Step 4 Rate Comparability Review

In the Order on Remand (FCC 03-249, released in 2003), the FCC adopted a new annual state certification requirement. Section 54.316 of the FCC's rules requires each state to review annually the comparability of residential rates in rural areas of the state served by non-rural incumbent local exchange carriers (ILECs) to urban rates nationwide, and to certify as to whether the rates are reasonably comparable.

Please note the rate comparability review certification is in addition to the annual certifications in which states certify to the use of universal service support through the High Cost Program, which are also due on October 1.

Effect of Failure to Certify

In the event that a state fails to certify, no eligible telecommunications carrier (ETC) in the state shall receive High Cost Model support pursuant to Section 54.309 of the FCC's rules.

For the rate comparability certification, states may use a safe harbor and presume for certification purposes that the residential rates in rural areas served by non-rural ILECs are reasonably comparable to urban rates nationwide, if the rates are below the nationwide urban rate benchmark. The nationwide urban benchmark is the most recent average urban rate plus two standard deviations, or $36.52 (August 8, 2008, FCC Reference Book), for the upcoming certification period. This benchmark amount will be adjusted annually.

If a state does not rely on the safe harbor provision, or certifies that the rates are not reasonably comparable, the state must fully explain its rate comparability analysis and provide data supporting its certification, including but not limited to, residential rate data for rural areas within the state served by non-rural ILECs. If a state certifies that the rates are not reasonably comparable, it also must explain why and what action it intends to take to achieve rate comparability.

Details of this requirement, along with rate comparability guidelines and a basic service rate template, can be found in the FCC's Order on Remand, Further Notice of Proposed Rulemaking, and Memorandum Opinion and Order, CC Docket No. 96-45, FCC 03-249, released October 27, 2003.

Where do I send my certifications?

Rate comparability certifications should be filed and mailed to both addresses below:

FCC mailing address:
Marlene H. Dortch
Office of the Secretary
Federal Communications Commission
445 12th Street, SW
Washington, DC 20554

FCC mailing address:
USAC
Vice President, High Cost and Low Income
2000 L Street NW, Suite 200
Washington, DC 20036