also, the monthly tariff rates that we report exclude the 
federal Subscriber Line Change; federal, state, and local surcharges 
for items such as universal service funding, 911 service, and taxes; 
the federal excise tax; and long distance fees and associated universal 
service surcharges and other taxes. 

Table 3: Residential and Single-Line Business Monthly Tariff Local 
Telephone Rates for Sampled Places by State: 

State: Alabama; 
Place name: Auburn; 
Type of place: Central City; 
Residential rate: $15.95; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Notasulga; 
Type of place: Suburb; 
Residential rate: $16.38; 
Single-line business rate: $41.38. 

State: Alabama; 
Place name: Birmingham; 
Type of place: Central City; 
Residential rate: $16.30; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Morris; 
Type of place: Suburb; 
Residential rate: $16.30; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Decatur; 
Type of place: Central City; 
Residential rate: $16.30; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Hillsboro; 
Type of place: Suburb; 
Residential rate: $15.95; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Baileyton; 
Type of place: Non-MSA; 
Residential rate: $15.95; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Goodwater; 
Type of place: Non-MSA; 
Residential rate: $15.65; 
Single-line business rate: $36.23. 

State: Alabama; 
Place name: Oak Hill; 
Type of place: Non-MSA; 
Residential rate: $15.85; 
Single-line business rate: $32.60. 

State: Alaska; 
Place name: Anchorage; 
Type of place: Central City; 
Residential rate: $9.70; 
Single-line business rate: $25.75. 

State: Alaska; 
Place name: Allakaket; 
Type of place: Non-MSA; 
Residential rate: $15.60; 
Single-line business rate: $26.05. 

State: Alaska; 
Place name: Toksook Bay; 
Type of place: Non-MSA; 
Residential rate: $19.23; 
Single-line business rate: $34.00. 

State: Arizona; 
Place name: Flagstaff; 
Type of place: Central City; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Williams; 
Type of place: Suburb; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Phoenix; 
Type of place: Central City; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Gila Bend; 
Type of place: Suburb; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Tucson; 
Type of place: Central City; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: South Tucson; 
Type of place: Suburb; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Clifton; 
Type of place: Non-MSA; 
Residential rate: $12.40; 
Single-line business rate: $16.65. 

State: Arizona; 
Place name: Sierra Vista; 
Type of place: Non-MSA; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arizona; 
Place name: Winslow; 
Type of place: Non-MSA; 
Residential rate: $13.18; 
Single-line business rate: $32.78. 

State: Arkansas; 
Place name: Fort Smith; 
Type of place: Central City; 
Residential rate: $14.91; 
Single-line business rate: $30.66. 

State: Arkansas; 
Place name: Barling; 
Type of place: Suburb; 
Residential rate: $14.91; 
Single-line business rate: $30.66. 

State: Arkansas; 
Place name: Little Rock; 
Type of place: Central City; 
Residential rate: $16.31; 
Single-line business rate: $33.61. 

State: Arkansas; 
Place name: Wrightsville; 
Type of place: Suburb; 
Residential rate: $16.31; 
Single-line business rate: $33.61. 

State: Arkansas; 
Place name: Pine Bluff; 
Type of place: Central City; 
Residential rate: $14.91; 
Single-line business rate: $30.66. 

State: Arkansas; 
Place name: Sherrill; 
Type of place: Suburb; 
Residential rate: $12.11; 
Single-line business rate: $24.81. 

State: Arkansas; 
Place name: Haynes; 
Type of place: Non-MSA; 
Residential rate: $13.51; 
Single-line business rate: $27.71. 

State: Arkansas; 
Place name: Oil Trough; 
Type of place: Non-MSA; 
Residential rate: $12.11; 
Single-line business rate: $24.81. 

State: Arkansas; 
Place name: Pollard; 
Type of place: Non-MSA; 
Residential rate: $18.65; 
Single-line business rate: $40.95. 

State: California; 
Place name: Los Angeles[A]; 
Type of place: Central City; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: San Fernando[A]; 
Type of place: Suburb; 
Residential rate: $17.25; 
Single-line business rate: $35.22. 

State: California; 
Place name: Merced[A]; 
Type of place: Central City; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: Dos Palos[A]; 
Type of place: Suburb; 
Residential rate: $16.85; 
Single-line business rate: $35.22. 

State: California; 
Place name: Sacramento[A]; 
Type of place: Central City; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: Placerville[A]; 
Type of place: Suburb; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: Salinas[A]; 
Type of place: Central City; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: Greenfield[A]; 
Type of place: Suburb; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: California; 
Place name: Dorris; 
Type of place: Non-MSA; 
Residential rate: $16.05; 
Single-line business rate: $25.69. 

State: California; 
Place name: El Centro[A]; 
Type of place: Non-MSA; 
Residential rate: $11.12; 
Single-line business rate: $65.73. 

State: California; 
Place name: Hanford[A]; 
Type of place: Non-MSA; 
Residential rate: $10.69; 
Single-line business rate: $64.35. 

State: Colorado; 
Place name: Boulder; 
Type of place: Central City; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Lafayette; 
Type of place: Suburb; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Colorado Springs; 
Type of place: Central City; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Monument; 
Type of place: Suburb; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Pueblo; 
Type of place: Central City; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Boone; 
Type of place: Suburb; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Buena Vista; 
Type of place: Non-MSA; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Leadville; 
Type of place: Non-MSA; 
Residential rate: $14.91; 
Single-line business rate: $34.60. 

State: Colorado; 
Place name: Two Buttes; 
Type of place: Non-MSA; 
Residential rate: $14.74; 
Single-line business rate: $36.79. 

State: Connecticut; 
Place name: Hartford; 
Type of place: Central City; 
Residential rate: $14.53; 
Single-line business rate: $39.13. 

State: Connecticut; 
Place name: Groton; 
Type of place: Suburb; 
Residential rate: $11.53; 
Single-line business rate: $31.03; 

State: Connecticut; 
Place name: Stamford; 
Type of place: Central City; 
Residential rate: $12.53; 
Single-line business rate: $33.73. 

State: Connecticut; 
Place name: New Canaan; 
Type of place: Suburb; 
Residential rate: $11.53; 
Single-line business rate: $31.03; 

State: Connecticut; 
Place name: Waterbury; 
Type of place: Central City; 
Residential rate: $13.53; 
Single-line business rate: $36.43. 

State: Connecticut; 
Place name: Bethlehem[B]; 
Type of place: Suburb; 
Residential rate: $15.95; 
Single-line business rate: N/A. 

State: Connecticut; 
Place name: Chester County; 
Type of place: Non-MSA; 
Residential rate: $10.53; 
Single-line business rate: $28.33. 

State: Connecticut; 
Place name: Essex; 
Type of place: Non-MSA; 
Residential rate: $10.53; 
Single-line business rate: $28.33. 

State: Delaware; 
Place name: Dover; 
Type of place: Central City; 
Residential rate: $10.96; 
Single-line business rate: $26.63. 

State: Delaware; 
Place name: Felton; 
Type of place: Suburb; 
Residential rate: $10.96; 
Single-line business rate: $26.63. 

State: Delaware; 
Place name: Wilmington; 
Type of place: Central City; 
Residential rate: $11.62; 
Single-line business rate: $26.83. 

State: Delaware; 
Place name: Newport; 
Type of place: Suburb; 
Residential rate: $11.62; 
Single-line business rate: $26.83. 

State: Delaware; 
Place name: Lewes; 
Type of place: Non-MSA; 
Residential rate: $11.62; 
Single-line business rate: $26.83. 

State: Delaware; 
Place name: Millville; 
Type of place: Non-MSA; 
Residential rate: $11.62; 
Single-line business rate: $26.83. 

State: District of Columbia; 
Place name: Washington[A]; 
Type of place: Central City; 
Residential rate: $12.78; 
Single-line business rate: $25.53. 

State: Florida; 
Place name: Fort Walton Beach; 
Type of place: Central City; 
Residential rate: $10.15; 
Single-line business rate: $21.60. 

State: Florida; 
Place name: Destin; 
Type of place: Suburb; 
Residential rate: $10.15; 
Single-line business rate: $21.60. 

State: Florida; 
Place name: Jacksonville; 
Type of place: Central City; 
Residential rate: $10.46; 
Single-line business rate: $28.43. 

State: Florida; 
Place name: Fernandina Beach; 
Type of place: Suburb; 
Residential rate: $8.22; 
Single-line business rate: $22.24. 

State: Florida; 
Place name: Lakeland; 
Type of place: Central City; 
Residential rate: $11.55; 
Single-line business rate: $28.70. 

State: Florida; 
Place name: Bartow; 
Type of place: Suburb; 
Residential rate: $11.55; 
Single-line business rate: $28.70. 

State: Florida; 
Place name: Tallahassee; 
Type of place: Central City; 
Residential rate: $10.65; 
Single-line business rate: $22.75. 

State: Florida; 
Place name: Havana; 
Type of place: Suburb; 
Residential rate: $9.29; 
Single-line business rate: $25.29. 

State: Florida; 
Place name: Carrabelle; 
Type of place: Non-MSA; 
Residential rate: $9.15; 
Single-line business rate: $24.00. 

State: Florida; 
Place name: Fanning Springs; 
Type of place: Non-MSA; 
Residential rate: $11.17; 
Single-line business rate: $30.27. 

State: Florida; 
Place name: Okeechobee; 
Type of place: Non-MSA; 
Residential rate: $7.47; 
Single-line business rate: $17.70. 

State: Georgia; 
Place name: Augusta; 
Type of place: Central City; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Hephzobah; 
Type of place: Suburb; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Columbus; 
Type of place: Central City; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Hamilton; 
Type of place: Suburb; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Macon; 
Type of place: Central City; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Payne; 
Type of place: Suburb; 
Residential rate: $14.85; 
Single-line business rate: $37.30. 

State: Georgia; 
Place name: Aldora; 
Type of place: Non-MSA; 
Residential rate: $17.45; 
Single-line business rate: $48.30. 

State: Georgia; 
Place name: Avera; 
Type of place: Non-MSA; 
Residential rate: $12.50; 
Single-line business rate: $24.90. 

State: Georgia; 
Place name: Tunnel Hill; 
Type of place: Non-MSA; 
Residential rate: $20.78; 
Single-line business rate: $41.58. 

State: Hawaii; 
Place name: Honolulu; 
Type of place: Central City; 
Residential rate: $14.40; 
Single-line business rate: $35.60. 

State: Hawaii; 
Place name: Hana; 
Type of place: Non-MSA; 
Residential rate: $12.50; 
Single-line business rate: $24.30. 

State: Hawaii; 
Place name: Kailua; 
Type of place: Non-MSA; 
Residential rate: $14.40; 
Single-line business rate: $35.60. 

State: Idaho; 
Place name: Boise City; 
Type of place: Central City; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Idaho; 
Place name: Caldwell; 
Type of place: Suburb; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Idaho; 
Place name: Pocatello; 
Type of place: Central City; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Idaho; 
Place name: Inkom; 
Type of place: Suburb; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Idaho; 
Place name: Dietrick; 
Type of place: Non-MSA; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Idaho; 
Place name: Mackay; 
Type of place: Non-MSA; 
Residential rate: $24.10; 
Single-line business rate: $42.00. 

State: Idaho; 
Place name: Wendell; 
Type of place: Non-MSA; 
Residential rate: $17.46; 
Single-line business rate: $32.47. 

State: Illinois; 
Place name: Champaign[C]; 
Type of place: Central City; 
Residential rate: $13.00; 
Single-line business rate: $31.87. 

State: Illinois; 
Place name: Homer[C]; 
Type of place: Suburb; 
Residential rate: $20.77; 
Single-line business rate: $37.89. 

State: Illinois; 
Place name: Chicago[C]; 
Type of place: Central City; 
Residential rate: $9.53; 
Single-line business rate: $28.21. 

State: Illinois; 
Place name: Arlington Heights[C]; 
Type of place: Suburb; 
Residential rate: $13.00; 
Single-line business rate: $31.87. 

State: Illinois; 
Place name: Peoria[C]; 
Type of place: Central City; 
Residential rate: $13.00; 
Single-line business rate: $31.87. 

State: Illinois; 
Place name: Minier[C]; 
Type of place: Suburb; 
Residential rate: $20.77; 
Single-line business rate: $37.89. 

State: Illinois; 
Place name: Clayton[C]; 
Type of place: Non-MSA; 
Residential rate: $20.77; 
Single-line business rate: $37.89. 

State: Illinois; 
Place name: Neponset[C]; 
Type of place: Non-MSA; 
Residential rate: $20.77; 
Single-line business rate: $37.89. 

State: Illinois; 
Place name: Pocahontas; 
Type of place: Non-MSA; 
Residential rate: $4.22; 
Single-line business rate: $9.55. 

State: Indiana; 
Place name: Fort Wayne; 
Type of place: Central City; 
Residential rate: $17.56; 
Single-line business rate: $30.18. 

State: Indiana; 
Place name: Waterloo; 
Type of place: Suburb; 
Residential rate: $12.35; 
Single-line business rate: 30.18. 

State: Indiana; 
Place name: Indianapolis; 
Type of place: Central City; 
Residential rate: $12.17; 
Single-line business rate: $47.40. 

State: Indiana; 
Place name: Edgewood; 
Type of place: Suburb; 
Residential rate: $10.48; 
Single-line business rate: $37.75. 

State: Indiana; 
Place name: Kokomo; 
Type of place: Central City; 
Residential rate: $9.75; 
Single-line business rate: $31.93. 

State: Indiana; 
Place name: Windfall; 
Type of place: Suburb; 
Residential rate: $15.94; 
Single-line business rate: $30.18; 

State: Indiana; 
Place name: Elnora; 
Type of place: Non-MSA; 
Residential rate: $20.45; 
Single-line business rate: $30.75. 

State: Indiana; 
Place name: Ladoga; 
Type of place: Non-MSA; 
Residential rate: $9.75; 
Single-line business rate: $31.93; 

State: Indiana; 
Place name: Marengo; 
Type of place: Non-MSA; 
Residential rate: $17.56; 
Single-line business rate: $30.18; 

State: Iowa; 
Place name: Davenport; 
Type of place: Central City; 
Residential rate: $12.65; 
Single-line business rate: $31.18. 

State: Iowa; 
Place name: Panorama Park; 
Type of place: Suburb; 
Residential rate: $12.65; 
Single-line business rate: $31.18. 

State: Iowa; 
Place name: Des Moines; 
Type of place: Central City; 
Residential rate: $12.65; 
Single-line business rate: $31.18. 

State: Iowa; 
Place name: Hartford; 
Type of place: Suburb; 
Residential rate: $12.65; 
Single-line business rate: $31.18. 

State: Iowa; 
Place name: Dubuque; 
Type of place: Central City; 
Residential rate: $11.68; 
Single-line business rate: $29.24. 

State: Iowa; 
Place name: Durango; 
Type of place: Suburb; 
Residential rate: $11.68; 
Single-line business rate: $29.24. 

State: Iowa; 
Place name: Atlantic City; 
Type of place: Non-MSA; 
Residential rate: $10.71; 
Single-line business rate: $27.30; 

State: Iowa; 
Place name: Corning; 
Type of place: Non-MSA; 
Residential rate: $7.50; 
Single-line business rate: $13.52. 

State: Iowa; 
Place name: Renwick; 
Type of place: Non-MSA; 
Residential rate: $10.71; 
Single-line business rate: $27.30. 

State: Kansas; 
Place name: Lawrence; 
Type of place: Central City; 
Residential rate: $13.90; 
Single-line business rate: $26.20; 

State: Kansas; 
Place name: Eudora; 
Type of place: Suburb; 
Residential rate: $13.90; 
Single-line business rate: $26.20; 

State: Kansas; 
Place name: Topeka; 
Type of place: Central City; 
Residential rate: $13.90; 
Single-line business rate: $26.20; 

State: Kansas; 
Place name: Auburn; 
Type of place: Suburb; 
Residential rate: $14.75; 
Single-line business rate: $27.70. 

State: Kansas; 
Place name: Wichita; 
Type of place: Central City; 
Residential rate: $14.20; 
Single-line business rate: $28.40. 

State: Kansas; 
Place name: El Dorado; 
Type of place: Suburb; 
Residential rate: $13.90; 
Single-line business rate: $24.50. 

State: Kansas; 
Place name: Beloit; 
Type of place: Non-MSA; 
Residential rate: $13.90; 
Single-line business rate: $22.75; 

State: Kansas; 
Place name: Milford; 
Type of place: Non-MSA; 
Residential rate: $16.00; 
Single-line business rate: $19.45. 

State: Kansas; 
Place name: Parsons; 
Type of place: Non-MSA; 
Residential rate: $13.90; 
Single-line business rate: $24.50. 

State: Kentucky; 
Place name: Lexington; 
Type of place: Central City; 
Residential rate: $18.95; 
Single-line business rate: $32.00. 

State: Kentucky; 
Place name: Stamping Ground; 
Type of place: Suburb; 
Residential rate: $15.22; 
Single-line business rate: $35.90. 

State: Kentucky; 
Place name: Louisville; 
Type of place: Central City; 
Residential rate: $18.40; 
Single-line business rate: $35.25. 

State: Kentucky; 
Place name: Plymouth Village; 
Type of place: Suburb; 
Residential rate: $18.40; 
Single-line business rate: $35.25. 

State: Kentucky; 
Place name: Owensboro; 
Type of place: Central City; 
Residential rate: $14.37; 
Single-line business rate: $35.90. 

State: Kentucky; 
Place name: Whitesville; 
Type of place: Suburb; 
Residential rate: $14.37; 
Single-line business rate: $35.90. 

State: Kentucky; 
Place name: Lewisburg; 
Type of place: Non-MSA; 
Residential rate: $16.50; 
Single-line business rate: $24.80. 

State: Kentucky; 
Place name: Scottsville; 
Type of place: Non-MSA; 
Residential rate: $13.20; 
Single-line business rate: $32.31. 

State: Kentucky; 
Place name: Stanford; 
Type of place: Non-MSA; 
Residential rate: $12.77; 
Single-line business rate: $35.00. 

State: Louisiana; 
Place name: Houma; 
Type of place: Central City; 
Residential rate: $12.43; 
Single-line business rate: $32.87. 

State: Louisiana; 
Place name: Lockport; 
Type of place: Suburb; 
Residential rate: $10.97; 
Single-line business rate: $28.68. 

State: Louisiana; 
Place name: Monroe; 
Type of place: Central City; 
Residential rate: $12.64; 
Single-line business rate: $33.00. 

State: Louisiana; 
Place name: Sterlington; 
Type of place: Suburb; 
Residential rate: $12.64; 
Single-line business rate: $33.00. 

State: Louisiana; 
Place name: New Orleans; 
Type of place: Central City; 
Residential rate: $12.64; 
Single-line business rate: $33.00. 

State: Louisiana; 
Place name: Westwego; 
Type of place: Suburb; 
Residential rate: $12.64; 
Single-line business rate: $33.00. 

State: Louisiana; 
Place name: Jena; 
Type of place: Non-MSA; 
Residential rate: $16.80; 
Single-line business rate: $33.60. 

State: Louisiana; 
Place name: New Llano; 
Type of place: Non-MSA; 
Residential rate: $11.81; 
Single-line business rate: $31.40. 

State: Louisiana; 
Place name: Vidalia; 
Type of place: Non-MSA; 
Residential rate: $11.81; 
Single-line business rate: $31.40. 

State: Maine; 
Place name: Bangor; 
Type of place: Central City; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Belfast; 
Type of place: Suburb; 
Residential rate: $15.63; 
Single-line business rate: $35.13. 

State: Maine; 
Place name: Lewiston; 
Type of place: Central City; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Auburn; 
Type of place: Suburb; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Portland; 
Type of place: Central City; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Westbrook; 
Type of place: Suburb; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Augusta; 
Type of place: Non-MSA; 
Residential rate: $16.91; 
Single-line business rate: $35.81. 

State: Maine; 
Place name: Waterville; 
Type of place: Non-MSA; 
Residential rate: $16.03; 
Single-line business rate: $35.47. 

State: Maryland; 
Place name: Baltimore[A]; 
Type of place: Central City; 
Residential rate: $16.26; 
Single-line business rate: $31.54; 

State: Maryland; 
Place name: Manchester[A]; 
Type of place: Suburb; 
Residential rate: $15.51; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Cumberland[A]; 
Type of place: Central City; 
Residential rate: $15.01; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Frostburg[A]; 
Type of place: Suburb; 
Residential rate: $15.01; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Hagerstown[A]; 
Type of place: Central City; 
Residential rate: $15.01; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Hancock[A]; 
Type of place: Suburb; 
Residential rate: $15.51; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Eldorado[A]; 
Type of place: Non-MSA; 
Residential rate: $15.01; 
Single-line business rate: $33.96. 

State: Maryland; 
Place name: Kitzmiller[A]; 
Type of place: Non-MSA; 
Residential rate: $15.01; 
Single-line business rate: $33.96. 

State: Massachusetts; 
Place name: Boston[A]; 
Type of place: Central City; 
Residential rate: $17.34; 
Single-line business rate: $32.00. 

State: Massachusetts; 
Place name: Taunton; 
Type of place: Suburb; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Fitchburg; 
Type of place: Central City; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Templeton; 
Type of place: Suburb; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Lowell; 
Type of place: Central City; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Chelmsfor[D]; 
Type of place: Suburb; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Bourne; 
Type of place: Non-MSA; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Massachusetts; 
Place name: Williamstown; 
Type of place: Non-MSA; 
Residential rate: $17.34; 
Single-line business rate: $39.77. 

State: Michigan; 
Place name: Ann Arbor [A,D]; 
Type of place: Central City; 
Residential rate: $43.95; 
Single-line business rate: $30.84. 

State: Michigan; 
Place name: Milan [A,D]; 
Type of place: Suburb; 
Residential rate: $43.95; 
Single-line business rate: $31.60. 

State: Michigan; 
Place name: Benton Harbor [A,D]; 
Type of place: Central City; 
Residential rate: $43.95; 
Single-line business rate: $31.60. 

State: Michigan; 
Place name: Eau Claire [A,D]; 
Type of place: Suburb; 
Residential rate: $43.95; 
Single-line business rate: $31.60. 

State: Michigan; 
Place name: Detroit [A,D]; 
Type of place: Central City; 
Residential rate: $43.95; 
Single-line business rate: $30.57. 

State: Michigan; 
Place name: Wayne [A,D]; 
Type of place: Suburb; 
Residential rate: $43.95; 
Single-line business rate: $30.84. 

State: Michigan; 
Place name: Grand Rapids [A,D]; 
Type of place: Central City; 
Residential rate: $43.95; 
Single-line business rate: $30.84. 

State: Michigan; 
Place name: East Grand Rapids [A,D]; 
Type of place: Suburb; 
Residential rate: $43.95; 
Single-line business rate: $30.84. 

State: Michigan; 
Place name: Custer [A,D]; 
Type of place: Non-MSA; 
Residential rate: $43.95; 
Single-line business rate: $31.60. 

State: Michigan; 
Place name: Fairgrove[A,D]; 
Type of place: Non-MSA; 
Residential rate: $43.95; 
Single-line business rate: $31.60. 

State: Michigan; 
Place name: Sturgis; 
Type of place: Non-MSA; 
Residential rate: $13.66; 
Single-line business rate: $15.80. 

State: Minnesota; 
Place name: Minneapolis; 
Type of place: Central City; 
Residential rate: $14.76; 
Single-line business rate: $43.29. 

State: Minnesota; 
Place name: Clear Lake; 
Type of place: Suburb; 
Residential rate: $14.25; 
Single-line business rate: $28.50. 

State: Minnesota; 
Place name: Rochester; 
Type of place: Central City; 
Residential rate: $13.96; 
Single-line business rate: $34.61. 

State: Minnesota; 
Place name: Stewartville; 
Type of place: Suburb; 
Residential rate: $13.96; 
Single-line business rate: $34.61. 

State: Minnesota; 
Place name: St. Cloud; 
Type of place: Central City; 
Residential rate: $13.96; 
Single-line business rate: $34.61. 

State: Minnesota; 
Place name: Sauk Rapids; 
Type of place: Suburb; 
Residential rate: $13.96; 
Single-line business rate: $34.61. 

State: Minnesota; 
Place name: Hutchinson; 
Type of place: Non-MSA; 
Residential rate: $12.06; 
Single-line business rate: $21.56; 

State: Minnesota; 
Place name: Milaca; 
Type of place: Non-MSA; 
Residential rate: $14.25; 
Single-line business rate: $28.50. 

State: Minnesota; 
Place name: Rock Creek; 
Type of place: Non-MSA; 
Residential rate: $13.96; 
Single-line business rate: $34.61. 

State: Mississippi; 
Place name: Gulfport; 
Type of place: Central City; 
Residential rate: $19.01; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Ocean Springs; 
Type of place: Suburb; 
Residential rate: $18.66; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Hattiesburg; 
Type of place: Central City; 
Residential rate: $17.95; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Purvis; 
Type of place: Suburb; 
Residential rate: $14.79; 
Single-line business rate: $34.61. 

State: Mississippi; 
Place name: Jackson; 
Type of place: Central City; 
Residential rate: $19.01; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Canton; 
Type of place: Suburb; 
Residential rate: $15.50; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Duck Hill; 
Type of place: Non-MSA; 
Residential rate: $15.15; 
Single-line business rate: $35.78. 

State: Mississippi; 
Place name: McComb; 
Type of place: Non-MSA; 
Residential rate: $16.90; 
Single-line business rate: $36.95. 

State: Mississippi; 
Place name: Polkville, 
Type of place: Non-MSA; 
Residential rate: $20.88; 
Single-line business rate: $30.83. 

State: Missouri; 
Place name: Columbia; 
Type of place: Central City; 
Residential rate: $9.91; 
Single-line business rate: $18.33. 

State: Missouri; 
Place name: Harrisburg; 
Type of place: Suburb; 
Residential rate: $9.91; 
Single-line business rate: $18.33. 

State: Missouri; 
Place name: Joplin; 
Type of place: Central City; 
Residential rate: $9.02; 
Single-line business rate: $22.89. 

State: Missouri; 
Place name: Duenweg; 
Type of place: Suburb; 
Residential rate: $9.02; 
Single-line business rate: $22.89. 

State: Missouri; 
Place name: St. Louis; 
Type of place: Central City; 
Residential rate: $11.25; 
Single-line business rate: $33.24. 

State: Missouri; 
Place name: Bella Villa; 
Type of place: Suburb; 
Residential rate: $11.25; 
Single-line business rate: $33.24. 

State: Missouri; 
Place name: Bragg City; 
Type of place: Non-MSA; 
Residential rate: $7.48; 
Single-line business rate: $16.69. 

State: Missouri; 
Place name: Galt; 
Type of place: Non-MSA; 
Residential rate: $14.76; 
Single-line business rate: $8.89. 

State: Missouri; 
Place name: Wyatt; 
Type of place: Non-MSA; 
Residential rate: $7.48; 
Single-line business rate: $16.69. 

State: Montana; 
Place name: Billings; 
Type of place: Central City; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Montana; 
Place name: Laurel; 
Type of place: Suburb; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Montana; 
Place name: Great Falls; 
Type of place: Central City; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Montana; 
Place name: Cascade; 
Type of place: Suburb; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Montana; 
Place name: Dillon; 
Type of place: Non-MSA; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Montana; 
Place name: Whitehall; 
Type of place: Non-MSA; 
Residential rate: $16.73; 
Single-line business rate: $34.21. 

State: Nebraska; 
Place name: Lincoln; 
Type of place: Central City; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nebraska; 
Place name: Roca; 
Type of place: Suburb; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nebraska; 
Place name: Omaha; 
Type of place: Central City; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nebraska; 
Place name: Avoca; 
Type of place: Suburb; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nebraska; 
Place name: Edison; 
Type of place: Non-MSA; 
Residential rate: $17.50; 
Single-line business rate: $27.50. 

State: Nebraska; 
Place name: Hebron; 
Type of place: Non-MSA; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nebraska; 
Place name: Humphrey; 
Type of place: Non-MSA; 
Residential rate: $17.50; 
Single-line business rate: $28.80. 

State: Nevada; 
Place name: Las Vegas; 
Type of place: Central City; 
Residential rate: $9.05; 
Single-line business rate: $18.25. 

State: Nevada; 
Place name: Henderson; 
Type of place: Suburb; 
Residential rate: $9.05; 
Single-line business rate: $18.25. 

State: Nevada; 
Place name: Reno; 
Type of place: Central City; 
Residential rate: $10.75; 
Single-line business rate: $22.00. 

State: Nevada; 
Place name: Sparks; 
Type of place: Suburb; 
Residential rate: $10.75; 
Single-line business rate: $22.00. 

State: Nevada; 
Place name: Carson City; 
Type of place: Non-MSA; 
Residential rate: $10.75; 
Single-line business rate: $22.00. 

State: Nevada; 
Place name: Lovelock; 
Type of place: Non-MSA; 
Residential rate: $10.75; 
Single-line business rate: $22.00. 

State: Nevada; 
Place name: Yerington; 
Type of place: Non-MSA; 
Residential rate: $10.08; 
Single-line business rate: $23.00. 

State: New Hampshire; 
Place name: Manchester; 
Type of place: Central City; 
Residential rate: $15.73; 
Single-line business rate: $44.67. 

State: New Hampshire; 
Place name: Franklin; 
Type of place: Suburb; 
Residential rate: $14.45; 
Single-line business rate: $40.31. 

State: New Hampshire; 
Place name: Nashua; 
Type of place: Central City; 
Residential rate: $15.73; 
Single-line business rate: $44.67. 

State: New Hampshire; 
Place name: Mason; 
Type of place: Suburb; 
Residential rate: $13.29; 
Single-line business rate: $35.93. 

State: New Hampshire; 
Place name: Rochester; 
Type of place: Central City; 
Residential rate: $14.45; 
Single-line business rate: $40.31. 

State: New Hampshire; 
Place name: Somersworth; 
Type of place: Suburb; 
Residential rate: $14.45; 
Single-line business rate: $40.31. 

State: New Hampshire; 
Place name: Hillsborough; 
Type of place: Non-MSA; 
Residential rate: $12.68; 
Single-line business rate: $21.20. 

State: New Hampshire; 
Place name: Littleton; 
Type of place: Non-MSA; 
Residential rate: $12.14; 
Single-line business rate: $31.75. 

State: New Hampshire; 
Place name: Whitefield; 
Type of place: Non-MSA; 
Residential rate: $12.14; 
Single-line business rate: $31.75. 

State: New Jersey; 
Place name: Atlantic City[A]; 
Type of place: Central City; 
Residential rate: $7.45; 
Single-line business rate: $20.01. 

State: New Jersey; 
Place name: Cape May Point[A]; 
Type of place: Suburb; 
Residential rate: $7.45; 
Single-line business rate: $20.01. 

State: New Jersey; 
Place name: Jersey City[A]; 
Type of place: Central City; 
Residential rate: $8.29; 
Single-line business rate: $21.21. 

State: New Jersey; 
Place name: Hoboken[A]; 
Type of place: Suburb; 
Residential rate: $8.29; 
Single-line business rate: $21.21. 

State: New Jersey; 
Place name: Newark[A]; 
Type of place: Central City; 
Residential rate: $8.29; 
Single-line business rate: $21.21. 

State: New Jersey; 
Place name: Victory Gardens[A]; 
Type of place: Suburb; 
Residential rate: $7.45; 
Single-line business rate: $20.01. 

State: New Mexico; 
Place name: Albuquerque
Type of place: Central City; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Bernalillo; 
Type of place: Suburb; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Las Cruces; 
Type of place: Central City; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Sunland Park; 
Type of place: Suburb; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Santa Fe; 
Type of place: Central City; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Angel Fire; 
Type of place: Non-MSA; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New Mexico; 
Place name: Encino; 
Type of place: Non-MSA; 
Residential rate: $13.00; 
Single-line business rate: $17.50. 

State: New Mexico; 
Place name: Las Vegas; 
Type of place: Non-MSA; 
Residential rate: $10.66; 
Single-line business rate: $34.37. 

State: New York; 
Place name: Glen Falls[A]; 
Type of place: Central City; 
Residential rate: $16.65; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Whitehall[A]; 
Type of place: Suburb; 
Residential rate: $15.28; 
Single-line business rate: $35.54. 

State: New York; 
Place name: New York[A]; 
Type of place: Central City; 
Residential rate: $20.16; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Bronxville[A]; 
Type of place: Suburb; 
Residential rate: $20.16; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Newburgh[A]; 
Type of place: Central City; 
Residential rate: $16.65; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Cornwall on Hudson[A]; 
Type of place: Suburb; 
Residential rate: $16.65; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Rochester[A]; 
Type of place: Central City; 
Residential rate: $11.71; 
Single-line business rate: $33.72. 

State: New York; 
Place name: Sodus Point[A]; 
Type of place: Suburb; 
Residential rate: $16.65; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Cattaraugus[A]; 
Type of place: Non-MSA; 
Residential rate: $13.14; 
Single-line business rate: $35.54. 

State: New York; 
Place name: Chaumont; 
Type of place: Non-MSA; 
Residential rate: $11.41; 
Single-line business rate: $20.18. 

State: New York; 
Place name: Ithaca[A]; 
Type of place: Non-MSA; 
Residential rate: $15.28; 
Single-line business rate: $35.54. 

State: North Carolina; 
Place name: Asheville; 
Type of place: Central City; 
Residential rate: $12.19; 
Single-line business rate: $32.83. 

State: North Carolina; 
Place name: Biltmore Forest; 
Type of place: Suburb; 
Residential rate: $12.19; 
Single-line business rate: $32.83. 

State: North Carolina; 
Place name: Charlotte; 
Type of place: Central City; 
Residential rate: $12.53; 
Single-line business rate: $33.95. 

State: North Carolina; 
Place name: Lake Park; 
Type of place: Suburb; 
Residential rate: $12.26; 
Single-line business rate: $32.22. 

State: North Carolina; 
Place name: Rocky Mount; 
Type of place: Central City; 
Residential rate: $12.52; 
Single-line business rate: $30.23. 

State: North Carolina; 
Place name: Castalia; 
Type of place: Suburb; 
Residential rate: $11.49; 
Single-line business rate: $27.87. 

State: North Carolina; 
Place name: Broadway; 
Type of place: Non-MSA; 
Residential rate: $12.26; 
Single-line business rate: $32.22. 

State: North Carolina; 
Place name: Elk Park; 
Type of place: Non-MSA; 
Residential rate: $10.47; 
Single-line business rate: $28.22. 

State: North Carolina; 
Place name: Whiteville; 
Type of place: Non-MSA; 
Residential rate: $11.10; 
Single-line business rate: $26.95. 

State: North Dakota; 
Place name: Bismarck; 
Type of place: Central City; 
Residential rate: $17.69; 
Single-line business rate: $28.74. 

State: North Dakota; 
Place name: Mandan; 
Type of place: Suburb; 
Residential rate: $17.69; 
Single-line business rate: $28.74. 

State: North Dakota; 
Place name: Fargo; 
Type of place: Central City; 
Residential rate: $17.69; 
Single-line business rate: $31.35. 

State: North Dakota; 
Place name: Grandin; 
Type of place: Suburb; 
Residential rate: $17.69; 
Single-line business rate: $31.35. 

State: North Dakota; 
Place name: Grand Forks; 
Type of place: Central City; 
Residential rate: $17.69; 
Single-line business rate: $28.74. 

State: North Dakota; 
Place name: Emerado; 
Type of place: Suburb; 
Residential rate: $17.69; 
Single-line business rate: $28.74. 

State: North Dakota; 
Place name: Belfield; 
Type of place: Non-MSA; 
Residential rate: $17.69; 
Single-line business rate: $28.74. 

State: North Dakota; 
Place name: Cayuga; 
Type of place: Non-MSA; 
Residential rate: $14.13; 
Single-line business rate: $33.20. 

State: North Dakota; 
Place name: Watford; 
Type of place: Non-MSA; 
Residential rate: $17.99; 
Single-line business rate: $26.02. 

State: Ohio; 
Place name: Canton[A]; 
Type of place: Central City; 
Residential rate: $14.25; 
Single-line business rate: $36.95. 

State: Ohio; 
Place name: Waynesburg[A]; 
Type of place: Suburb; 
Residential rate: $14.35; 
Single-line business rate: $36.95. 

State: Ohio; 
Place name: Dayton[A]; 
Type of place: Central City; 
Residential rate: $14.25; 
Single-line business rate: $32.45. 

State: Ohio; 
Place name: Miamisburg[A]; 
Type of place: Suburb; 
Residential rate: $14.25; 
Single-line business rate: $36.95. 

State: Ohio; 
Place name: Lima; 
Type of place: Central City; 
Residential rate: $16.05; 
Single-line business rate: $36.80. 

State: Ohio; 
Place name: Delphos; 
Type of place: Suburb; 
Residential rate: $14.95; 
Single-line business rate: $32.45. 

State: Ohio; 
Place name: Clarksville; 
Type of place: Non-MSA; 
Residential rate: $13.93; 
Single-line business rate: $27.86. 

State: Ohio; 
Place name: Leipsic; 
Type of place: Non-MSA; 
Residential rate: $16.65; 
Single-line business rate: %26.89. 

State: Ohio; 
Place name: Middleport; 
Type of place: Non-MSA; 
Residential rate: $13.93; 
Single-line business rate: $27.86. 

State: Oklahoma; 
Place name: Lawton; 
Type of place: Central City; 
Residential rate: $12.07; 
Single-line business rate: $32.44. 

State: Oklahoma; 
Place name: Cache; 
Type of place: Suburb; 
Residential rate: $12.07; 
Single-line business rate: $32.44. 

State: Oklahoma; 
Place name: Oklahoma City; 
Type of place: Central City; 
Residential rate: $13.72; 
Single-line business rate: $39.81. 

State: Oklahoma; 
Place name: Lake Aluma; 
Type of place: Suburb; 
Residential rate: $13.72; 
Single-line business rate: $39.81. 

State: Oklahoma; 
Place name: Tulsa; 
Type of place: Central City; 
Residential rate: $13.72; 
Single-line business rate: $39.81. 

State: Oklahoma; 
Place name: Claremore; 
Type of place: Suburb; 
Residential rate: $13.72; 
Single-line business rate: $39.81. 

State: Oklahoma; 
Place name: Achille; 
Type of place: Non-MSA; 
Residential rate: $10.25; 
Single-line business rate: $12.05; 

State: Oklahoma; 
Place name: Pawnee; 
Type of place: Non-MSA; 
Residential rate: $10.22; 
Single-line business rate: $22.08. 

State: Oklahoma; 
Place name: Pocola; 
Type of place: Non-MSA; 
Residential rate: $12.07; 
Single-line business rate: $32.44. 

State: Oregon; 
Place name: Corvallis; 
Type of place: Central City; 
Residential rate: $12.80; 
Single-line business rate: $26.40. 

State: Oregon; 
Place name: Albany; 
Type of place: Suburb; 
Residential rate: $12.80; 
Single-line business rate: $26.40. 

State: Oregon; 
Place name: Eugene; 
Type of place: Central City; 
Residential rate: $12.80; 
Single-line business rate: $26.40. 

State: Oregon; 
Place name: Junction City; 
Type of place: Suburb; 
Residential rate: $12.80; 
Single-line business rate: $28.90. 

State: Oregon; 
Place name: Portland; 
Type of place: Central City; 
Residential rate: $12.80; 
Single-line business rate: $26.40. 

State: Oregon; 
Place name: Yamhill; 
Type of place: Suburb; 
Residential rate: $12.59; 
Single-line business rate: $28.27. 

State: Oregon; 
Place name: Adams; 
Type of place: Non-MSA; 
Residential rate: $12.80; 
Single-line business rate: $30.50. 

State: Oregon; 
Place name: Hood River; 
Type of place: Non-MSA; 
Residential rate: $13.43; 
Single-line business rate: $24.23. 

State: Oregon; 
Place name: Milton-Freewater; 
Type of place: Non-MSA; 
Residential rate: $12.80; 
Single-line business rate: $28.90; 

State: Pennsylvania; 
Place name: Johnstown; 
Type of place: Central City; 
Residential rate: $13.80; 
Single-line business rate: $29.26; 

State: Pennsylvania; 
Place name: Franklin; 
Type of place: Suburb; 
Residential rate: $12.83; 
Single-line business rate: $26.49. 

State: Pennsylvania; 
Place name: Philadelphia[A]; 
Type of place: Central City; 
Residential rate: $13.43; 
Single-line business rate: $24.23. 

State: Pennsylvania; 
Place name: Oxford[A]; 
Type of place: Suburb; 
Residential rate: $10.88; 
Single-line business rate: $31.73. 

State: Pennsylvania; 
Place name: Scranton[A]; 
Type of place: Central City; 
Residential rate: $12.13; 
Single-line business rate: $29.23. 

State: Pennsylvania; 
Place name: Exeter[A]; 
Type of place: Suburb; 
Residential rate: $12.13; 
Single-line business rate: $29.23. 

State: Pennsylvania; 
Place name: Burlington; 
Type of place: Non-MSA; 
Residential rate: $9.36; 
Single-line business rate: $14.12. 

State: Pennsylvania; 
Place name: Saltsburg; 
Type of place: Non-MSA; 
Residential rate: $9.87; 
Single-line business rate: $18.28. 

State: Pennsylvania; 
Place name: South New Castle[A]; 
Type of place: Non-MSA; 
Residential rate: $8.28; 
Single-line business rate: $31.73. 

State: Rhode Island; 
Place name: Providence[A]; 
Type of place: Central City; 
Residential rate: $17.26; 
Single-line business rate: $59.91. 

State: Rhode Island; 
Place name: East Providence[A]; 
Type of place: Suburb; 
Residential rate: $17.26; 
Single-line business rate: $59.91. 

State: South Carolina; 
Place name: Columbia; 
Type of place: Central City; 
Residential rate: $15.40; 
Single-line business rate: $42.75. 

State: South Carolina; 
Place name: Arcadia Lakes; 
Type of place: Suburb; 
Residential rate: $15.40; 
Single-line business rate: $42.75. 

State: South Carolina; 
Place name: Greenville; 
Type of place: Central City; 
Residential rate: $15.40; 
Single-line business rate: $42.75. 

State: South Carolina; 
Place name: Norris; 
Type of place: Suburb; 
Residential rate: $14.05; 
Single-line business rate: $37.65. 

State: South Carolina; 
Place name: Sumter; 
Type of place: Central City; 
Residential rate: $15.96; 
Single-line business rate: $32.75. 

State: South Carolina; 
Place name: Bluffton; 
Type of place: Non-MSA; 
Residential rate: $8.34; 
Single-line business rate: $14.32. 

State: South Carolina; 
Place name: Calhoun Falls; 
Type of place: Non-MSA; 
Residential rate: $15.96; 
Single-line business rate: $32.75. 

State: South Carolina; 
Place name: Springfield; 
Type of place: Non-MSA; 
Residential rate: $12.70; 
Single-line business rate: $32.55. 

State: South Dakota; 
Place name: Rapid City; 
Type of place: Central City; 
Residential rate: $17.75; 
Single-line business rate: $36.60. 

State: South Dakota; 
Place name: Hill City; 
Type of place: Suburb; 
Residential rate: $17.75; 
Single-line business rate: $36.60. 

State: South Dakota; 
Place name: Sioux Falls; 
Type of place: Central City; 
Residential rate: $18.25; 
Single-line business rate: $38.40. 

State: South Dakota; 
Place name: Tea; 
Type of place: Suburb; 
Residential rate: $18.25; 
Single-line business rate: $38.40. 

State: South Dakota; 
Place name: Chamberlain; 
Type of place: Non-MSA; 
Residential rate: $15.75; 
Single-line business rate: $29.65. 

State: South Dakota; 
Place name: Kranzburg; 
Type of place: Non-MSA; 
Residential rate: $16.55; 
Single-line business rate: $32.45. 

State: South Dakota; 
Place name: Madison; 
Type of place: Non-MSA; 
Residential rate: $16.55; 
Single-line business rate: $32.45. 

State: Tennessee; 
Place name: Jackson; 
Type of place: Central City; 
Residential rate: $9.80; 
Single-line business rate: $35.75. 

State: Tennessee; 
Place name: Humbolt; 
Type of place: Suburb; 
Residential rate: $9.25; 
Single-line business rate: $33.80. 

State: Tennessee; 
Place name: Johnson City; 
Type of place: Central City; 
Residential rate: $13.01; 
Single-line business rate: $33.87. 

State: Tennessee; 
Place name: Bristol; 
Type of place: Suburb; 
Residential rate: $13.01; 
Single-line business rate: $33.87. 

State: Tennessee; 
Place name: Memphis; 
Type of place: Central City; 
Residential rate: $12.90; 
Single-line business rate: $42.70. 

State: Tennessee; 
Place name: Piperton; 
Type of place: Suburb; 
Residential rate: $12.90; 
Single-line business rate: $42.70. 

State: Tennessee; 
Place name: Cumberland Gap; 
Type of place: Non-MSA; 
Residential rate: $9.25; 
Single-line business rate: $33.80. 

State: Tennessee; 
Place name: Dover; 
Type of place: Non-MSA; 
Residential rate: $8.30; 
Single-line business rate: $30.05. 

State: Tennessee; 
Place name: Rutherford; 
Type of place: Non-MSA; 
Residential rate: $5.86; 
Single-line business rate: $10.46. 

State: Texas; 
Place name: Galveston; 
Type of place: Central City; 
Residential rate: $9.10; 
Single-line business rate: $11.45. 

State: Texas; 
Place name: Jamaica Beach; 
Type of place: Suburb; 
Residential rate: $9.10; 
Single-line business rate: $11.45. 

State: Texas; 
Place name: Houston; 
Type of place: Central City; 
Residential rate: $11.05; 
Single-line business rate: $28.25; 

State: Texas; 
Place name: El Lago; 
Type of place: Suburb; 
Residential rate: $11.05; 
Single-line business rate: $28.25; 

State: Texas; 
Place name: Victoria; 
Type of place: Central City; 
Residential rate: $8.80; 
Single-line business rate: $20.65. 

State: Texas; 
Place name: Waco; 
Type of place: Central City; 
Residential rate: $9.10; 
Single-line business rate: $11.45. 

State: Texas; 
Place name: Bruceville-Eddy; 
Type of place: Suburb; 
Residential rate: $9.10; 
Single-line business rate: $11.45. 

State: Texas; 
Place name: Putnam; 
Type of place: Non-MSA; 
Residential rate: $20.00; 
Single-line business rate: $30.00. 

State: Texas; 
Place name: Roaring Springs; 
Type of place: Non-MSA; 
Residential rate: $7.10; 
Single-line business rate: $18.35. 

State: Texas; 
Place name: Winters; 
Type of place: Non-MSA; 
Residential rate: $7.10; 
Single-line business rate: $18.35. 

State: Utah; 
Place name: Provo; 
Type of place: Central City; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Utah; 
Place name: Springville; 
Type of place: Suburb; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Utah; 
Place name: Salt Lake City; 
Type of place: Central City; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Utah; 
Place name: Bountiful; 
Type of place: Suburb; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Utah; 
Place name: Castle Valley; 
Type of place: Non-MSA; 
Residential rate: $13.50; 
Single-line business rate: $23.00. 

State: Utah; 
Place name: River Heights; 
Type of place: Non-MSA; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Utah; 
Place name: Salina; 
Type of place: Non-MSA; 
Residential rate: $11.03; 
Single-line business rate: $19.27. 

State: Vermont; 
Place name: Burlington[C]; 
Type of place: Central City; 
Residential rate: $24.55; 
Single-line business rate: $55.00. 

State: Vermont; 
Place name: South Burlington[C]; 
Type of place: Suburb; 
Residential rate: $24.55; 
Single-line business rate: $55.00. 

State: Vermont; 
Place name: Jeffersonville; 
Type of place: Non-MSA; 
Residential rate: $24.55; 
Single-line business rate: $55.00. 

State: Vermont; 
Place name: Newport[C]; 
Type of place: Non-MSA; 
Residential rate: $24.55; 
Single-line business rate: $55.00. 

State: Vermont; 
Place name: Westminster[C]; 
Type of place: Non-MSA; 
Residential rate: $25.30; 
Single-line business rate: $48.25. 

State: Virginia; 
Place name: Lynchburg; 
Type of place: Central City; 
Residential rate: $12.64; 
Single-line business rate: $45.50. 

State: Virginia; 
Place name: Altavista; 
Type of place: Suburb; 
Residential rate: $15.04; 
Single-line business rate: $30.48. 

State: Virginia; 
Place name: Virginia Beach; 
Type of place: Central City; 
Residential rate: $14.30; 
Single-line business rate: $53.18. 

State: Virginia; 
Place name: Hampton; 
Type of place: Suburb; 
Residential rate: $14.30; 
Single-line business rate: $53.18. 

State: Virginia; 
Place name: Roanoke; 
Type of place: Central City; 
Residential rate: $13.59; 
Single-line business rate: $49.33. 

State: Virginia; 
Place name: Buchanan; 
Type of place: Suburb; 
Residential rate: $12.64; 
Single-line business rate: $45.50. 

State: Virginia; 
Place name: Iron Gate; 
Type of place: Non-MSA; 
Residential rate: $12.65; 
Single-line business rate: $29.50; 

State: Virginia; 
Place name: Melfa; 
Type of place: Non-MSA; 
Residential rate: $11.91; 
Single-line business rate: $41.76. 

State: Virginia; 
Place name: Radford; 
Type of place: Non-MSA; 
Residential rate: $12.64; 
Single-line business rate: $45.50. 

State: Washington; 
Place name: Bellingham; 
Type of place: Central City; 
Residential rate: $12.50; 
Single-line business rate: $26.89. 

State: Washington; 
Place name: Bremerton; 
Type of place: Central City; 
Residential rate: $12.50; 
Single-line business rate: $26.89. 

State: Washington; 
Place name: Bainbridge Island; 
Type of place: Suburb; 
Residential rate: $12.50; 
Single-line business rate: $26.89. 

State: Washington; 
Place name: Seattle; 
Type of place: Central City; 
Residential rate: $12.50; 
Single-line business rate: $26.89. 

State: Washington; 
Place name: Kenmore; 
Type of place: Suburb; 
Residential rate: $13.25; 
Single-line business rate: $31.10. 

State: Washington; 
Place name: Mossyrock; 
Type of place: Non-MSA; 
Residential rate: $14.30; 
Single-line business rate: $20.50. 

State: Washington; 
Place name: Tekoa; 
Type of place: Non-MSA; 
Residential rate: $11.84; 
Single-line business rate: $27.28. 

State: Washington; 
Place name: Warden; 
Type of place: Non-MSA; 
Residential rate: $12.50; 
Single-line business rate: $26.89. 

State: West Virginia; 
Place name: Huntington; 
Type of place: Central City; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Milton; 
Type of place: Suburb; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Parkersburh; 
Type of place: Central City; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Vienna; 
Type of place: Suburb; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Wheeling; 
Type of place: Central City; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Moundsville; 
Type of place: Suburb; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Keystone; 
Type of place: Non-MSA; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Shinnston; 
Type of place: Non-MSA; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: West Virginia; 
Place name: Terra Alta; 
Type of place: Non-MSA; 
Residential rate: $15.00; 
Single-line business rate: $55.00. 

State: Wisconsin; 
Place name: Janesville[C]; 
Type of place: Central City; 
Residential rate: $10.67; 
Single-line business rate: $32.85; 

State: Wisconsin; 
Place name: Footville; 
Type of place: Suburb; 
Residential rate: $19.48; 
Single-line business rate: $25.00. 

State: Wisconsin; 
Place name: Madison[C]; 
Type of place: Central City; 
Residential rate: $10.67; 
Single-line business rate: $32.85. 

State: Wisconsin; 
Place name: Stoughton[C]; 
Type of place: Suburb; 
Residential rate: $10.67; 
Single-line business rate: $32.85. 

State: Wisconsin; 
Place name: Wausau[C]; 
Type of place: Central City; 
Residential rate: $18.25; 
Single-line business rate: $36.65. 

State: Wisconsin; 
Place name: Brokaw[C]; 
Type of place: Suburb; 
Residential rate: $18.25; 
Single-line business rate: $36.65. 

State: Wisconsin; 
Place name: Clintonville; 
Type of place: Non-MSA; 
Residential rate: $12.50; 
Single-line business rate: $21.00. 

State: Wisconsin; 
Place name: Genoa[C]; 
Type of place: Non-MSA; 
Residential rate: $10.67; 
Single-line business rate: $32.85. 

State: Wisconsin; 
Place name: North Freedom[C]; 
Type of place: Non-MSA; 
Residential rate: $13.35; 
Single-line business rate: $42.60. 

State: Wyoming; 
Place name: Casper; 
Type of place: Central City; 
Residential rate: $23.10; 
Single-line business rate: $23.10. 

State: Wyoming; 
Place name: Evansville; 
Type of place: Suburb; 
Residential rate: $23.10; 
Single-line business rate: $23.10. 

State: Wyoming; 
Place name: Cheyenne; 
Type of place: Central City; 
Residential rate: $23.10; 
Single-line business rate: $23.10. 

State: Wyoming; 
Place name: Gillette; 
Type of place: Non-MSA; 
Residential rate: $23.10; 
Single-line business rate: $23.10. 

State: Wyoming; 
Place name: Hudson; 
Type of place: Non-MSA; 
Residential rate: $48.60; 
Single-line business rate: $48.60. 

State: Wyoming; 
Place name: Rock River; 
Type of place: Non-MSA; 
Residential rate: $40.95; 
Single-line business rate: $40.95. 

[A] Rate for single-line business customers calculated based on message 
rate. 

[B] Rate for residential customers calculated based on message rate. 

[C] Rate for residential and single-line business customers calculated 
based on message rate. 

[D] For residential customers, there is an unlimited basic service 
available for $43.95. According to staff at the Michigan Public Service 
Commission, most residential customers purchase a message-rate service 
that allows 400 calls per month. The recurring service charge for this 
service is $12.01, not including any per-call charges that would be 
incurred for calls in excess of 400 per month. 

Source: GAO’s survey of state public utility commissions (May – Sept. 
2001). 

[End of table] 

[End of section] 

Appendix V: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Peter Guerrero (202) 512-2834: 
John Finedore (202) 512-2834: 
Amy Abramowitz (202) 512-2834: 

Acknowledgments: 

In addition to those named above, Wendy Ahmed, Michael Clements, Eric 
Diamant, Michele Fejfar, Faye Morrison, James Sweetman, Jr., and Mindi 
Weisenbloom made key contributions to this report. 

[End of section] 

Footnotes: 

[1] In 1949, the Congress amended the Rural Electrification Act (REA) 
to authorize the REA Administrator to make low-interest loans to extend 
and improve telephone service in rural areas. 

[2] In 1974, the Department of Justice (DOJ) brought an antitrust suit 
against AT&T, alleging that the company was engaging in anticompetitive 
behavior. DOJ and AT&T entered into a consent decree that required AT&T 
to divest its local telephone companies 

[3] Section 2(b) assigns responsibility for intrastate telephone rate 
setting to state governments. Section 254 directs both FCC and the 
states to take the steps necessary to promote universal service. 

[4] USAC is a subsidiary of the National Exchange Carrier Association 
(NECA). NECA was, at one point, the temporary administrator of the 
federal universal service programs. 

[5] The TRS program is mandated in title IV of the Americans with 
Disabilities Act and is codified in section 225 of the Communications 
Act of 1934. While not included in section 254 of the Communications 
Act with other universal service programs, we nonetheless include the 
TRS program in our discussion of universal service because the program 
helps to make telephone service available to individuals who otherwise 
might not receive service. 

[6] USAC reports the amount paid to and due to service providers, while 
NECA reports payment obligations. We refer to both as disbursements 
when reporting the program amounts for the year 2000. 

[7] In some instances, providers of eligible services without an ETC 
designation can receive support from USAC for the Schools and Libraries 
and Rural Health Care programs. 

[8] These services include single-party service; voice grade access to 
the telephone network; Touch-Tone service or its equivalent; access to 
emergency services, operator services, long distance service, and 
directory assistance; and toll limitation service. 

[9] Funding also comes from certain other non-common carrier providers 
of interstate telecommunications that FCC has required to contribute by 
regulation because the public interest so requires. 

[10] On a quarterly basis, USAC estimates the funding necessary for the 
four programs that it administers and the total interstate and 
international end-user telecommunications revenues. Based on these 
estimates, FCC approves a “contribution factor” that is applied to each 
telecommunications carrier’s interstate and international end-user 
telecommunications revenue from the previous 6 months to determine its 
contribution. 

[11] The safe harbor percentages are intended to approximate the 
carrier’s percentage of interstate and international end-user 
telecommunications revenue. 

[12] The Rural Utilities Service (RUS) in the Department of Agriculture 
also operates two programs that provide telecommunications-related 
assistance. RUS operates a loan program to provide funding to build and 
maintain rural telephone systems and a grant and loan program for 
distance learning and telemedicine. 

[13] For example, the federal Lifeline Program provides support to 
customers in all states. However, for purposes of reporting the number 
of states with a Lifeline Program, we only include states that have an 
independent program or provide additional funding beyond the federal 
funding. 

[14] The remaining state commissions reported two different types of 
geographic averaging. Nine commissions reported that rates for the 
largest local telephone company are set the same within broad 
geographic areas (e.g., urban, suburban, and rural). The remaining 
eight commissions reported that some other type of geographic averaging 
approach was used for the largest local telephone company in their 
state. 

[15] We classified places in Metropolitan Statistical Areas (MSA) as 
either central city or suburb. The Census Bureau reports a central city 
for each MSA. We classified all other places within an MSA, excluding 
the central city, as suburbs. We classified rural places as those 
outside an MSA. 

[16] In Wyoming, business and residential local telephone rates are the 
same. 

[17] Business customers are generally located closer to the telephone 
company’s facilities than are residential customers. This would imply 
that the cost of providing service to the average business customer is 
less than that for the average residential customer. Alternatively, 
most business telephone calls occur during busy hours (e.g., 10:30 a.m. 
to 11:30 a.m.). This concentration of telephone calls during the busy 
hours necessitates more switching capacity than would otherwise be 
necessary and implies higher costs associated with business customers. 
These effects most likely offset each other. 

[18] Five other states either have no intrastate long distance service 
(e.g., the District of Columbia) or are uncertain or have made no 
determination of whether the intrastate long distance access charges 
are subsidizing basic local telephone service. 

[19] We asked the experts we interviewed for their definitions of the 
various names given to IP voice applications. Several said that “IP 
telephony” and “VoIP” often are used interchangeably in the industry. A 
number of the experts considered “Internet telephony” to be a subset of 
IP telephony, referring specifically to calls sent using the Internet 
rather than a private data network. Those we spoke with differed in 
their terminology preferences. We have chosen to use “IP telephony” in 
this report because it is one of the more widely recognized of the 
various terms. 

[20] In some cases, this is the Internet; and in others, it is a 
private data network. 

[21] We were told by a few of the industry representatives we 
interviewed that quality problems still exist with IP telephony when it 
is sent over the Internet. 

[22] This application requires that each user has the correct software, 
as well as special hardware such as speakers and a microphone, and is 
online. 

[23] A couple of our interviewees pointed out that customers do not 
generally care about the technology behind their telephone calls—only 
that calls are completed and are of an acceptable quality. 

[24] It was mentioned that exact numbers for the amount of IP telephony 
traffic are not determined because “a packet is a packet,” meaning it 
is unknown whether any particular packet is voice, video, or data. 
Thus, there is no accurate measurement of IP telephony usage. 

[25] These systems usually involve the installation of IP telephony 
telephones. For calls outside the company, equipment linking to the 
public switched telephone network is retained. 

[26] One equipment provider that we interviewed said there had been 
more than a dozen trials of IP telephony by cable systems. 

[27] E-911, or enhanced 911, means the location of the caller is 
automatically identified to the emergency personnel receiving the call. 

[28] For further explanation of the stovepiped structure of the 
Communications Act of 1934 see our report, Telecommunications: 
Technological and Regulatory Factors Affecting Consumer Choice of 
Internet Providers [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-
93], Oct. 12, 2000, p. 19. 

[29] It has never been determined by the Commission whether IP 
telephony is an information service or a telecommunications service. 
FCC has stated that certain forms of “phone-to-phone” IP telephony 
services lack the characteristics that would render them “information 
services” within the meaning of the statute, and instead bear the 
characteristics of “telecommunications services.” However, FCC found it 
was not appropriate to make any definitive pronouncements in the 
absence of a more complete record focused on individual service 
offerings. In the Matter of Federal-State Joint Board on Universal 
Service, CC Docket No. 96-45, Report to Congress, FCC 98-67 (released 
Apr. 10, 1998) at paragraph 14. 

[30] There has been some debate on whether companies providing IP 
telephony services are engaging in “regulatory arbitrage,” or using the 
regulatory environment to one’s competitive advantage. For example, a 
service provider would be engaging in regulatory arbitrage if it chose 
to offer IP telephony specifically to avoid including universal service 
charges on its customers’ bills, and thereby perhaps being able to 
offer less expensive service than its traditional telephony competitors 
who are legally obligated to contribute to the Universal Service Fund. 
Several of the experts with whom we spoke noted that regulatory 
arbitrage had in fact driven the use of IP telephony in international 
calling. The current international accounting rates system is bypassed 
with IP telephony, keeping the cost of service provision lower. 
Regarding the Universal Service Fund, however, companies that 
exclusively provide international services are exempt from universal 
service contributions. Thus, we were told that the “information 
service” exemption was not a motivating factor for these international 
service providers to have selected IP telephony technology. For 
domestic service providers, some experts believed that companies have 
elected to deploy IP telephony technologies because they see 
convergence of voice and data as the future of the industry—not to 
avoid contributions to the Universal Service Fund. 

[31] A representative of several large users of telecommunications 
explained that the universal service charges on the telephone bills of 
large companies can run anywhere from 8 to 12 percent of the total 
telephone bill. Thus, IP telephony calls, which do not include 
universal service charges, can mean savings of around 10 percent on 
corporate telephone bills. This savings, along with the flexibility of 
the network, and the new features and functions offered, may make IP 
networks attractive to large business end users. 

[32] We were given a wide range of views about how much voice traffic 
would be IP telephony a few years from now, from just a few percent to 
more than 20 percent. 

[33] Several people we interviewed noted that there could be privacy 
concerns surrounding the labeling of packets as “voice.” 

[34] Some experts we spoke with thought that, ideally, universal 
service funds should come from the nation’s general tax revenues. 
Others suggested it be recovered from the 3 percent telephone excise 
tax, originally placed on American telephone bills in 1898 to fund the 
Spanish-American War. One carrier we met with had a detailed plan 
calling for a flat, per-line fee that would appear as a line item on 
every telephone bill—one rate for residential and a higher rate for 
businesses. Another carrier felt the current method of collecting, 
based on reported revenues, was sound and that a flat, per-line fee 
would shift universal service contributions to local exchange carriers 
because they have the most easily ascertainable line count. In April 
2001, the Consumer Energy Council of America released a report that 
explored several alternative funding options for universal service 
programs (see Universal Service: Policy Issues for the 21st Century, 
Consumer Energy Council of America, Mar. 2001). 

[35] However, some experts disagreed with aspects of the current High 
Cost Program. They felt it should be a means-tested program—that we 
should not subsidize everyone who chooses to live in a rural area 
irregardless of their ability to afford the higher cost of telephone 
service in such areas. 

[36] See Telecommunications: The Changing Status of Competition to 
Cable Television [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-
99-158], Jul. 8, 1999; Telecommunications: Development of Competition 
in Local Telephone Markets [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO/RCED-00-38], Jan. 25, 2000; Telecommunications: 
Technological and Regulatory Factors Affecting Consumer Choice of 
Internet Providers [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-
93], Oct. 12, 2000; and Telecommunications: Characteristics and 
Competitiveness of the Internet Backbone Market [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-02-16], Oct. 16, 2001. 

[37] There was disagreement among commenters, however, on whether 
assessments should be on a collected, gross-billed, or projected 
revenue basis. The Commission also sought comment on the de minimus 
exception, the limited international revenues exception, fund 
sufficiency, recovery of contributions, and more. See In the Matter of 
Federal-State Joint Board on Universal Service, CC Docket No. 96-45, 
Notice of Proposed Rulemaking, FCC 01-145 (released May 8, 2001) 
(NPRM). 

[38] NPRM at paragraph 6. 

[39] As defined by the Census Bureau, a place is a concentration of 
population, either legally bounded as an incorporated place or 
delineated for statistical purposes as a census designated place. 

[40] Because places are defined by political boundaries, there can be 
instances where the population density and categories of places that we 
have developed are not consistent. For example, some central cities 
encompass very large geographic areas and therefore have relatively few 
and less densely populated suburbs, while some central cities are 
relatively small geographically and therefore have many suburbs, some 
of which can be very densely populated. 

[41] The general concept of an MSA is that of a core area containing a 
large population nucleus, together with adjacent communities having a 
high degree of economic and social integration with that core. The 
current standards provide that each newly qualifying MSA must include 
at least one city with 50,000 or more inhabitants, or a Census Bureau-
defined urbanized area (of at least 50,000 inhabitants) and a total 
metropolitan population of at least 100,000 (75,000 in New England). 

[42] In some instances, MSAs cross state boundaries. When this 
occurred, the places within the MSA, but outside the state, were 
excluded. Approximately 3.8 percent of the U.S. population lives in 
these excluded places. 

[43] A rural carrier is a local telephone company that (1) provides 
common carrier service in a study area that does not include either any 
incorporated place of 10,000 inhabitants or more or any territory 
included in an urbanized place, (2) provides telephone exchange service 
to fewer than 50,000 access lines, (3) provides telephone exchange 
service to any local exchange carrier study area with fewer than 
100,000 access lines, or (4) has less than 15 percent of its access 
lines in communities of more than 50,000 on the date of enactment of 
the Telecommunications Act of 1996 (Feb. 8, 1996). 

[44] The federal Subscriber Line Charge is a monthly fee authorized by 
FCC and payable to the customer’s local telephone company to recover a 
portion of the cost of providing local telephone service that is 
associated with interstate service. The Subscriber Line Charge 
increases for additional lines beyond the first, or primary, line. 

[45] A wire center is a telephone company facility where customers’ 
telephone lines originate and which also generally houses one or more 
switches to route customers’ telephone calls. 

[46] Based on conversations with FCC staff, we believe there are two 
factors that mitigate any possible bias introduced by the divergence 
between political and wire center boundaries. First, even if customers 
are served by wire centers outside their political jurisdiction, the 
impact on the estimated cost is minor because adjacent wire centers 
generally have similar costs. Second, biases likely offset because, 
while some customers in a place are served by a wire center in an 
adjacent place, some wire centers in the place serve customers in an 
adjacent place. 

[End of section] 

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