Intercarrier Compensation Recovery is the component of the Connect America Fund (CAF) that supports reforms to the intercarrier compensation system, the system of regulated payments among carriers to compensate each other for the origination, transport and termination of telecommunications traffic. In 2011, the Federal Communications Commission adopted rules requiring Incumbent Local Exchange Carriers (ILECS) to reduce many of these switched access rates over a multi-year period.
ICC Recovery support enables ILECs to recover a decreasing portion of revenue lost due to reductions in switched access rates. The FCC allows carriers to charge residential customers an Access Recovery Charge (ARC) on a limited basis and recover charges from certain multi-line business customers. If eligible, ILECs may receive additional recovery funds provided they meet certain broadband service obligations.
Features of an ARC
There are a few restrictions and limitations on an ARC. They include:
- Annual consumer increase is limited to 50 cents
- Price cap carriers are permitted up to five annual increases
- Rate-of-return carriers are permitted up to six annual increases
- ARC cannot be charged to Lifeline program subscribers
- ARC is independent of the subscriber line charge but it may be listed as a single line item
- Residential rate ceiling – local consumer rates (including the subscriber line charge and other fees) plus ARC cannot exceed $30
- Multiline business rate ceiling – the subscriber line charge plus ARC cannot exceed $12.20
- Maximum permissible recovery from ARC whether or not charged
Carriers may receive additional funds through the Connect America Fund to cover ARC revenue shortfalls. For price cap carriers these supplementary funds will be phased down to zero over a three-year period, beginning in 2017. Rate-of-return carriers will receive supplementary funding without a phase down process for the time being.
What else do I need to know?
Price cap and rate-of-return carriers are eligible for ICC Recovery support and there are a few important forms and deadlines to be aware of:
- State or self-use certification letters are due annually on October 1, pursuant to Section 54.314. Review information about certification letters on our Certification Requirements page.
- The Carrier Annual Reporting Data Collection Form, the FCC Form 481, is due annually on July 1, pursuant to Section 54.313. For more information on the form and online submittal instructions, please read the Online Filing Instructions and the official FCC form instructions on the High Cost program Forms page.
- Connect America Fund ICC data reports are due annually based on annual access tariff filing dates.
- When submitting your Tariff Review Plans to USAC, please also provide a completed copy of the RoR Input Template.