OUS Fund - FAQ: OUS Surcharge and the OUS 2 Revenue Worksheet
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- OUS Surcharge and Contribution Rates
- Telecommunications Revenues Subject to PUC Fee and OUS Surcharge
- OUS 2 Revenue Worksheet Examples
- OUS 2 Acronyms
OUS Surcharge
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Q1. Why did the PUC implement an OUS fund surcharge?
Q2. How is the OUS surcharge assessed?
Q3. What is the authorized end-user OUS surcharge rate?
Q4. How often may the OUS surcharge rate change?
Q5. Are providers required to bill the surcharge to end-users?
Q6. Is there explicit language to be included on the end-user bill?
Q8. Does the surcharge apply to nonrecurring telecommunications charges?
Q9. Does the surcharge apply to non-regulated telecommunications services?
Q10. Are Universal Service distributions included in the OUS surcharge base?
Q11. What revenues are excluded from the OUS surcharge application?
Q12. How are RCCs and wireless service revenues treated?
Q13. How are information and enhanced services revenues treated?
Q14. How are payphone coin revenues treated?
Q15. Are pay telephone providers allowed to obtain a refund of OUS surcharges?
Q16. How are out-of-period revenue journal adjustment entries treated?
Q17. Are uncollectible revenues and late payment charges included in the OUS revenue base?
Q18. How are OUS surcharges remitted to the OUS administrator?
Q20. What does intrastate mean? Does it include interLATA?
Q22. What intrastate telecommunications services are included in the OUS revenue base?
Q1. Why did the PUC implementing an OUS fund surcharge?
The PUC was directed by the 1999 Oregon Legislative Assembly to create and implement the OUS fund and pay for it with a surcharge on all retail telecommunications sales in Oregon. The fund is designed to support carriers that provide basic telephone service in high-cost rural areas in Oregon. The purpose is to ensure that basic telephone service is available at reasonably comparable and affordable rates throughout the state.
In the past, basic telephone service rates in high-cost rural areas were supported through implicit subsidies included in other telephone rates such as those for toll and business services. The OUS fund replaces that implicit subsidy with an explicit subsidy. Creating an explicit state fund at this time allows the industry to move toward cost-based rates without adversely affecting rates in rural areas. The fund is also designed to remove any competitive advantages between incumbent providers and new providers entering the market.
Q2. How is the OUS surcharge assessed?
The surcharge is assessed against all telecommunications service providers (TSPs) in Oregon based on Oregon intrastate retail telecommunications revenue. TSPs may pass along the surcharge to customers (i.e., end-users) as a separate item on their bill.
Q3. What is the authorized end-user OUS surcharge rate?
The authorized OUS surcharge rate is set by the Commission and may change depending on the requirements of the fund. For a complete schedule and current contribution and surcharge rates, see Quarterly OUS 2 Revenue Reporting and Payment Schedule.
Q4. How often may the OUS surcharge rate change?
The surcharge rate is set by the Public Utility Commission of Oregon (PUC). When the PUC authorizes a change in the surcharge rate, TSPs will be notified 45 days prior to the effective date.
Q5. Are providers required to bill the surcharge to end-users?
No. End-user billing is optional. TSPs, however, will be assessed the surcharge on retail revenue regardless of whether they pass along the surcharge to end-users.
Q6. Is there explicit language to be included on the end-user bill?
Yes. The billing line item is to read "Oregon Universal Service Surcharge _____%" followed by the computed amount. Reasonable abbreviations are acceptable like "OR" for "Oregon", "%" for "percent", and "Charge" for "Surcharge". The percentage rate, however, should be identified so that the customer can readily identify changes in the rate when they occur.
Q7. Is the surcharge applied to all retail telecommunications revenues including intrastate, interstate, and international?
No. The surcharge applies only to retail intrastate telecommunications services sold in Oregon. (PUC 00-312, Issue 11) There are some exceptions that are discussed below. See Question 11.
Q8. Does the surcharge apply to nonrecurring telecommunications charges?
Yes. Recurring, nonrecurring, and other service element charges that are associated with service or service activity are included.
Q9. Does the surcharge apply to non-regulated telecommunications services?
Generally, yes, but there are some exceptions. See Question 11.
Q10. Are Universal Service distributions included in the OUS surcharge base?
No. USF distributions from various federal and state universal service programs are recorded on line 7 of the OUS 2 Worksheet. They are excluded from the OUS base. Federal support distributions would include the federal High-Cost, Lifeline, Link-Up, Schools and Libraries, and Rural Health Care Provider programs. State support distributions would include High-Cost (i.e., Docket UM 731 and the universal service component of UM 384 OCAP), OTAP, Link-Up, and the speech, and hearing impaired programs. For end-user surcharge billing, the OUS surcharge would be applied to the net retail bill amount after credits for Lifeline, and OTAP.
Q11. What revenues are excluded from the OUS surcharge application?
1. Wholesale revenues are not subject to OUS surcharges. Wholesale revenues are revenues derived from services provided to other TSPs that in turn contribute to the OUS fund (lines 1 through 11 of the OUS 2 Worksheet). These include revenues derived from access services purchased by interexchange carriers (IXCs), interconnection and UNEs purchased by competitive LECs, and finished services sold to resellers.
Revenues derived from telecommunications services sold to radio common carriers (RCCs), enhanced service providers (ESPs), information or Internet service providers (ISPs), and payphone providers are generally considered retail and are subject to OUS surcharges. This is because these providers are considered end-users for purposes of OUS funding. See Questions 12, 13, and 14 for further explanation.
2. Other revenues, as identified on the OUS 2 Worksheet lines 21-30, are not subject to OUS surcharges. These include information and enhanced service revenues; local coin revenues; certain international toll revenues; directory publishing - including directory listing revenues from unlisted and non-published telephone numbers; carrier billing and collection revenues; non-telecommunications revenues; and net settlements from access pooling arrangements. Enhanced and information service revenues and payphone local coin revenues are not subject to OUS surcharges in order to establish equity with ESPs, ISPs, and payphone providers who, as mentioned, are considered as end-users and not carriers. However, the equivalent telecommunications services (network access, toll, and other features) required in a carrier’s provision of enhanced services, information services, and payphone services should be imputed by the carrier and considered as retail revenue subject to the surcharge. See Questions 13 and 14 for further explanation.
3. Certain fees and taxes that appear on the customer’s billing statement are not subject to OUS surcharges. These would include franchise taxes, federal excise taxes, 9-1-1 fees, PUC fees, and RSPF fees. End-user billing for recovery of the federal Universal Service Fund, however, is included in the revenue base (line 19 of the OUS 2 Worksheet). See Question 17 for further explanation. Fees and taxes that flow through the balance sheet (i.e., because the carrier acts as a billing agent for a third party) would not be entered on the OUS 2 Worksheet. Fees and taxes that flow through the revenue accounts may be recorded on line 27 of the OUS 2 Worksheet.
4. Expense reimbursements and custom work that are not recorded in the revenue accounts of a carrier are not subject to OUS surcharges and are not recorded on the OUS 2 Worksheet.
5. Retail interstate and international telecommunications service revenues are not subject to OUS surcharges.
Q12. How are RCCs and wireless service revenues treated?
Wireless service revenues are treated differently depending on whether the service is (1) provided by an RCC that is not participating in the OUS program, (2) provided by an RCC that is participating in the OUS program, or (3) provided by a TSP. The option of RCCs to participate in the OUS program is set forth in ORS 759.425(7).
1. RCCs that do not participate in the OUS program are considered end-users. Revenues received by TSPs from RCCs for network interconnection, toll, or other telecommunications services would be classified as retail revenues subject to the OUS surcharge and recorded on lines 12-15 and 17-19 of the OUS 2 Worksheet depending on the services ordered. Because the RCC is not participating, wireless revenues normally recorded on lines 8 and 16 would be left blank.
2. RCCs that participate in the OUS program are considered carriers. Revenues received by TSPs from RCCs for interconnection or other services would now be classified as wholesale revenue, excluded from the OUS base, and recorded on lines 1-6 and 9-10 of the OUS 2 Worksheet depending on the wholesale services ordered. Participating RCCs would now record wireless revenues as retail or wholesale depending on whether the wireless services are provided to end-users or resold to another participating RCC or carrier. Wireless revenues would be recorded on lines 8 (wholesale) or 16 (retail) of the OUS 2 Worksheet.
3. Wireless services provided by a certified TSP are treated the same as if they were provided by an RCC that participates in the OUS program. TSPs, as contrasted to RCCs, may not opt-out of contributing to the OUS program. Wireless revenues should be classified as retail (line 16) or wholesale (line 8) depending on whether the wireless services are provided to end-users or resold to another participating RCC or carrier.
Q13. How are information and enhanced services revenues treated?
Information and enhanced service revenues are not subject to the OUS surcharge (line 21 of the OUS 2 Worksheet). This is to create symmetry between services provided by ESPs and ISPs (ESPs and ISPs are considered end-users) and similar enhanced services provided by certified TSPs. However, in the same way that an "end-user" ESP or ISP would purchase telecommunications services from a TSP, the TSP should impute retail telecommunications revenues from the same services to itself. These services would include access, transport, and other features of the network that an "end-user" ISP/ESP would require. These imputed service revenues would be subject to the OUS surcharge and recorded on lines 12-19 of the OUS 2 Worksheet depending on the service requirements.
Q14. How are payphone coin revenues treated?
Local coin revenues are not subject to an OUS surcharge (line 23 of the OUS 2 Worksheet). This is to create symmetry between payphone providers (payphone providers are considered end-users) and local coin revenues received by certified TSPs. However, in the same way that an "end-user" payphone provider would purchase telecommunications services from a TSP, the TSP, if it self-provisions coin telephone service, should impute the same telecommunications services to itself. These services would include public access lines (PALs), network usage charges, and other features of the network that a payphone provider would require. They would also include toll services (credit card, third party billing, collect, and coin sent-paid) provided by operator service providers (OSPs), IXCs, or LECs. These service revenues would be subject to the OUS surcharge and recorded on lines 12-19 of the OUS 2 Worksheet depending on the service requirements. Payphone compensation from OSPs, IXCs or LECs would be recorded on line 5 of the OUS 2 Worksheet and would not be subject to the OUS surcharge.
Q15. Are pay telephone providers allowed to obtain a refund of OUS surcharges?
Yes. Oregon Revised Statutes (ORS) 759.425(8) allows pay telephone providers to apply for a refund of the OUS surcharge imposed on, and paid by, the provider for the provision of pay telephone service. See ORS 759.425(8) and Oregon Administrative Rule 860-032-0670. Pay telephone providers seeking a refund must file an Application for Refund of the Oregon Universal Service Surcharge.
Q16. How are out-of-period revenue journal adjustment entries treated?
Journal adjustments are not generally subject to the OUS surcharges (line 29 of the OUS 2 Worksheet). An example would be prior-period service refunds ordered by the PUC or FCC. However service credits or debits that appear on a customer bill due to service outages, or due to billing cycle timing differences, would be subject to OUS surcharges. The revenue adjustments should be recorded as wholesale or retail revenues as appropriate.
Q17. Are uncollectible revenues and late payment charges included in the OUS revenue base?
No. Uncollectible revenue and late payment charges are not included in the OUS revenue base.
Q18. How are OUS surcharges remitted to the OUS administrator?
Within 15 days of the close of a recovery quarter, i.e. the quarter for which contributions are due, the OUS administrator will send an OUS 2 form packet to all Oregon telecommunications providers and participating RCCs. The OUS 2 form will have the appropriate contribution rate for the quarter on line 32. TSPs complete the revenues part of the form and then calculate their required contribution by multiplying Oregon intrastate retail revenues (line 31) by the contribution rate for the quarter (line 32) and record their contribution on line 33. The completed OUS 2 form is due to the OUS administrator by the 10th of the second month after the close of the recovery quarter.
Automated Clearing House (ACH) payment of contributions is an option. An ACH Agreement has to be completed and signed by the TSP and sent to the PUC at least 30 days before the first transaction. Agreement forms are sent in the first OUS 2 form packet or they can be downloaded from this website. A TSP has a choice of two methods of electronic payment: ACH-debit which has no cost to the TSP and ACH-credit which, has fees associated with the transaction specific to the TSP's financial institution.
If a TSP is paying by ACH credit, an ACH Credit Transaction Slip must be completed and faxed to the PUC to the attention of David Hillier (See PUC and OUS Contact Information) on the date of the transaction.
Once the ACH agreement is established, the amount on line 33 will be transferred from the TSP's account on the 28th of the second month after the end of the recovery quarter. The transfer will be done by the PUC in case of ACH-debit, or by the TSP's bank in case of ACH-credit.
The TSP may pay the contribution by check payable to the "OUS Fund". The check must be mailed together with a remittance slip, which is provided in the OUS 2 form packet, to:
Oregon PUC/Oregon Universal Service Fund
PO Box 2153
Salem, OR 97308-2153
The check and the remittance slip must be received at the above address by the 28th of the second month after the close of the recovery quarter.
As an option, if the contribution amount is less than $100 the TSP may defer payment and accumulate it to the following quarter's contribution. This accumulation may continue interest-free until either the accumulated amount owed to the OUS fund is greater than $100 or four quarters has passed from the first deferment, whichever comes first. When the accumulated total owed the OUS fund becomes over $100, payment is required and must be received by the PUC no later than the 10th of the following month. If this option is chosen, it must be indicated on the OUS 2 form by checking the "Deferment" payment option just below line 33.
Contribution payments are due quarterly. Contributions from providers to the OUS fund are required regardless of whether the provider bills an end-user the OUS surcharge. Providers that have third-party billing and collections arrangements are responsible for making any necessary arrangements.
For a complete schedule of payment dates, see Quarterly OUS 2 Revenue Reporting and Payment Schedule. For current rates see OUS Contribution and Surcharge Rates.
Q19. Should a TSP file an OUS 2 Worksheet even if it had no Oregon revenues for the reporting period?
Yes. The form should be completed with "zero" revenues reported, signed and dated.
Q20. What does intrastate mean? Does it include interLATA?
Intrastate telecommunications means any telecommunications service in which the information transmitted originates and terminates within the boundaries of the State of Oregon (ORS 759.005(2)(b)). It includes interLATA telecommunications services within the state. Thus, local exchange services, EAS services, and message toll services where the call originates and terminates in Oregon - regardless of the route - are intrastate. Dedicated private line services where the end user terminus points are within the state are generally intrastate. There are a number of exceptions that are discussed under Questions 21 and 22.
Q21. What interstate and international telecommunications services are excluded from the OUS revenue base?
Examples of excluded interstate retail telecommunications services include:
(1) Federal subscriber line charges,
(2) Federal USF surcharges.
(3) Interstate and international message toll service and associated operator service charges,
(4) Interstate and international private line charges,
(5) Digital subscriber loops (DSL) that terminate on Internet Service Providers (ISPs), and
(6) Local private lines that serve audio and/or video broadcasters.
On the OUS 2 worksheet, interstate service revenues would be included under Column A Total Oregon Revenue but not under Column B Intrastate Oregon Revenue. Total Oregon revenues will be retained on the OUS 2 worksheet for audit purposes but excluded from the OUS assessment base.
Q22. What intrastate telecommunications services are included in the OUS revenue base?
Examples of intrastate retail telecommunications services included in the OUS revenue base include:
(1) Local exchange business and residential services,
(2) CENTREX services,
(3) Public Access Line service,
(4) Radio common carrier (RCC) access service,
(5) Integrated Switched Digital Network (ISDN) services,
(6) Extended Area Service (EAS)
(7) Intrastate message toll services - both inter- and intraLATA,
(8) Intrastate operator and directory assistance services,
(9) Intrastate private line services,
(10) Central office dialing and customer calling features, and
(11) End user OUS surcharges.
On the OUS 2 worksheet, intrastate service revenues would be included under both Column A Total Oregon Revenue and Column B retail revenues consistent with the implementation of the PUC Order.