Under the hood of the revenue base

So Anchornets has got me thinking about the USF contribution methodology. I've already posted about how the increase in the Contribution Factor (38.1% currently) is due more to a shrinking revenue base than to increases in program expenditures (and the expenditure increases are mostly over at the High Cost program).

But it got me thinking about how the revenue base is calculated, so I thought I'd look into it. Is the information useful? I don't see how unless you work for a carrier, USAC or the FCC. Is it interesting? If your answer is yes, you are too far down the USF rabbit hole.

The revenue base comes to USAC via the 499-Q, by which carriers report their interstate and international long distance revenue. (The USF fee is only charged on interstate and international revenue.)

But where do the carriers get the number from? It's not like the old days, when your phone bill listed each long distance call and the amount you paid for it. That was the norm in 1996 when the E-Rate was being created. Telecom people call those lists call detail records (CDRs). In those days, carriers could just add up all their interstate and international call revenue, since they were keeping track of each call.

But that's not an option for most modern carriers, so they have two options: 1) a traffic study or 2) the "safe harbor." 

The traffic study is what it sounds like: the carrier randomly selects a set of calls and then determines what percentage are long distance. So a wireless provider might find that 25% of their users' calls are interstate or international, so their percentage of interstate usage (PIU); they can multiply their total revenue by 25% to come up with their revenue base for the USF.

The safe harbor is a percentage that the FCC sets for carriers who can't or don't want to do a traffic study. It was last set in the 2006 Contribution Methodology Reform Order, which set the safe harbor at 37.1% for cell phones (paragraph 2) and 64.9% for VoIP (paragraph 53). (For those keeping score at home, it left the safe harbor for pagers at 12% and for analog SMR dispatch (whatever the hell that is) at 1%.) So a cell phone provider too lazy to do a traffic study can multiply their total revenue by 37.1% to come up with their revenue base for the USF.

What percentage of carriers are using the safe harbor percentages? I wish I could find that out. Does anyone out there know? [Why do I want that piece of data? Because it's there.]

I warned you at the beginning that this post wouldn't be useful or interesting.