2012 Arkansas Code
Title 23 - Public Utilities and Regulated Industries
Subtitle 1 - Public Utilities And Carriers
Chapter 17 - Telephone and Telegraph Companies
Subchapter 4 - -- Telecommunications Regulatory Reform
§ 23-17-404 - Preservation and promotion of universal service.

(a) (1) The Arkansas High Cost Fund (AHCF) is established by this section in order to promote and assure the availability of universal service at rates that are reasonable and affordable and to provide for reasonably comparable services and rates between rural and urban areas.

(2) The AHCF will provide funding to an eligible telecommunications carrier that provides basic local exchange services using its own facilities or a combination of its own facilities and another carrier's facilities by the eligible telecommunications carrier within its study area.

(3) The AHCF shall be designed to provide predictable, sufficient, and sustainable funding to eligible telecommunications carriers serving rural or high-cost areas of the state.

(4) The AHCF shall also be used to accelerate and promote the incremental extension and expansion of broadband services and other advanced services in rural or high-cost areas of the state beyond what would normally occur and support the Lifeline Assistance Program to eligible low-income customers.

(b) (1) The AHCF is to provide a mechanism to restructure the present system of telecommunication service rates in the state as provided herein, and all telecommunications providers, except as prohibited by federal law, shall be charged for the direct and indirect value inherent in the obtaining and preserving of reasonable and comparable access to telecommunications services in the rural or high-cost areas. The value and utility of access to and interconnection with the public switched network will be lessened if the rural or high-cost areas do not have comparable access and subscribership.

(2) (A) This AHCF charge for all telecommunications providers shall be proportionate to each provider's Arkansas intrastate retail telecommunications service revenues.

(B) Because customers of the telecommunications providers that would pay the AHCF charge receive the benefits of a universal network, the telecommunications providers may surcharge their customers to recover the AHCF charges paid by the telecommunications provider. Therefore, the AHCF charge is not a tax and is not affected by state laws governing taxation.

(C) For the purpose of assessing mobile telecommunications services, the AHCF administrator shall continue to assess only Arkansas intrastate retail telecommunications service revenues and only to the extent such revenues may be considered located in the State of Arkansas in accordance with the Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252.

(c) (1) (A) The Arkansas Public Service Commission shall delegate to a trustee, the "AHCF administrator", the administration, collection, and distribution of the AHCF within forty-five (45) days of the effective date of the adoption of rules and procedures to implement the AHCF.

(B) In evaluating responses to request for proposals for the AHCF administrator's position, the commission shall consider and give material weight to the applicant's:

(i) Familiarity with Arkansas ETCs, Arkansas access rates, AICCLP history and procedures, and AUSF history and procedures; and

(ii) Personal availability to provide information and assistance to the General Assembly, telecommunications providers, and members of the public.

(2) (A) The AHCF administrator shall enforce and implement all rules and directives governing the funding, collection, and eligibility for the AHCF.

(B) As soon as practicable after the AHCF administrator is designated, he or she shall:

(i) Promptly notify all Arkansas ETCs of the availability of AHCF support and accept requests for AHCF support from Arkansas ETCs; and

(ii) Review and determine the accuracy and appropriateness of each request and advise the entity requesting the funds of his or her determination, including:

(a) Eligibility for support;

(b) The unreduced amount of support available during the phase-in period;

(c) The uncapped amount of support available; and

(d) The actual support available after implementation of all phase-in reductions and fund cap limitations.

(C) The affected parties shall have thirty (30) days to request reconsideration by the commission of the AHCF administrator's determination, and the commission after notice and hearing, if requested, shall issue its opinion on the reconsideration within thirty (30) days after the request of reconsideration unless continued by the commission.

(D) Persons aggrieved by the commission's opinion shall have the right to appeal the opinion in accordance with law.

(d) (1) (A) The AHCF administrator periodically shall establish and notify each telecommunications provider of the AHCF charge levels required to be paid by the telecommunications provider. In order to fund the AHCF at the required level, as soon as administratively reasonable after March 19, 2007, the AUSF administrator shall adjust the surcharge to ensure it will adequately fund the projected monthly payments required under this section, have sufficient reserves, and have the surplus necessary to fund the transition period required by this section. The AUSF administrator shall continue to charge and collect the AUSF surcharge until the AHCF administrator is designated by the commission and the AHCF administrator has adequate time to undertake charging and collecting the surcharge as the AHCF charge.

(B) The AUSF administrator shall continue to administer the AUSF until the AUSF has paid all administrative fees and completed its duties. The AUSF administrator shall cooperate with the AHCF administrator in transferring information and documentation necessary for the AHCF administrator to bill and collect charges from responsible parties and to transfer information about all accounts receivable due the AUSF administrator from responsible parties.

(C) All accounts payable to the AUSF administrator, all funds held by the AUSF administrator, and assets of the AUSF administrator shall be transferred to the AHCF administrator, when the AHCF administrator requests, to allow the AHCF administrator to carry out his or her function. When the AUSF administrator has completed his or her duties under the AUSF and completed his or her duties concerning transfer of information and other assistance, the AUSF administrator shall terminate all further activity in regard to the AUSF and the AHCF. If a transfer of funds is made to the AHCF administrator before the finalization of all duties by the AUSF administrator, the AUSF administrator may retain funds necessary for the AUSF administrator to fully pay all expected administrative costs of finalizing his or her duties and thereafter shall transfer any remaining funds to the AHCF administrator.

(2) Any telecommunications provider that without just cause fails to pay the AHCF charge that is due and payable pursuant to this section after notice and opportunity for hearing shall have its authority to do business as a telecommunications provider in the State of Arkansas revoked by the commission.

(3) The AHCF charge shall not be subject to any state or local tax or franchise fees.

(e) After reasonable notice and hearing, the commission shall establish rules and procedures necessary to implement the AHCF. The commission shall implement the AHCF and make AHCF funds available to eligible telecommunications carriers beginning the first calendar month after one hundred fifty (150) days after March 19, 2007. In establishing and implementing the AHCF, the commission shall adhere to the following instructions and guidelines:

(1) (A) AHCF funding shall be provided directly to eligible telecommunications carriers.

(B) (i) Except in an exchange in which the electing company is authorized under § 23-17-407(d) to determine the rates for basic local exchange service and switched-access services under § 23-17-408(c), for an ETC to receive funds from the AHCF, the ETC shall agree to be subject to and comply with all telecommunications provider rules adopted by the commission, unless the commission finds the technology used by the ETC to provide telecommunications service makes a rule inapplicable.

(ii) Except in any exchange in which the electing company is authorized under § 23-17-407(d) to determine the rates for basic local exchange service and switched-access services pursuant to § 23-17-408(c), each ETC shall be subject to all TPRs concerning application for service, refusing service, deposits, notices before disconnect, late payment penalties, elderly and handicapped protection, medical need for utility services, delayed payment agreements, and extended due dates.

(2) (A) The commission shall provide a report to the Legislative Council by October 31 of the year prior to a regular session of the General Assembly detailing any recommended changes to the universal service list of requirements that are to be supported by the AHCF. This list may be approved by the General Assembly, and if approved, the AHCF support to ETCs may be adjusted, due to the approved changes, to reflect an increase or decrease in the size of the AHCF by increasing or decreasing the overall financial cap on the AHCF to recover the cost of additions or revisions to the universal service list concurrent with any such revisions to the list of universal services identified in § 23-17-403.

(B) In considering revisions to the universal service list, the commission shall consider the need for the addition or removal of a service to the list in order to maintain end-user rates for universal services that are reasonably comparable between urban and rural areas or to reflect changes in the type and quality of telecommunications services considered essential by the public as evidenced, for example, by those telecommunication services that are purchased and used by a majority of single-line urban customers.

(C) A rate case proceeding or earning investigation or analysis shall not be required or conducted in connection with the recovery of the cost of additions or revisions or in connection with the administration of the AHCF;

(3) (A) The AICCLP members shall charge the rate under subdivision (e)(4)(B)(i) of this section to underlying carriers.

(B) The ILECs shall charge a reciprocal rate to other ILECs.

(C) The commission may review the accuracy of the reciprocal rates and the per-access minute carrier common line rate charged under subdivision (e)(4)(B)(i) of this section.

(D) If the AICCLP fails to provide an ILEC's carrier common line net revenue requirement, the ILEC may obtain concurrent recovery of the revenue loss from basic local exchange rates, intrastate access rate adjustments, or a combination thereof. Any recovery of revenue loss under this subdivision (e)(3)(D) shall not be subject to the caps on local rates under § 23-17-412;

(4) (A) Through December 31, 2003, except as provided in this subdivision (e)(4)(A), the intrastate Carrier Common Line Pool charges billed to carriers by the Arkansas Intrastate Carrier Common Line Pool (AICCLP) shall be determined as provided in the AICCLP tariff effective on December 31, 2000. Following April 20, 2001, carriers must continue to report RBMOUs associated with the traffic that they reported as of December 2000, except that incumbent local exchange carriers may discontinue reporting RBMOUs associated with their intracompany flat-rated optional plans that exist as of June 1, 2001. The AICCLP charges shall be adjusted to eliminate any credits to the AICCLP or to interexchange carriers that have been previously required.

(B) (i) Beginning January 1, 2004, except as provided in this subdivision (e)(4)(B), the intrastate Carrier Common Line charges billed to ILECs and underlying carriers shall be determined at the rate of one and sixty-five hundredths cents (1.65cent(s)) per intrastate access minute, exclusive of the amounts specified for funding the Extension of Telecommunications Facilities Fund and the Arkansas Calling Plan Fund. However, ILECs that are not AICCLP members may charge at a rate that is less than one and sixty-five hundredths cents (1.65cent(s)) and may recover the difference between the actual rate charged and one and sixty-five hundredths cents (1.65cent(s)) as allowed under § 23-17-416(b)(3). Following April 20, 2001, carriers must continue to report RBMOUs associated with the traffic that they reported as of December 2000 and shall continue to report through December 31, 2003, except that incumbent local exchange carriers may discontinue reporting RBMOUs associated with their intracompany flat-rated optional plans that exist as of June 1, 2001. The AICCLP charges shall be adjusted to eliminate any credits to the AICCLP or to interexchange carriers that have been previously required.

(ii) (a) There is created an allocation of AICCLP funds to be known as the "Extension of Telecommunications Facilities Fund".

(b) A maximum of five hundred thousand dollars ($500,000) per year of AICCLP funds shall be allocated to fund the Extension of Telecommunications Facilities Fund to assist in the extension of telecommunications facilities to citizens not served by the wire line facilities of an eligible telecommunications carrier.

(iii) (a) (1) There is also created an AICCLP allocation to be known as the "Arkansas Calling Plan Fund".

(2) Through December 31, 2003, the Extension of Telecommunications Facilities Fund and the Arkansas Calling Plan Fund will be funded by the AICCLP by assessing one-half (1/2) of the fund to be paid by ILECs and one-half (1/2) of the fund to be paid by all other telecommunications providers reporting intrastate retail billed minutes of use to the AICCLP.

(b) The Arkansas Calling Plan Fund shall receive a maximum of four million five hundred thousand dollars ($4,500,000) per year to assist in funding the provision of calling plans in telephone exchanges in the state.

(iv) (a) Through December 31, 2003, the Extension of Telecommunications Facilities Fund and the Arkansas Calling Plan Fund will be funded by the AICCLP assessing one-half (1/2) of the fund to be paid by incumbent local exchange carriers (ILECs) and one-half (1/2) of the fund to be paid by all other telecommunications providers reporting intrastate retail billed minutes of use to the AICCLP. Beginning January 1, 2004, the Extension of Telecommunications Facilities Fund and the Arkansas Calling Plan Fund will be paid by the AICCLP members, exiting ILECs, and underlying carriers as follows:

(1) Each AICCLP member and each exiting ILEC shall remit to the AICCLP administrator on a monthly basis the proportion of the total assessment each was paying before December 31, 2003, for a collective total of one-half (1/2) of those funds;

(2) Underlying carriers shall pay to the administrator a collective total of one-half (1/2) of the cost of the Arkansas Calling Plan Fund and Extension of Telecommunications Facilities Fund; and

(3) Each underlying carrier shall continue to remit to the administrator on a monthly basis its portion of the underlying carrier funding requirement of the Arkansas Calling Plan Fund and Extension of Telecommunications Facilities Fund, based upon the underlying carrier's share of Arkansas intrastate telecommunications services revenues and special intrastate ILEC revenues proportionate to the total Arkansas intrastate telecommunications services revenues and special intrastate ILEC revenues of all underlying carriers.

(b) Through December 31, 2003, ILECs shall be individually assessed in accordance with the proportion that the ILEC funds the AICCLP credits that are being eliminated by this section, and each other telecommunications provider shall be assessed based on its portion of the total non-ILEC intrastate retail billed minutes of use.

(c) Amounts paid by ILECs to fund either the Extension of Telecommunications Facilities Fund or the Arkansas Calling Plan Fund created by this section shall not be recoverable from the Arkansas Universal Service Fund (AUSF).

(d) (1) The assessments shall commence upon the first day of the month following April 20, 2001.

(2) Assessments shall be made with respect to the Extension of Telecommunications Facilities Fund and the Arkansas Calling Plan Fund only to the extent necessary, but not more than the maximum specified in this section, to fund any extensions of facilities or calling plans approved by the Arkansas Public Service Commission in accordance with applicable law and this section.

(v) (a) AICCLP charges determined and billed through December 2000 shall be considered final and not subject to further true up or adjustment.

(b) (1) (A) Unless an audit is requested prior to February 28, 2004, by a two-thirds (2/3) vote of the participating carriers of the AICCLP as it is constituted prior to January 1, 2004, charges determined and billed through December 2003 shall be considered final and not subject to audit.

(B) The AICCLP board, with the assistance of the administrator, shall allow recipients and payors to correct any errors concerning the AICCLP settlement process for corrections that are for the time period after December 31, 2003.

(2) The administrator of the AICCLP as it existed prior to January 1, 2004, may supervise any audit that is requested and may further take any action deemed reasonable or necessary to finalize the winding-up process of the AICCLP as it existed prior to January 1, 2004.

(C) (i) Any ETC may receive support from the AHCF after it is established and operational. Until that time, the current AUSF shall continue to provide support through June 30, 2007, at the level set by commission order. After June 30, 2007, the support level for companies receiving payments from the AUSF shall continue at the level previously ordered by the commission subject to an adjustment to reflect the elimination of an overpayment made to AUSF recipients in 2006. At such time that the AHCF is fully operational and providing support to ETCs through the formula set forth herein, all payments from the AUSF shall cease and the AUSF shall be eliminated and administratively closed as soon as possible.

(ii) (a) The formula is as follows for ETCs with fewer than five hundred thousand (500,000) access lines or customers:

(1) The AHCF administrator shall determine the support for High Cost Loop Support by using the most current annual filing of annual unseparated unlimited loop revenue requirement cost per loop of the ETC's study area as developed each year by NECA and filed with USAC. For an ETC not submitting such information, the ETC shall submit equivalent information to the administrator for the administrator to calculate as to cost per loop for wireline or per customer for commercial mobile service providers. Unless the commission determines otherwise the raw financial data submitted to the administrator to establish an alternate cost per loop shall be treated as confidential;

(2) The AHCF administrator shall then subtract the per-loop federal high-cost loop support as developed each year by NECA and filed with USAC of the ETC's study area or alternatively the total high-cost loop support per loop or per customer as calculated by the AHCF administrator with data provided by the ETC;

(3) The AHCF administrator shall also subtract the amount of three hundred forty-four dollars and forty cents ($344.40) per loop, due to the responsibility of each ETC to fund through local rates and other revenue such as AICCLP revenue requirements and access charges, to fund a significant portion of their cost per loop. Alternatively, the AHCF administrator shall subtract three hundred forty-four dollars and forty cents ($344.40) per loop or customer from ETCs not reporting loops and loop cost to NECA;

(4) The AHCF administrator shall determine the high-cost support for each ETC by subtracting these reductions as set forth in this formula from the annual unseparated unlimited loop revenue requirement and apply it to the total number of loops in the ETC's study area as of December 31 of the preceding year that are eligible for support for federal universal service. As to ETCs not reporting loops within its study area, the AHCF administrator shall apply the reductions to the total number of loops or customers of the ETC eligible for support for federal universal service as of December 31 of the preceding year; and

(5) The remaining balance, if positive as to each ETC, shall be the ETC's loop support element to support an ETC's high cost loops. As to ETCs funded based upon customers, the remaining balance, if positive, shall be called the "customer support element".

(b) (1) The AHCF administrator shall determine local switching support (LSS) of each ETC using the most current annual financial data submitted to NECA and calculated by USAC and applying the following procedure:

(A) The AHCF administrator shall use the most current trued up local switching support amount that has been calculated by NECA and submitted to USAC annually for each ETC within its size group. For each ETC that does not have an individually calculated local switching support amount, the AHCF administrator shall calculate a local switching support amount by using an average of all ETCs within its size group that have an established local switching support amount;

(B) The AHCF administrator shall calculate the local switching support factor for each ETC's study area by taking the 1996 weighted dialed equipment minute factor as supplied in the NECA submission of 1999 Network Data Management -- Usage filed on March 1, 2001, with the FCC and subtracting the 1996 interstate dialed equipment minute factor as supplied in the NECA submission of 1999 network usage data filed on March 1, 2001, with the FCC. This result shall be called the "local switching support factor". For each ETC that does not have an individually calculated weighted dialed equipment minute factor and an interstate dialed equipment minute factor, the AHCF administrator shall calculate a weighted dialed equipment minute factor and an interstate dialed equipment minute factor by using an average of all ETCs within its size group that have an established weighted dialed equipment minute factor and an interstate dialed equipment minute factor;

(C) The AHCF administrator shall then calculate the total LSS revenue requirement for each ETC by dividing the local switching support amount calculated in subdivision (e)(4)(C)(ii)(b)(1)(A) of this section by the local switching support factor as calculated in subdivision (e)(4)(C)(ii)(b)(1)(B) of this section;

(D) The AHCF administrator shall then divide the total LSS revenue requirement for each ETC by the total number of loops in the ETC's study area as of December 31 of the preceding year that are eligible for support for federal universal service;

(E) The AHCF administrator shall then calculate the local switching support (LSS) to be recovered by multiplying the total LSS revenue requirement per loop as calculated in subdivision (e)(4)(C)(ii)(b)(1)(D) of this section by fifteen percent (15%); and

(F) The sum of subdivision (e)(4)(C)(ii)(b)(1)(E) of this section as to each ETC, if positive, shall be the ETC's local switching support element.

(2) If a request for support is made by an ETC that does not have switching support calculated by NECA, the commission shall develop a proxy method to be used to calculate such an ETC's local switching support. The sum of the calculation for each ETC from the proxy method, if positive, shall be the ETC's local switching support element.

(c) (1) For ETCs with AHCF support based on loops, the AHCF administrator shall determine each ETC's local loop support by multiplying the number of loops of the ETC as of December 31 of the preceding year that are eligible for federal universal service support by the ETC's loop support element, if applicable, and the AHCF administrator shall determine the ETC's local switching support by multiplying the number of loops of the ETC as of December 31 of the preceding year that are eligible for federal universal service support by the ETC's local switching support element. The AHCF administrator shall determine the uncapped AHCF support for each ETC by adding the sum of the ETC's total loop support, if any, and the ETC's total local switching support, if any.

(2) For ETCs with AHCF support based on customers, the AHCF administrator shall determine the ETC's customer support element by multiplying the number of customers of the ETC as of December 31 of the preceding year who are eligible for federal universal service support by the ETC's customer support element, if applicable, and the AHCF administrator shall determine the ETC's local switching support by multiplying the number of customers of the ETC as of December 31 of the preceding year who are eligible for federal universal service support by the ETC's local switching support element. The AHCF administrator shall determine the uncapped AHCF support for the ETC by adding the sum of the ETC's total loop support, if any, and the ETC's total local switching support, if any.

(3) (A) If state or federal regulatory or legislative actions eliminate the publicly available elements used to calculate loop support under subdivision (e)(4)(C)(ii)(a)(1) of this section or local switching support under subdivision (e)(4)(C)(ii)(b)(1) of this section for an ETC with a total customer access base or total customer base of fewer than fifteen thousand (15,000) lines or customers, the AHCF administrator shall promptly notify the commission.

(B) Once notified, the commission shall open a rule-making docket to replace the eliminated elements used to calculate loop support under subdivision (e)(4)(C)(ii)(a)(1) of this section or local switching support under subdivision (e)(4)(C)(ii)(b)(1) of this section.

(C) Until alternate elements are adopted by the commission, the AHCF administrator shall use the previous determinations as used during the year immediately preceding the year the elements were eliminated to calculate loop support under subdivision (e)(4)(C)(ii)(a)(1) of this section or local switching support under subdivision (e)(4)(C)(ii)(b)(1) of this section.

(D) Upon commission adoption of the replacement elements, the commission shall order the AHCF administrator to incorporate those replacement elements into the previously existing method used by the AHCF administrator to calculate loop support under subdivision (e)(4)(C)(ii)(a)(1) of this section or local switching support under subdivision (e)(4)(C)(ii)(b)(1) of this section. The calculations shall be:

(i) Based on the fully allocated cost of the affected ETCs; and

(ii) Effective as of the next annual determination process date, as established by the commission.

(iii) (a) For ETCs with five hundred thousand (500,000) lines or more on or after December 31, 2010, support shall be determined using the following procedure:

(1) Using the FCC's synthesis model available from USAC or an equivalent replacement model, the AHCF administrator shall take the ETC's average monthly per-line cost for each eligible wire center and subtract the FCC cost model benchmark. The result of the line cost minus the benchmark is the available per-line high-cost support available for that wire center;

(2) The AHCF administrator then shall multiply the available high-cost support for each eligible wire center by the number of lines reported to the AHCF administrator by the carrier as of December 31 of the preceding year. Eligible wire centers shall be wire centers with three thousand (3,000) access lines or less as of March 19, 2007; and

(3) The total of the calculations by the AHCF administrator for all eligible wire centers shall be the high-cost support available to the ETC, as limited by cap restrictions.

(b) The support provided by the AHCF shall be calculated as an annual amount paid in equal monthly payments and recalculated annually by the AHCF administrator in compliance with this section and the commission's rules and procedures.

(iv) In the event that an element used to determine AHCF support is materially changed or eliminated, the AHCF administrator shall use an equivalent or similar element in calculating the AHCF support in subdivisions (e)(4)(C)(ii) and (iii) of this section.

(v) The AHCF shall be phased in over a five-year transition period. The phase-in shall transition from the AUSF revenue replacement mechanism to the AHCF high-cost support mechanism for ETCs with a total customer access base of under fifteen thousand (15,000) access lines. ETCs with a total customer access base of over fifteen thousand (15,000) access lines shall not participate in the transition or in the funding of the transition, and any calculations related to the transition apply only to the size group with a total customer access base of under fifteen thousand (15,000) access lines. The AHCF administrator shall apply the AHCF transition period for the ETCs as follows:

(a) In year one of the transition period, the administrator shall first calculate the total support due an ETC from the AHCF. If the AHCF calculation for the ETC exceeds the revenue the ETC received from the AUSF in the 2007 revenue base, the AHCF calculation shall be the ETC's uncapped unreduced AHCF support. If the ETC's calculated AHCF support is less than the ETC's 2007 revenue base, then the ETC's AHCF uncapped support in year one shall be the ETC's AHCF calculated support plus eighty-nine percent (89%) of the difference between the ETC's 2007 revenue base and the ETC's calculated AHCF support;

(b) In year two of the transition period, the administrator shall first calculate the total support due an ETC from the AHCF. If the AHCF calculation for the ETC exceeds the revenue the ETC received from the AUSF in the 2007 revenue base, the AHCF calculation shall be the ETC's uncapped unreduced AHCF support. If the ETC's calculated AHCF support is less than the ETC's 2007 revenue base, the ETC's AHCF uncapped support in year two shall be the ETC's AHCF calculated support plus seventy-eight percent (78%) of the difference between the ETC's 2007 revenue base and the ETC's calculated AHCF support;

(c) In year three of the transition period, the administrator shall first calculate the total support due an ETC from the AHCF. If the AHCF calculation for the ETC exceeds the revenue the ETC received from the AUSF in the 2007 revenue base, the AHCF calculation shall be the ETC's uncapped unreduced AHCF support. If the ETC's calculated AHCF support is less than the ETC's 2007 revenue base, the ETC's AHCF uncapped support in year three shall be the ETC's AHCF calculated support plus sixty-seven percent (67%) of the difference between the ETC's 2007 revenue base and the ETC's calculated AHCF support;

(d) In year four of the transition period, the administrator shall first calculate the total support due an ETC from the AHCF. If the AHCF calculation for the ETC exceeds the revenue the ETC received from the AUSF in the 2007 revenue base, the AHCF calculation shall be the ETC's uncapped unreduced AHCF support. If the ETC's calculated AHCF support is less than the ETC's 2007 revenue base, the ETC's AHCF uncapped support in year four shall be the ETC's AHCF calculated support plus fifty-one percent (51%) of the difference between the ETC's 2007 revenue base and the ETC's calculated AHCF support;

(e) In year five of the transition period, the administrator shall first calculate the total support due an ETC from the AHCF. If the AHCF calculation for the ETC exceeds the revenue the ETC received from the AUSF in the 2007 revenue base, the AHCF calculation shall be the ETC's uncapped unreduced AHCF support. If the ETC's calculated AHCF support is less than the ETC's 2007 revenue base, the ETC's AHCF uncapped support in year five shall be the ETC's AHCF calculated support plus thirty-four percent (34%) of the difference between the ETC's 2007 revenue base and the ETC's calculated AHCF support; and

(f) After the five-year transition period, the AHCF administrator shall calculate each ETC's support by first calculating each ETC's uncapped AHCF support. If the total calculated support to all ETCs within a size group is less than the capped amount of the size group's part of the total AHCF, each ETC within the size group shall be entitled to its total calculated AHCF support.

(D) (i) (a) The cost to transition from the 2007 revenue base to the AHCF during the five-year transition period shall be funded by a combination of sources. The AHCF administrator shall reserve three million dollars ($3,000,000) from the existing AUSF surplus to assist in funding the transition period. The specific annual amounts the AHCF administrator shall use from the surplus for the transition period shall be as follows:

(1) One million dollars ($1,000,000) for year one;

(2) Seven hundred fifty thousand dollars ($750,000) for year two;

(3) Seven hundred fifty thousand dollars ($750,000) for year three;

(4) Two hundred fifty thousand dollars ($250,000) for year four; and

(5) Two hundred fifty thousand dollars ($250,000) for year five.

(b) In the event the total transition cost in a year is less than the amount scheduled to be used that year from the AUSF surplus, that excess amount shall be used to assist in funding the transition in the subsequent year or years.

(ii) (a) The AHCF administrator shall calculate the total support necessary to fully fund the transition cost for each specific calendar year.

(b) If the transition support from the surplus fully funds the transition costs, the AHCF administrator shall add each ETC's calculated AHCF support to any transition support to which the ETC may be entitled, and that amount shall be the ETC's uncapped AHCF support.

(c) If the surplus does not fully fund the transition costs, then each ETC participating in the size group with a total customer access base of under fifteen thousand (15,000) access lines that is not receiving transition funds shall pay a pro rata share of the remaining transition costs based upon a formula using total increase in support received by all ETCs with an increase from the 2007 revenue base to AHCF levels as the denominator and the specific ETC's increase from the 2007 revenue base to the AHCF support as the numerator. The AHCF administrator shall use that formula to calculate the pro rata share of each ETC that is not receiving transition funds to assist in fully funding the transition costs. However, an ETC shall not be required to pay transition funding that would lower its uncapped payment from the AHCF below the ETC's funding received from the AUSF in the 2007 revenue base.

(iii) The annual transition funds provided from the AUSF surplus and the funds used in the transition are supplemental funds, are in addition to the capped funds, and are not to be considered when a cap is calculated at any time.

(E) The AHCF administrator shall apply the cap on the total AHCF and upon the specific size groups established within the AHCF annually. During the transition, the cap shall be applied as follows:

(i) (a) (1) The total AHCF support that is calculated to be due ETCs within each size group of the AHCF shall be calculated prior to the consideration of the transition funding. If total support due a size group, prior to transition funding, does not exceed that size group's AHCF cap, the AHCF administrator shall pay that size group's full AHCF support amount.

(2) If total support, using the AHCF formula for recipients of the specific size group exceeds the cap, the administrator shall determine the amount that the total calculated AHCF support exceeds that size group's cap.

(b) To reduce each size group's authorized support to conform to the size group's cap, the AHCF administrator shall determine total calculated AHCF support to each ETC within the size group and shall add each ETC's transition payment, if any, to establish each ETC's total calculated support within the size group. The AHCF administrator shall then use the total calculated support due all ETCs within the size group as the denominator and the amount the size group's AHCF calculation exceeds the cap as the numerator. The administrator shall then subtract from each ETC's total calculated support a pro rata portion, using the fraction established herein to reduce AHCF funding to the capped amount, based upon each ETC's total calculated support, to reduce the size group's support level to the capped AHCF amount; and

(ii) (a) The funds available for distribution to ETCs from the AHCF shall not exceed and are capped at twenty-two million dollars ($22,000,000) per year, the total capped fund. Cost of administrating the AHCF shall first be deducted from the total capped fund prior to allocation of funding to the ETCs. Transition funds used from the surplus during the five-year transition period are supplemental and are not subject to any cap. The annual period to be used by the AHCF administrator to adjust support levels and upon which to apply any cap shall be on the calendar year. In addition to the total fund cap, the funds available from the AHCF shall also be capped based upon size groups using access lines for loop-based ETCs and customers for customer-based ETCs. Size grouping is used to ensure funds are targeted to areas most needing high-cost assistance. For the purpose of calculating the size grouping caps, total customer access base shall be used for loop-based ETCs and total customers for customer-based ETCs.

(b) For all ETCs with a total customer access base or total customer base of five hundred thousand (500,000) or more access lines or customers on or after December 31, 2010, the size group cap shall be thirteen and one-half percent (13.5%) of the total capped fund.

(c) For all ETCs with a total customer access base or total customer base of one hundred fifty thousand (150,000) or more access lines or customers and fewer than five hundred thousand (500,000) access lines or customers on December 31, 2010, the size group cap shall be thirteen and one-half percent (13.5%) of the total capped fund.

(d) For all ETCs with a total customer access base or total customer base of fifteen thousand (15,000) or more access lines or customers and fewer than one hundred fifty thousand (150,000) access lines or customers on December 31, 2010, the size group cap shall be two percent (2%) of the total capped fund.

(e) For all ETCs with a total customer access base or total customer base of fewer than fifteen thousand (15,000) access lines or customers, the size group cap shall be seventy-one percent (71%) of the total capped fund.

(5) (A) (i) The commission shall establish by regulation a grant program to make grants available to eligible telecommunications carriers for the extension of facilities to citizens who are not served by wire line services of an eligible telecommunications carrier. Grants may be requested by an eligible telecommunications carrier or citizens who are not served, or both.

(ii) The commission shall delegate to a trustee the administration, collection, and distribution of the Extension of Telecommunications Facilities Fund in accordance with the rules and procedures established by the commission. The trustee shall enforce and implement all rules and directives governing the funding, collection, and eligibility for the Extension of Telecommunications Facilities Fund.

(B) (i) In establishing regulations for the grant program, the commission shall consider demonstrated need, the length of time the citizens have not been served, the households affected, the best use of the funds, and the overall need for extensions throughout the state.

(ii) The commission may require each potential customer to be served by the extension of facilities to pay up to two hundred fifty dollars ($250) of the cost of extending facilities.

(C) The plan shall be funded by customer contributions and by the Extension of Telecommunications Facilities Fund established by subdivision (e)(4)(B)(ii)(a) of this section.

(D) (i) The commission shall provide quarterly reports to the Legislative Council. The reports shall include, but shall not be limited to, the number of requests for grants, the number of grants awarded, the amount awarded, and the number of additional customers served.

(ii) The commission shall notify members of the General Assembly of grants made in their districts.

(E) In order to allow time for potential applicants to request grants, no grants shall be awarded for three (3) months after the effective date of the rules establishing the program.