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PCancel *26 B1sQATimes New RomNE'f& \@04: 2< yO-  Њ  FEDERAL COMMUNICATIONS COMMISSION ă  yO WASHINGTON, D.C. 20554 ă  yO -`7(##\4  pG;`# IN REPLY REFER TO: ă  yOx` `  hh@hpp   xx1600E  X-#Xn4  pG;X#  X-x` `  hh@hpp RAO Letter 27  Xk-x` `  hh@hpp DA 981106  XT-x` `  hh@hppAdopted: June 10, 1998  X= -x` `  hh@hppReleased: June 10, 1998  X& -#Xj\  P6G;CXP# Responsible Accounting Officer:  X-Re:xAccounting for Universal Service Support Payments and Receipts  X- I. Introduction  XW-xCurrently, Part 32 of the Commission's Rules,CW yO-ԍx47 C.F.R. Part 32.C the Uniform System of Accounts, has  X@-no revenue or expense accounts explicitly designated for recording universal service support@X yOI-  ЍxWe include the DEM Weighting and Long Term Support mechanisms in our definition of universal service support for this RAO Letter. payments and receipts. Because of recent changes in universal support mechanisms, we are issuing this letter to provide interim accounting guidance to assure that sufficiently detailed records are maintained to meet the Commission's information needs. Subsequently, we plan to initiate a rulemaking proceeding to determine whether Part 32 should be amended to establish new accounting rules for universal service support.  X- II. Background  Xq-xOn May 8, 1997, the Commission released the Universal Service Order to implement  X\-the requirements of Section 254 of the Communications Act of 1934, as amended (the Act).\ {O"-  ЍxFederalState Joint Board on Universal Service, CC Docket No. 9645, Report and Order, 12 FCC Rcd.  {O#-8776 (1997) (Universal Service Order).  XE-As required by the Act, the Universal Service Order established new mechanisms for providing universal service support payments to carriers, established new methods for telecommunications service providers to contribute to the universal service support programs, and required that, to the extent possible, universal service support be explicit, rather than implicit. Section 254(d) of the Act requires all carriers that provide interstate telecommunications services to contribute to universal service support mechanisms in an"! 0*0*0*H!"  X-equitable and nondiscriminatory manner.G yOy-ԍx47 U.S.C.  254(d).G To implement this provision of the Act, the  X-Universal Service Order established two contribution assessment methodologies. Contributions to fund the schools and libraries and rural health care  X- xZsupport mechanisms are assessed based on a carrier's interstate, intrastate, and international end X- xKuser telecommunications revenues.bXҼ {O-ԍxUniversal Service Order at paras. 837, 841.b Contributions to fund the high cost and low income support  xmechanisms are based on a carrier's interstate and international enduser telecommunications  Xx-revenues.bxҼ {O -ԍxUniversal Service Order at paras. 831, 836.b   1xIn the past, support specifically designated for universal service was paid for almost  xentirely by the interexchange carriers and was paid to local exchange carriers with higher than  X - xaverage localloop costs. Under the Universal Service Order, the definition of universal service  xhas been broadened to include not only the previously explicit support mechanisms of the high  x0cost fund and Lifeline and Linkup, but also implicit support mechanisms, such as DEM  xweighting, and new mechanisms for schools and libraries and rural health care providers.  xBecause the nature of funding and promoting universal service support has changed significantly,  xguidance on how to record these receipts and payments is necessary to ensure availability of data  xat the appropriate level of detail until such time as the Commission issues final accounting rules for universal service support.  XO- III. Accounting Classification and Subsidiary Accounting Records  X8-  X!-x 1. Universal Service Support Payments (Expenses)   X-  ^xCarriers shall record all universal service support payments in Account 6540, Access  X- x expense.wX|Ҽ yO -  ЍxThe term "universal service support payments" refers to all amounts that carriers pay as universal service  xKsupport to either state or federal support mechanisms. The term shall include cash payments as well as amounts credited against universal service support payment obligations. w Further, carriers shall establish accounting records to identify universal support  xpayments for the following three categories: federal support payments made for schools,  xlibraries, and rural health care mechanisms; federal support payments made for the high cost and  x low income mechanisms; and all other universal service support payments including those  x]required by the state jurisdictions. Carriers may identify these amounts by establishing  xsubsidiary accounting records, by using tracking codes that are compatible with their existing internal accounting systems, or by establishing subaccounts within each Part 32 expense account. ";0*(("  X-x 2. Universal Service Support Receipts (Revenues)   X-  xCarriers can receive universal service support receiptsXҼ yO4-  ЍxThe term "universal service support receipts" refers to all amounts that carriers receive as universal service  xsupport from either state or federal support mechanisms. The term shall include amounts received as cash as well as amounts received as credit against universal service support payment obligations.  from one or all of the universal  xservice support mechanisms. Currently, carriers record universal service support receipts in the  xrevenue account appropriate for the service supported. Carriers should continue to account for  Xv- xuniversal service support receipts in this manner. vҼ yO -  ]ЍxGenerally, Class A carriers record universal service support receipts in Account 5082, Switched access  x<revenue and Class B carriers record universal service support receipts in Account 5080, Network access revenue.  x,With respect to the schools and libraries and rural health care mechanisms, carriers shall record their receipts in the  xappropriate Part 32 revenue account (interstate or intrastate) for tariffed services performed or Account 5280, Nonregulated operating revenue, for nontariffed services such as internet access and inside wiring.  Carriers shall, however, establish records to  xkidentify amounts for each of the following support mechanisms: schools and libraries, rural  xyhealth care, high cost, low income, and other support mechanisms, including those established  xby state commissions. Carriers may identify these amounts by establishing subsidiary accounting  x/records, by using tracking codes that are compatible with their existing internal accounting systems, or by establishing subaccounts within each Part 32 revenue account.  X -   X01Í ÍX01Í ÍxThis letter is issued pursuant to authority delegated under  0.291 of the Commission's  xRules, 47 C.F.R.  0.291. Applications for review under Section 1.115 of the Commission's  X - x>Rules, 47 C.F.R.  1.115, must be filed within 30 days of the date of this letter. See 47 C.F.R.  1.4(b)(2). xIf you have any questions, please contact Thaddeus Machcinski at (202) 4180810. x` `  hh@Sincerely, x` `  hh@Kenneth P. Moran x` `  hh@Chief, Accounting Safeguards Division x` `  hh@Common Carrier Bureau