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Connecticut PURA Probes E-911 Telecom Revenue Falloff

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On its own motion (that is, not in response to any issue brought by providers or consumers), Connecticut’s Public Utilities Regulatory Authority (“PURA”) has opened Docket No. 12-11-02, “PURA Investigation into the Accuracy of Telecommunications Data Reporting for E-911 Funding Purposes,” to inquire into causes of “revenue shortfalls” in the state’s E-911 program in recent years, and specifically “to investigate telecommunications company data reporting” which forms the basis for determining program assessments. PURA identified two areas of concern: a “reduction in the number of wireline access lines count experienced by the incumbent telephone companies,” and the apparent fact “that a number of telecommunications companies are reporting all of their lines at the 100+ line rate, when in fact they should not be.” Both problems factor into a problematic diminution in the amount of “revenues being paid to Public Safety,” which PURA characterizes as “significantly lower” than they used to be.

Identifying its audience (and its targets), PURA made the announcement of inception of the probe to “All Local Exchange Carriers, Wholesale Providers of Commercial Mobile Radio Service, Pay Telephone Service Providers and Commercial Mobile Radio Service Resellers, The Southern New England Telephone Company d/b/a AT&T Connecticut, and Verizon New York,” and reported that the State Office of Consumer Counsel would also be a “Participant” in the investigation.

The diminished number of wired access lines now reporting and paying into the emergency notification system accords with the historic shift of public telecom usage away from traditional landlines and towards the burgeoning alternatives offered by twenty-first century technology. There isn’t much PURA can do about that. However, questions concerning the assessment rate that should properly apply to the lines that are reported is another matter: The suspicion here, clearly, is that manipulation – perhaps fraudulent – of PURA’s “tiered” accounting system may be being committed by some of the state’s telecom providers.

Here’s the background: On May 27, 1997, the (then) Department of Public Utility Control announced (in Docket No. 96-09-13) that it had “determined that Connecticut local exchange and commercial mobile radio service subscribers should be assessed an amount ranging from $.08 to $.39, depending upon the number of access lines subscribed,” such amount to appear on the monthly billing statements issued by telephone service providers. The applicable per-line imposition rates were set to follow a logical, semi-algorithmic curve:

For a single line provided to and reported for a given identified customer – that is, your basic residential household or single-line business – the assessment is set at 39¢ per month; if, however, two lines are on the account, each would be charged only 29¢. Three lines would result in a further-reduced impost of 26¢ per line per month, and if there are four or five lines going to the same address or account, each line would be assessed only 23¢ per month. Users maintaining between six and ten access lines (mostly small business and commercial customers) pay 19¢ for each one, and accounts with from eleven to twenty-five lines are required to pay 16¢ per. Where from twenty-six to fifty access lines are supplied, the rate comes down to 13¢ per line each month, and it diminishes to 10¢ for accounts numbering between fifty-one and ninety-nine lines. Finally, a rock-bottom per-line rate of 8¢ each month is assessed on telecom customers having a hundred or more 911-capable outgoing phone lines (the “100+ line rate” referenced in the new docket) – that is, a mere 20½% of the top-tier rate collected from single-line accounts, which comprise the large majority of billings.

Thus – and herein lies the greater difficulty confronting PURA – if a substantial number of accounts are, intentionally or otherwise, being reported incorrectly, especially if such “errors” are resulting in a yield equal to only one-fifth of the appropriate sum (which is, again, the source of program income for the E-911 system), then funding for enhanced emergency notification in Connecticut would be severely compromised. Accordingly, PURA’s investigation will attempt to identify and then rectify such mistakes (or abuses) where it finds them.

About the Author: Marc Palmer Kram is a Senior Tax Analyst at Wolters Kluwer Tax & Accounting US, where he performs quality control and troubleshooting on the vast taxability database supporting its best-in-class CCH tax-compliance software, and then sometimes writes about what he finds. Learn more about him by visiting his author bio page. Learn more about Wolters Kluwer at WoltersKluwer.com and SalesTax.com.

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