Washington Post 2008 Annual Report Download - page 24

Universal Service. The FCC has determined that interconnected VoIP services, such as those provided by Cable ONE,
must contribute to the universal service fund. The amount of a company’s universal service fund contribution is based on a
percentage of revenues earned from end-user interstate and international services. The FCC has developed three
alternative methodologies through which an interconnected VoIP service provider may elect to calculate its universal
service fund contribution: (i) an interim safe harbor that assumes that 64.9% of the provider’s total end-user revenues are
derived from interstate or international service; (ii) a traffic study to determine an allocation for interstate and international
end-user revenues; or (iii) actual interstate and international end-user revenues. If an interconnected VoIP service provider
calculates its universal service fund contributions based on its actual percentage of interstate calls, the interstate
classification of the service might no longer apply, in which case the VoIP service provider could be subject to regulation
by each state in which it operates, as well as federal regulation. The FCC’s decision to apply universal service
obligations to VoIP providers was upheld by a federal court.
Intercarrier Compensation. The FCC is considering various proposals designed to reform the manner in which
providers of telecommunications and VoIP services compensate one another for transporting and terminating various forms
of network traffic. FCC determinations regarding the rates, terms and conditions for transporting and terminating such
traffic can have a profound and material effect on the profitability of providing voice and data services. It is not possible
to predict what actions the FCC might take in this area or the effect that they will have on Cable ONE.
CPNI. In 2007, the FCC adopted rules expanding the protection of customer proprietary network information (“CPNI”)
and extending CPNI protection requirements to providers of interconnected VoIP. CPNI is information about the quantity,
technical configuration, type, location and amount of a phone customer’s use. These requirements generally have
increased the cost of providing VoIP service, as providers now must implement various safeguards to protect CPNI from
unauthorized disclosure.
Access for Persons with Disabilities. FCC regulations require providers of interconnected VoIP service to comply with
all disability access requirements that apply to telecommunications carriers, including provision of telecommunications
relay services for persons with speech or hearing impairments. These requirements generally have had the effect of
increasing the cost of providing VoIP service.
Regulatory Fees. An August 2007 FCC order established that interconnected VoIP service providers must begin
contributing to shared costs of FCC regulation through an annual regulatory fee assessment. Fee payments started in
2008. These rules have had the effect of increasing the cost of providing VoIP service.
Local Number Portability. In 2007, the FCC required providers of interconnected VoIP service and their “numbering
partners” to ensure that their subscribers have the ability to port their telephone numbers when changing service providers.
The order also clarified that local exchange carriers and commercial mobile radio service providers have an obligation to
port numbers to an interconnected VoIP service provider upon a valid port request. Providers of interconnected VoIP
service are required to begin to contribute to federal funds to meet the shared costs of local number portability and the
costs of North American Numbering Plan Administration. The new rules were effective in March 2008. The FCC is
currently considering whether additional numbering requirements (such as allowing consumers access to abbreviated
dialing codes like 211 and 311) should be applied to interconnected VoIP service providers. These rules have had the
effect of increasing the cost of providing VoIP service.
Subscribership and Deployment Reports. In a June 2008 order, the FCC required interconnected VoIP service
providers to report certain data on a semi-annual basis (March and September) to the FCC. These data include the
number of residential and commercial voice lines by state and the ZIP codes in which voice service is offered. The new
reporting requirement is currently pending approval by the Office of Management and Budget. It is expected that the
requirement will be approved and applied to interconnected VoIP service providers before the March reporting cycle.
12 THE WASHINGTON POST COMPANY