*Pages 1--358 from C:\Pdf2Text\Ready4Text_in\pdf\54061.pdf* 3 - 1 3. High- Cost Support The high- cost support mechanisms enable areas with very high costs to recover some of these costs from the federal universal service fund, leaving a smaller remainder of the costs to be recovered through end- user rates or state universal service support mechanisms. In this manner, the high- cost support mechanisms are intended to hold down rates and thereby further one of the most important goals of federal and state regulation -- the preservation and advancement of universal telephone service. This section of the report outlines the high- cost support mechanisms and provides data for these mechanisms. The high- cost support mechanisms include embedded high- cost loop support (HCLS), 1 safety net additive support, safety valve support, forward- looking non- rural high- cost model support (HCMS), long term support (LTS) 2 , interstate common line support (ICLS) for rate- of- return carriers, interstate access support (IAS) for price- cap carriers, and local switching support (LSS). Table 3.1 summarizes the annual amounts for the high- cost support mechanisms for 1986 through 2005. 3 It is based on information provided by the National Exchange Carrier Association (NECA) through 1997 and the Universal Service Administrative Company (USAC) since 1998. For the first time, we have actual support amounts from USAC for all years from 1998 to 2004. Support amounts for 2005 are projected, based on USACs third quarter filing. 4 Support amounts are subject to adjustment if data are corrected in future periods. Competitive carriers are eligible to receive support from the universal service support mechanisms provided that they provide service using their own facilities, either partially or completely. Thus, pure resellers are not eligible. To be eligible to receive support, a carrier must be designated as a competitive eligible telecommunications carrier (CETC) by the state regulatory commission of the state in which it operates, or by the FCC where the state

1 This was formerly referred to as the Universal Service Fund, and still bears that name in the Commission rules. It is now referred to as high- cost loop support to avoid confusion with the new, more comprehensive universal service support mechanisms that the Commission developed to implement the 1996 Act. See 47 C. F. R. 36.601. See also 47 C. F. R. Part 54. 2 Effective July 1, 2004, LTS was merged into ICLS.

3 The 2005 numbers are based on the assumption that fourth quarter projections will be the same as those for the third quarter.

4 Universal Service Administrative Company, Federal Universal Service Support Mechanism Fund Size Projections (USAC Filing) for the Third Quarter 2005 (May 2, 2005). Actual support amounts for earlier years were provided to us by special request. Except for ICLS and LSS, for which final true- ups are available through 2003, the actual support amounts for a given year contain adjustments for prior years. USAC now makes these amounts available on their website on a monthly basis. 1 3 - 2 commission lacks jurisdiction. 5 A competitive carrier that is designated as a CETC will receive high- cost support that is determined by the number of lines it serves, the support per line received by the incumbent local exchange carrier (ILEC) against which it is competing, and the degree to which it uses its own facilities to provide its services. 6 Table 3.2 compares the annual amounts of support received by ILECs and by CETCs for each support mechanism since the first CETC started receiving support in 1999. 7

Historically, HCLS was provided to all ILECs based on their embedded costs. Such support provides assistance for non- traffic sensitive (NTS) local loop costs -- a term that refers to the costs of outside telephone wires, poles, and other facilities that link each telephone customer's premises to the public switched telephone network. NTS costs are allocated between the state and interstate jurisdictions because all local loops can be used for making and receiving both intrastate and interstate telephone calls. Historically, the interstate allocation was made using the Subscriber Plant Factor (SPF). 8 This factor is now 25% for all companies. Today, only rural carriers 9 receive HCLS. Non- rural carriers receive HCMS instead of HCLS.

If an ILEC is deemed a rural carrier, it continues to receive high- cost support based on embedded costs. The expense adjustment allows those study areas 10 with an average unseparated cost per loop that exceeds 115% of the national average to allocate an additional portion of their NTS costs to the interstate jurisdiction and to have those costs recovered by

5 47 C. F. R. 54.201. 6 47 C. F. R. 54.307. 7 The data for 2005 are projections. USACs quarterly filings include projections of support for competitive carriers that have applied for, but not yet received, ETC status. These support amounts have been removed from the 2005 data reported here if the carrier failed to attain ETC status by the time of the filing for the Third Quarter 2005.

8 The Subscriber Plant Factor is defined in section 36.154( e) of the Commission's rules. 47 C. F. R. 36.154( e). It was frozen in 1981 and then transitioned to 25% between 1985 and 1993, subject to the limitations in section 36.154( f) of the Commission's rules. 47 C. F. R. 36.154( f).

9 See 47 C. F. R. 51.5 for the definition of a rural carrier. Generally, they either have less than 100,000 lines or serve predominantly rural areas.

10 A study area is usually an operating company's operations in one state. Holding companies may own multiple operating companies and thus have multiple study areas in a state. Study area boundaries were frozen as of November 15, 1984. Any subsequent change requires a Commission waiver of this freeze. 2 3 - 3 HCLS. 11 Table 3.3 shows the percentages of additional NTS costs recovered by HCLS. 12 HCLS was implemented during a period in which the basic interstate allocation of loop costs was shifted from a level based on the historical SPF to the present flat allocation factor of 25%. Both of these changes were phased in between 1985 and 1993, during which the HCLS was increased by one- eighth of the formula amount each year. In December 1993, the Commission, at the recommendation of the Joint Board in CC Docket 80- 286, imposed a cap on HCLS payments. 13 The cap was indexed to the rate of growth in the national total of working exchange loops. It is implemented by adjusting the national average cost per loop used to calculate each study area's high- cost assistance (using the current formula from Table 3.3) from the average value to whatever base value is required to achieve the cap. For example, in 2003, the cap is achieved by adjusting the base value 2001 cost per loop from the national average of $240.00 to $267.15. In addition, when exchanges are sold or transferred to another company, the new owner is limited to the same support for those exchanges that they had under the old owner. 14 The Commission modified the high- cost support mechanism to provide additional support to rural carriers on May 23, 2001. Implementation of the modified support mechanism began July 1, 2001 and will continue for at least a five year period. 15 The Commission rebased 11 In January 1988, high- cost assistance was retargeted to increase benefits to small and medium sized LECs. The old and new high- cost formulas are compared in Table 3.1 of the Monitoring Reports in CC Docket No. 87- 339. The last report in that docket was released May 30, 1997.

12 For example, suppose the national average cost per loop is $240 and a company with 10,000 loops has a cost per loop of $420, or 175% of the national average. Then for the portion of their costs between $276 (115% of the national average) and $360 (150% of the national average) they would receive 65% of those costs [. 65 times ($ 360 - $276) = $54.60], plus they would receive 75% of their costs over $360 [. 75 times ($ 420 - $360) = $45], resulting in HCLS totaling $99.60 per loop, or $996,000 total support.

13 Amendment of Part 36 of the Commissions Rules and Establishment of a Joint Board, CC Docket No. 80- 286, Report and Order, 9 FCC Rcd 303 (1993). 14 47 C. F. R. 54.305. This applies to sales and transfers initiated after May 7, 1997. In August 2000, the Common Carrier Bureau adopted an order removing similar older caps for individual study areas that were subject to them at that time, effective January 1, 2000. Petitions for Waiver Concerning the Definition of Study Area Contained in Part 36 Appendix- Glossary of the Commissions Rules, CC Docket No. 96- 45, Order, 15 FCC Rcd 23491 (2000).

15 See Federal- State Joint Board on Universal Service, Multi- Association Group (MAG) Plan for Regulation of Interstate Services of Non- Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, CC Docket Nos. 96- 45, 00- 256, Fourteenth Report 3 3 - 4 the HCLS fund for rural carriers, revised the corporate operations expense limitation formula, 16 and modified the indexed cap. Accordingly, beginning July 1, 2001, the caps for non- rural hold-harmless and rural HCLS are calculated separately. 17 For rural carriers, the national average annual loop cost is now frozen at $240.00 and the cap is indexed to the rate of growth in working loops of rural carriers plus the rate of inflation as measured by the Gross Domestic Product Chained Price Index (GDP- CPI). 18

To encourage new investment in rural infrastructure, safety net additive support was made available for rural carriers whose telephone plant in service per loop increased by over 14% in one year. This additional loop support equals the difference between what its HCLS would have been uncapped and what it is capped in the qualifying year less the difference between the uncapped and capped amounts in the base year. For new sales or transfers of rural exchanges, the acquiring carrier is required to keep separate cost information for the acquired exchanges to determine the eligible support for those exchanges. Safety valve support is available for new investments in infrastructure made in the acquired exchanges. 19 On June 13, 2002, the Commission adjusted the rural HCLS cap by changing the base year for the calculations to 2000 for purposes of recalculating the cap for 2002 and subsequent years. 20

If a carrier is deemed to be a non- rural carrier, it now receives high- cost support based on forward- looking costs, as estimated by an FCC cost model. The Commission adopted a new high- cost support mechanism for non- rural carriers on October 21, 1999, based on recommendations from the Joint Board. 21 This HCMS mechanism is based on the forward-

and Order, Twenty- Second Order on Reconsideration, and Further Notice of Proposed Rulemaking in CC Docket No. 96- 45, and Report and Order in CC Docket No. 00- 256, 16 FCC Rcd 11244 (2001). 16 Previously, in 1997, the Commission had adopted limitations on the amount of allowed corporate operations expense. The limitations are specified in section 36.621( a)( 4) of the Commission's rules. 47 C. F. R. 36.621( a)( 4). 17 47 C. F. R. 36.602 and 36.603. See page 3 6 below for a discussion of hold- harmless.

18 This replaces the indexing of the cap to the rate of growth of the national total of working exchange loops.

19 See 47 C. F. R. 54.305( d)-( f). 20 See Federal- State Joint Board on Universal Service, Multi- Association Group (MAG) Plan for Regulation of Interstate Services of Non- Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, CC Docket Nos. 96- 45, 00- 256, Order on Reconsideration, 17 FCC Rcd 11472 (2002) (Rebasing Order).

21 See Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Ninth Report 4 3 - 5 looking costs of providing supported services 22 as determined by the Commissions cost model. 23 For each state, the cost model calculates the wire center forward- looking cost per line incurred by non- rural carriers to provide supported services. The statewide average cost per line is then compared to the national average cost per line to determine eligibility for support. The forward-looking support mechanism provides support to non- rural carriers in those states that have a statewide average forward- looking cost per line greater than the national benchmark, which initially was set at 135 percent of the national average forward- looking cost per line. Beginning in 2004, this benchmark is now two standard deviations above the national average. 24

After determining the total amount of forward- looking support provided to non- rural carriers in a particular state, the support is then targeted to individual wire centers that have forward- looking costs in excess of the benchmark. 25 Under the targeting approach, the amount of support provided to a non- rural carrier serving a particular wire center depends on the relative costs in that wire center and the number of lines served by the carrier. By comparing the relative

and Order and Eighteenth Order on Reconsideration, 14 FCC Rcd 20432 (1999) (High-Cost Methodology Order), revd in part and remanded, Qwest Corp. v. FCC, 258 F. 3d 1191 (10 th Cir. 2001), Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Order on Remand, Further Notice of Proposed Rulemaking, and Memorandum Opinion and Order, 18 FCC Rcd 22559 (2003) (Order on Remand), remanded, Qwest Corp. v. FCC, 398 F. 3d 1222 (10 th Cir. 2005).

22 The services eligible for federal universal service support are listed in section 54.101 of the Commissions rules. 47 C. F. R. 54.101. 23 The cost model consists of: (1) a model platform, which contains a series of fixed assumptions about network design and engineering; and (2) input values for the model platform, such as the cost of network components, e. g., cables and switches, as well as various capital cost parameters. The Commission adopted the model platform in the Platform Order released in October 1998. Federal- State Joint Board on Universal Service, Forward- Looking Mechanism for High- Cost Support for Non- Rural LECs, CC Docket Nos. 96- 45, 97- 160, Fifth Report and Order, 13 FCC Rcd 21323 (1998) (Platform Order). The Commission adopted input values in the Inputs Order released in November 1999. Federal- State Joint Board on Universal Service, Forward- Looking Mechanism for High- Cost Support for Non- Rural LECs, CC Docket Nos. 96- 45, 97- 160, Tenth Report and Order, 14 FCC Rcd 20156 (1999) (Inputs Order). 24 High- Cost Methodology Order, 14 FCC Rcd 20432 at paras. 10 and 55. The forward-looking support mechanism provides support for all intrastate costs that exceed the benchmark. High- Cost Methodology Order, at paras. 60- 63. In October 2003, the Commission adopted an order modifying the national benchmark. Order on Remand.

25 High- Cost Methodology Order, at paras. 68- 76. 5 3 - 6 costs in various above- benchmark wire centers, the targeting approach enables the Commission to provide greater amounts of support to carriers serving lines in wire centers with costs further above the benchmark. Thus, unlike providing a uniform per line statewide support amount, the targeting approach provides support in an amount commensurate with the cost of service, thereby encouraging carriers to serve high- cost areas. The Commission also adopted a transitional hold- harmless measure to prevent rate shocks and disruptions in state rate designs when the new mechanism took effect. As adopted, no non- rural telephone company would receive less support than it received under the LTS plus embedded HCLS mechanisms during the transition period. On December 8, 2000, the Commission adopted measures to phase down interim hold- harmless support, through $1.00 reductions in average monthly per- line embedded HCLS, beginning January 1, 2001, and every year thereafter until there is no more interim embedded hold- harmless HCLS. 26 That point has now been reached.

LTS was related to interstate non- traffic sensitive costs. LTS provided support to the members of the NECA common line pool, allowing them to charge a below- cost carrier common line (CCL) rate that was uniform for all companies in the pool. Prior to 1989, all ILECs were required to be part of the NECA common line (CL) pool, and CCL rates were uniform nationwide. On April 1, 1989, companies were permitted to withdraw from the NECA CL pool and provide jurisdictionally specific CCL access charges; however, carriers had to remain in the pool to receive LTS. 27 Nationwide pool results provided by NECA for 2004 are shown in Tables 3.4 and 3.5. Table 3.4 summarizes the CL pool revenues and expenses for the year 2004, as well as a comparison with the corresponding figures for 2003. Table 3.5 has comparable figures for NECA's traffic sensitive pool.

To reduce disparities in CCL rates among ILECs after companies were permitted to withdraw from the CL pool, LTS was set up. LTS originally consisted of payments to the NECA CL pool from companies that withdrew from the NECA CL pool. Companies remaining in the NECA pool charge CCL rates, pursuant to the NECA tariff, which were formerly equal to the average CCL rate of the price- cap companies. Effective January 1, 1998, the funds for LTS came from the federal universal service support mechanisms. At the same time, the NECA pool rate no longer was made equal to the average price- cap rate. Rather, the amount of LTS that a

26 Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Thirteenth Report and Order and Further Notice of Proposed Rulemaking, 15 FCC Rcd 24422 (2000). 27 See previous Monitoring Reports for a detailed list of which companies are no longer in the NECA CL pool. 6 3 - 7 NECA pool member was eligible to receive in 1998 was the 1997 level of LTS (the difference between 1997 CCL revenue requirements and the sum of 1997 CCL revenues using the NECA pool rate and 1997 subscriber line charge revenues) multiplied by the rate of growth of the national average NTS cost per loop. The 1999 level of LTS was similarly adjusted from the 1998 level by the national average loop cost growth rate. Beginning January 1, 2000, LTS was adjusted for inflation to reflect the annual percentage change in the GDP- CPI. 28 After the implementation of ICLS (see below), the Commission determined that it was necessary to reduce LTS for some carriers to prevent over earning by those carriers whose ICLS would otherwise have fallen below zero. 29 Effective July 1, 2004, LTS was merged into ICLS. 30 In response to the 1996 Act, the Commission also has removed implicit support from interstate access charges. In November 2001, the Commission created the ICLS mechanism for rate- of- return carriers to convert implicit support in the access rate structure to explicit, portable support. 31 ICLS recovers any shortfall between the allowed common line revenues of rate- of-return carriers and their subscriber line charge revenues and gradually replaces the carrier common line charge. Under the MAG Order, the ICLS mechanism was implemented beginning on July 1, 2002. On May 31, 2000, the Commission established an explicit interstate access support (IAS) mechanism for price- cap carriers to replace the implicit support previously collected through interstate access charges. 32 Like LTS and ICLS, the purpose of this mechanism is to provide

28 See 47 C. F. R. 54.303. 29 See Multi- Association Group (MAG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, Federal-State Joint Board on Universal Service, CC Docket Nos. 00- 256, 96- 45, Order and Second Order on Reconsideration, 17 FCC Rcd 11593 (2002) (MAG Reconsideration Order). 30 See Multi- Association Group (MAG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, Federal-State Joint Board on Universal Service, CC Docket Nos. 00- 256, 96- 45, Report and Order and Second Further Notice of Proposed Rulemaking, 19 FCC Rcd 4122 (2004).

31 Multi- Association Group (MAG) Plan for Regulation of Interstate Services of Non- Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers, Federal- State Joint Board on Universal Service, Second Report and Order and Further Notice of Proposed Rulemaking in CC Docket No. 00- 256, Fifteenth Report and Order in CC Docket No. 96- 45, 16 FCC Rcd 19613 (2001) (MAG Order). 32 Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Low- Volume Long Distance Users, Federal- State Joint Board on Universal Service, Sixth Report and Order in CC Docket Nos. 96- 262 and 94- 1, Report and Order in CC 7 3 - 8 explicit support to ensure reasonably affordable interstate rates. This is in contrast to the Commissions other high- cost support mechanisms, which provide support to enable states to ensure reasonably affordable and comparable intrastate rates. The IAS mechanism provides support to carriers serving lines in areas where they are unable to recover their permitted revenues from the subscriber line charges. The support total is an aggregate annual amount of approximately $650 million. It is targeted to the density zones that have the greatest need for it, and is provided on a portable, per- line basis. It is available on a competitively neutral basis to any ETC serving a supported customer, regardless of the technology used by that carrier.

LSS provides support for traffic sensitive local switching costs. LSS provides support to ILECs with study areas of 50,000 or fewer access lines, to help defray the higher switching costs of small ILECs. The LSS is recovered through the universal service support mechanisms, rather than through higher traffic- sensitive access charges. Until 1997, this support was implicitly included in those access charges, based on dial equipment minute (DEM) weighting. 33 The portion of these costs that were normally allocated to interstate was determined by the ratio of interstate to total dial equipment minutes, known as the DEM factor. However, ILEC study areas with 50,000 access lines or fewer had that portion multiplied by a weighting factor, which was determined by the number of access lines in the study area. 34 The resulting weighted DEM factor (which was not permitted to exceed .85) allowed these study areas to recover a greater portion of their local switching costs from interexchange carriers in the form of higher access charges. 35

Since 1998, the LSS factor has been calculated as the difference between the 1996 weighted DEM factor and the 1996 unweighted DEM factor. It is subject to the limit that the sum of the DEM factor and the LSS factor shall not exceed .85. Also, if the number of lines has increased since 1996 across one of the limit values of 10,000 or 20,000 or 50,000 lines, the 1996

Docket No. 99- 249, Eleventh Report and Order in CC Docket No. 96- 45, 15 FCC Rcd 12962 (2000) (CALLS Order), revd and remanded, Texas Office of Public Utility Counsel v. FCC, 265 F. 3d 313 (5 th Cir. 2001), and Access Charge Reform, CC Docket No. 96- 262, Price Cap Performance Review for LECs, CC Docket No. 94- 1, Low-Volume Long Distance Users, CC Docket No. 99- 249, Federal- State Joint Board on Universal Service, CC Docket No. 96- 45, Order on Remand, 18 FCC Rcd 14976 (2003).

33 Table 3.7 of the 2003 Universal Service Monitoring Report provides estimates of DEM weighting impacts from 1993 to 1997. 34 The weighting factors, which became effective in 1993, are shown in Table 3.6 of the December 1998 and June 1999 Monitoring Reports. 35 The weighted and unweighted DEM factors are shown in section 8 of this report. The DEM factors were frozen in 2001 for a five year period. See Jurisdictional Separations Reform and Referral to the Federal- State Joint Board, Report and Order, CC Docket No. 80- 286, FCC 01- 162, 16 FCC Rcd 11382 (2001). 8 3 - 9 weighted DEM factor used for computing the LSS factor is adjusted to reflect the weighting factor appropriate for the new number of lines. The LSS is the product of a carriers annual unseparated local switching revenue requirement multiplied by its LSS factor. The Commissions rules require that the LSS be trued- up with actual costs no later than 15 months after the end of the calendar year for which historical data are submitted. 36 All of the universal service support mechanisms are administered by USAC, an independent subsidiary of NECA. As part of its administration of these support mechanisms, USAC files quarterly reports with the Commission, at least 60 days prior to the start of each quarter. These reports include quarterly projections of the amounts to be paid for each program, along with true- ups (differences between actual payments and projections) for prior periods, administrative expenses and interest income. The report for the third quarter of 2005, filed on May 2, 2005, was the primary one used to compile the tables in this section, along with information on actual support payments since 2003 found on the USAC website 37 and data provided to us by USAC on annual support payments between 1998 and 2002. Tables 3.6 through 3.14 provide a summary by state of the total amounts of these support payments. Each table summarizes the annual amounts for the high- cost programs for 1998 through 2005. The 2005 numbers are based on the assumption that fourth quarter projections will be the same as those for the third quarter. Table 3.6 summarizes HCLS payments, Table 3.7 summarizes safety net additive support payments, Table 3.8 summarizes safety valve support payments, Table 3.9 summarizes HCMS payments, 38 Table 3.10 summarizes LTS payments, Table 3.11 summarizes ICLS payments, Table 3.12 summarizes IAS payments, and Table 3.13 summarizes LSS payments. Table 3.14 summarizes the total of these seven payments. Table 3.15 shows the amounts of these payments by state going to ILECs and CETCs for each year since 1999. Table 3.16 shows, by support mechanism by state, for 2004, the monthly support payments per loop to carriers. 39

36 47 C. F. R. 54.301( e)( 2)( iv). 37 The monthly payment information for each study area can be found at: http:// form498. universalservice. org/ hc/ disbursements/ default. aspx.

38 The payments for the forward- looking high- cost model support only include payments actually made based on the model. In cases where the HCL hold- harmless payment was made because it exceeded the model amount, the model amount was not counted and the hold- harmless payments were included in Table 3.6.

39 Loops or lines from USACs Fund Size Projection for the Fourth Quarter 2004 were used because USACs files showing actual payments do not include the number of loops or lines on which those payments are based. HCLS loops were used for ILECs. For CETCs, HCLS loops were used where available; when HCLS loops were not available, lines are based on the number of reported loops or lines for the support mechanisms for which they qualify. Only those CETC loops or lines that were reported as eligible for support in the Fourth Quarter filing or received support payments in 2004 were included. 9 3 - 10 Pursuant to Part 36 of the Commissions rules, NECA collects certain cost data from ILECs that provide service to approximately 98% of the nation's subscribers. 40 Each year NECA collects NTS cost and loop data from the previous year, and files all such data with USAC and the Commission. USAC, as administrator of the high- cost support mechanism, uses that information to distribute high- cost assistance in the following year. On October 1, 2004, NECA reported new data for 2003, and revised data for the four previous years. State totals, based on that report, covering cost data for 2003, are presented in Table 3.17. This table shows unseparated NTS costs (revenue requirement), the number of loops, and costs per loop. It also shows the expected HCLS payments for 2005, based on 2003 data, using the high- cost formula and the cap discussed above. The costs shown are embedded costs for all companies. 41 The final column shows the percentage of the total payments going to companies in the state. Table 3.18 shows the changes, from the revised data for 2002 to the newly reported data for 2003, for state totals, of the unseparated NTS revenue requirement, the number of loops, the revenue requirement per loop, and the HCLS payments. The phrase, "payments in later year" in the last column refers to the fact that the payments are made two years after the costs are incurred; in this case, in the years 2004 and 2005. Tables 3.19 through 3.21 present state summaries of the revised historical information filed for 1999 through 2003 in the 2004 filing. Table 3.19 shows the unseparated NTS revenue requirements for each year. Table 3.20 shows the number of loops. Table 3.21 shows the unseparated NTS revenue requirement per loop.

The next several tables in this section are data for individual study areas. Tables 3.22 through 3.30 are derived from the USAC data. Table 3.22 has HCLS payments. Table 3.23 has safety net additive support payments. Only those study areas that are eligible for these payments, regardless of whether they receive any support, are included in the table. Table 3.24 has safety valve support payments. Only those study areas that are eligible for these payments, regardless of whether they receive any support, are included in the table. Table 3.25 provides, by non- rural study area, the high cost support using the forward- looking high- cost model support mechanism. 42 Table 3.26 has LTS payments. Table 3.27 has ICLS payments. Table 3.28 has

40 These are the carriers that settle on a cost basis. Costs for the remaining ILECs, which settle on an average schedule basis, are attributed by NECA on the basis of those carriers' average number of loops per exchange. 41 The data submitted by NECA include payments that would have been made to non- rural carriers if the forward- looking high cost model had not been implemented, which form

the basis of the hold- harmless calculations. Consequently the amounts shown in Table 3.6 are a better indication of the actual HCLS payments.

42 Companies getting hold- harmless support have those amounts shown in Table 3.22. 10 3 - 11 IAS payments for price- cap companies. Only those study areas that are eligible for these payments, regardless of whether they receive any support, are included in the table. Table 3.29 has LSS payments. Table 3.30 has the total support payments for all seven programs. Each of these tables contains the annual amounts for only those years for which a support mechanism was in place. The 1998 amounts in Tables 3.22, 3.26, and 3.29 are the actual payments after processing the final true- ups for 1998. 43 Table 3.27 has the final ICLS true- ups for 2002 and 2003. 44 Table 3.29 has the final LSS true- ups for 1999 through 2003. 45 The other numbers (except for 2005 data) are based on the actual payments, as reported by USAC, and include out-of year adjustments for prior years. In all cases the 2005 total is based on the assumption that the fourth quarter amount will be the same as the third quarter projection. CETC study areas listed in the USAC Filing for the Third Quarter of 2005 as being ineligible for support (because they applied for, but have not yet received, ETC status) have been excluded from these tables.

Tables 3.31 through 3.35 are derived from NECAs 2004 filing. 46 Table 3.31 contains individual study area data for 2003 for unseparated NTS costs (Revenue Requirement), the number of loops, and costs per loop. It also shows the expected HCLS payments for 2005, based on 2003 data, and the percentage of the national total HCLS that goes to the study area. For study areas that acquired exchanges from another study area and had to report the amounts for the acquired exchanges separately, the study area code is appended with an A for the data for the acquired exchanges. In the second column of Table 3.31, the types are cost (C) and average schedule (A), indicating the form of settlements used by that study area. The third column indicates whether the study area has been designated as rural (R) or non- rural (N). In addition to the name of the study area, the name of the holding company (if any) is also shown. The costs shown are embedded costs for all companies, and the payments shown include potential payments to non- rural companies that form the basis of hold- harmless calculations. 47 Table 3.32 shows the percentage changes from the

43 These are from Universal Service Administrative Company, Federal Universal Service Support Mechanism Fund Size Projections (USAC Filing) for the First Quarter 2002 (November 2, 2001), Appendix HC7. 44 These are from the USAC Filing for the Third Quarter 2004 (May 13, 2004), Appendix HC23, and the USAC Filing for the Third Quarter 2005 (May 2, 2005), Appendix HC23.

45 These are from the USAC Filing for the Third Quarter 2001 (May 2, 2001), Appendix HC6; USAC Filing for the Fourth Quarter 2002 (August2, 2001), Appendix HC17; USAC Filing for the Third Quarter 2003 (May 2, 2003), Appendix HC18; USAC Filing for the Third Quarter 2004 (May 13, 2004), Appendix HC22; and USAC Filing for the Third Quarter 2005 (May 2, 2005), Appendix HC22. 46 National Exchange Carrier Association, Inc., Universal Service Fund 2004 Submission of 2003 Study Results (October 1, 2004).

47 The data submitted by NECA include payments that would have been made if the 11 3 - 12 previous year for each of these amounts for individual study areas. In the payments column in this table, the entry "INFINITE" indicates that the payment was zero in the first year and positive in the second year. Tables 3.33 through 3.35 present individual study area data for the historical information filed for 1999 through 2003 in the 2004 filing. Table 3.33 shows the unseparated NTS revenue requirements for each year. Table 3.34 shows the number of loops. Table 3.35 shows the unseparated NTS revenue requirement per loop.

In compiling the historical data, it is necessary to account for changes that have occurred in the study areas over time. These changes are noted in Table 3.36. 48 In cases where study areas have merged, the pre- merger data for all of the merged study areas have been combined and reported as the data for the surviving study area in Tables 3.33 through 3.35. In cases where there has been an ownership change resulting in a code number change, the pre- change data is reported under the new code number and name. In the case of newly created study areas, pre- creation data is reported as 0. In Table 3.32, percentage changes in the case of mergers are comparisons of the surviving study area data with the consolidated pre- merger data. In the case of sales of exchanges, for comparison purposes the data for the sold exchanges are consolidated with the data for the study area that divested them.

Each year NECA submits detailed account data used to calculate the unseparated revenue requirement per loop for each study area that settles on a cost basis, and total attributed revenue requirements for study areas that settle on an average schedule basis. In its filings since 1993, in addition to submitting such information for the latest year, NECA also submitted revised information for the four preceding years. The detailed account data are not reported here, but the most recent revision of the data for each year since 1988 is available in electronic form on the Wireline Competition Bureau Statistical Reports web site .

forward- looking high cost model had not been implemented. Consequently, Table 3.22 is a better indication of actual HCLS payments. 48 Because the study areas were matched between years by study area code number, changes in only the name of the company are not included in this list. However, for name changes between 2002 and 2003, Table 3.32 shows the old name in parentheses. 12 Year High- Cost Loop Support

Safety Net Additive Support Safety Valve Support High- Cost Model Support Long-Term Support

Interstate Common Line Support Interstate Access Support Local Switching Support Total Support 1986 $56 - - - - - - - $56 1987 126 - - - - - - - 126 1988 183 - - - - - - - 183 1989 265 - - - $236 - - - 500 1990 339 - - - 263 - - - 602 1991 485 - - - 272 - - - 757 1992 609 - - - 306 - - - 915 1993 705 - - - 323 - - - 1,028 1994 725 - - - 347 - - - 1,072 1995 750 - - - 382 - - - 1,132 1996 763 - - - 426 - - - 1,188 1997 794 - - - 470 - - - 1,263 1998 827 - - - 473 - - $390 1,690 1999 864 - - - 473 - - 380 1,718 2000 874 - - $219 478 - $279 385 2,235 2001 927 - - 206 492 - 577 390 2,592 2002 1,045 - - 233 493 $173 615 376 2,935 2003 1,085 $9 $0 234 504 409 622 396 3,259 2004 1,137 12 0 273 275 727 642 422 3,488 2005 * 1,196 15 5 291 - 1,107 675 445 3,734

Note: Detail may not appear to add to totals due to rounding. - Support mechanism did not exist in that year. * Estimate for 2005 based on USAC projections. Sources: National Exchange Carrier Association (1986- 1997), Universal Service Administrative Company (1998- 2004). Federal Universal Service Support Mechanisms Fund Size Projections for the Third Quarter 2005 (2005).

Total High- Cost Support Fund Payments

(In Millions of Dollars) Table 3.1 High- Cost Support Fund Payment History

Chart 3.1 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Millions of Dollars

Total Support 56 126 183 500 602 757 915 1,028 1,072 1,132 1,188 1,263 1,690 1,718 2,235 2,592 2,935 3,259 3,488 3,734 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

3 - 13 13 Year Companies High- Cost Loop Support

Safety Net Additive Support Safety Valve Support High- Cost Model Support Long-Term Support

Interstate Common Line Support Interstate Access Support Local Switching Support Total Support ILECs 864.2 - - - 472.9 - - 380.3 1,717.4 1999 CETCs 0.1 - - - 0.4 - - 0.0 0.5 Total 864.3 - - - 473.3 - - 380.3 1,718.0 ILECs 873.8 - - 218.7 477.3 - 278.8 384.7 2,233.3 2000 CETCs 0.4 - - 0.0 1.1 - 0.0 0.0 1.5 Total 874.1 - - 218.7 478.4 - 278.8 384.7 2,234.8 ILECs 921.5 - - 205.4 484.2 - 575.7 387.9 2,574.7 2001 CETCs 5.7 - - 0.3 8.0 - 1.0 1.9 16.9 Total 927.2 - - 205.7 492.1 - 576.7 389.9 2,591.6 ILECs 1,039.1 - - 213.8 481.2 172.1 608.5 374.2 2,888.9 2002 CETCs 5.7 - - 19.0 11.8 0.8 7.0 1.7 46.1 Total 1,044.9 - - 232.8 493.0 172.9 615.4 375.9 2,935.0 ILECs 1,058.2 8.8 - 207.2 479.1 392.0 604.9 379.2 3,129.4 2003 CETCs 26.5 0.3 - 26.8 25.0 17.1 16.9 17.0 129.6 Total 1,084.6 9.1 - 234.0 504.1 409.1 621.7 396.3 3,259.0 ILECs 1,055.4 10.5 - 218.9 243.8 645.0 596.0 384.8 3,154.5 2004 CETCs 81.3 1.1 - 54.5 31.0 82.0 45.7 37.5 333.1 Total 1,136.6 11.6 - 273.4 274.8 727.0 641.7 422.3 3,487.6 ILECs 1,059.8 12.7 4.7 221.9 - 945.3 603.4 390.1 3,237.9 2005 * CETCs 136.5 2.3 0.0 68.9 - 161.9 71.4 55.2 496.2 Total 1,196.3 14.9 4.7 290.9 - 1,107.2 674.8 445.3 3,734.1 Note: Details may not appear to add to totals due to rounding. ILECs are incumbent local exchange carriers. CETCs are competitive eligible telecommunications carriers. - Support mechanism did not exist in that year. * Estimate for 2005 based on USAC projections. Source: Universal Service Administrative Company. Chart 3.2 Total High- Cost Support Fund Payments - ILECs and CETCs (In Millions of Dollars)

Table 3.2 High- Cost Support Fund Payment History - ILECs and CETCs (In Millions of Dollars)

0 500 1,000 1,500 2,000 2,500 3,000 3,500

1999 20002001 20022003 20042005 Support ILECs CETCs

3 - 14 14 3 15 Table 3.3 Embedded High- Cost Loop Fund Formulas Cost Range as % of National Average % Expense Adjustment within Range Study Areas with Over 200,000 Loops 0% - 115% 0% 115% - 160% 10% 160% - 200% 30% 200% - 250% 60% 250% and above 75% Study Areas with 200,000 Loops or Fewer 0% - 115% 0% 115% - 150% 65% 150% and above 75% Notes: These values have been used since 1988. Beginning January 1, 2000, these are only applicable to rural companies and to hold- harmless support for non- rural companies. 15 Pool Year (Note 2) Percentage Change Line Item (Note 1) 2003 2004 (Note 3) Carrier Common Line (CCL) Earned Revenues Premium $33,840,154 $0 -100.00% Non- Premium $20,777 $0 -100.00% Special Access Surcharge $97,533,914 $107,098,955 9.81% CCL Net Realized Uncollectibles $7,521,706 $4,976,184 -33.84% CCL Net Earned Revenues $123,873,039 $102,122,771 -17.56%

End- User Net Earned Revenues (Note 4) $981,152,864 $991,386,899 1.04% Total Common Line Net Earned Revenues $1,105,025,903 $1,093,509,670 -1.04% ICLS $375,723,359 $652,817,276 73.75% Long- Term Support $479,259,970 $243,831,816 -49.12% Total Common Line Revenues $1,960,009,232 $1,990,158,762 1.54%

NECA Administrative Costs $29,243,220 $26,324,892 -9.98% Average Schedule Company Settlements $366,408,117 $366,611,120 0.06% Common Line Expenses and Other Taxes $1,196,027,215 $1,252,839,400 4.75% Common Line Adjusted Federal Income Tax $81,259,857 $75,872,149 -6.63% Total Common Line Expenses $1,672,938,409 $1,721,647,561 2.91% Common Line Residue for Distribution (Note 5) $287,070,823 $268,511,201 -6.47% Common Line Average Net Investment $2,324,706,608 $2,341,390,728 0.72% Common Line Residue Ratio (Note 6) 12.35% 11.47% -7.13% Note 1: All of the individual line items include some estimates and are subject to further adjustments under current NECA procedures.

Note 2: The pool year is the calendar year. The 2003 pool year data are reported as of February 29, 2004. The 2004 pool year data are reported as of February 28, 2005. Note 3: Year- to- year changes are affected by changes in the number of companies participating in NECA tariffs, sales and acquisitions of assets by participating companies, average schedule to cost conversions, and mid- year tariff changes in rate levels. Note 4: Amount includes end- user SLC waiver revenues for NECA tariff participants. Note 5: Residue for distribution is total revenues less total expenses. Note 6: Residue ratio is calculated by dividing the amount of residue for distribution by the amount of average net investment and multiplying by 100.

Table 3.4 National Exchange Carrier Association, Inc. Pool Results - Common Line Summary

3 - 16 16 National Exchange Carrier Association, Inc. Pool Results - Traffic Sensitive Summary Pool Year (Note 2) Percentage Change Line Item (Note 1) 2003 2004 (Note 3) Traffic Sensitive Earned Revenues $765,064,063 $809,882,656 5.86% Local Switching Support $317,551,902 $325,401,791 2.47% Traffic Sensitive Net Realized Uncollectibles $4,640,711 $1,526,893 -67.10% Traffic Sensitive Net Earned Revenues $1,077,975,254 $1,133,757,554 5.17% Total Traffic Sensitive Revenues $1,077,975,254 $1,133,757,554 5.17% NECA Administrative Costs $16,716,779 $15,726,968 -5.92% Average Schedule Company Settlements $340,393,034 $361,134,139 6.09% Traffic Sensitive Expenses & Other Taxes $504,946,138 $532,091,027 5.38% Traffic Sensitive Adjusted Federal Income Tax $47,425,909 $49,647,326 4.68% Total Traffic Sensitive Expenses $909,481,860 $958,599,460 5.40% Traffic Sensitive Residue for Distribution (Note 4) $168,493,394 $175,158,094 3.96% Traffic Sensitive Average Net Investment $1,165,879,592 $1,152,196,094 -1.17% Traffic Sensitive Residue Ratio (Note 5) 14.45% 15.20% 5.19%

Note 1: All of the individual line items include some estimates and are subject to further adjustments under current NECA procedures. Note 2: The pool year is the calendar year. The 2003 pool year data are reported as of February 29, 2004. The 2004 pool year data are reported as of February 28, 2005. Note 3: Year- to- year changes are affected by changes in the number of companies participating in NECA tariffs, sales and acquisitions of assets by participating companies, average schedule to cost conversions, and mid- year tariff changes in rate levels. Note 4: Residue for distribution is total revenues less total expenses. Note 5: Residue ratio is calculated by dividing the amount of residue for distribution by the amount of average net investment and multiplying by 100.

Table 3.5

3 - 17 17 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama 21,800,835 21,708,609 13,576,288 15,453,729 16,050,478 18,042,245 16,927,983 19,005,340 Alaska 32,000,263 36,858,696 38,592,012 43,763,238 44,675,073 42,820,132 48,040,754 52,652,535 American Samoa 0 0 0 17,676 0 (1,650) 767,700 675,185 Arizona 20,543,238 18,362,646 19,688,325 24,449,474 26,403,756 30,528,308 39,848,583 32,856,739 Arkansas 45,888,519 50,973,342 45,564,663 45,664,170 62,532,024 60,858,997 65,480,010 73,583,488 California 32,452,556 29,726,451 28,187,757 30,031,809 32,376,201 33,316,344 37,448,856 37,257,750 Colorado 27,530,368 28,078,032 29,640,447 29,388,387 31,440,901 34,679,242 37,676,368 34,175,878 Connecticut 0 0 0 0 0 0 0 0 Delaware 0 0 0 0 0 0 0 0 District of Columbia 0 0 0 0 0 0 0 0 Florida 9,503,863 9,837,420 10,381,512 12,863,073 13,222,008 11,950,548 10,687,942 12,008,683 Georgia 43,839,125 40,959,225 42,548,087 47,726,328 56,375,955 53,118,466 42,423,112 42,584,330 Guam 0 394,548 1,223,460 343,446 0 1,437,902 4,775,865 9,327,464 Hawaii 31,571 378,732 378,360 1,277,112 2,071,587 3,015,711 4,851,324 12,029,591 Idaho 19,909,914 19,628,691 18,877,584 18,650,055 20,685,816 20,741,823 21,358,204 22,693,676 Illinois 5,336,115 20,291,268 6,210,756 7,732,992 11,895,567 12,424,125 12,351,372 14,713,029 Indiana 2,867,566 3,220,683 4,757,712 4,348,545 6,794,010 8,028,121 8,684,095 9,635,809 Iowa 3,470,888 3,927,414 4,675,446 5,358,582 8,653,826 14,554,062 16,888,461 21,038,828 Kansas 35,680,025 39,602,289 39,313,497 48,759,258 52,879,300 59,883,994 68,840,164 88,441,223 Kentucky 13,688,167 9,409,629 9,367,208 9,515,893 21,294,954 19,863,491 18,061,623 21,150,127 Louisiana 41,953,218 40,909,401 43,703,265 46,674,032 50,889,258 50,853,650 59,326,267 59,620,963 Maine 4,839,886 5,298,069 7,102,143 7,693,212 8,273,040 6,840,121 8,915,130 7,042,413 Maryland 0 0 0 47,628 200,700 372,650 279,666 252,275 Massachusetts 5,160 47,604 20,004 116,826 239,208 155,742 102,456 219,481 Michigan 14,147,961 16,816,689 21,469,743 22,691,736 25,251,390 22,830,789 23,439,214 24,967,367 Minnesota 8,422,456 11,851,026 16,226,949 17,185,635 25,151,208 26,188,017 28,586,696 35,367,871 Mississippi 18,238,298 18,266,196 14,565,069 16,585,404 19,146,684 19,390,101 19,422,040 24,733,354 Missouri 29,261,897 32,497,104 40,818,762 40,300,608 44,811,722 42,284,551 42,032,820 40,583,514 Montana 23,260,667 25,047,981 25,009,902 27,630,348 28,317,264 27,733,949 26,821,188 26,735,842 Nebraska 5,993,161 6,657,618 8,547,087 9,936,034 11,248,935 13,838,283 13,919,052 16,510,594 Nevada 3,532,823 4,215,264 4,677,543 6,632,430 6,883,467 8,225,107 6,168,624 6,472,846 New Hampshire 2,259,432 1,633,989 1,288,836 1,003,899 975,360 867,894 681,939 706,671 New Jersey 1,743,597 0 0 0 0 0 0 0 New Mexico 18,979,208 20,875,452 18,293,091 18,106,968 20,003,238 19,550,715 20,624,985 22,839,004 New York 11,146,052 12,819,186 14,685,669 12,531,138 12,078,444 9,844,646 9,006,500 8,157,956 North Carolina 20,992,234 14,151,897 10,324,953 8,919,450 11,524,905 11,975,314 15,712,617 11,793,186 North Dakota 4,618,626 5,072,256 9,025,489 11,113,527 13,017,948 18,473,275 16,048,576 20,947,087 Northern Mariana Islands 3,568,910 4,731,756 2,425,068 2,683,836 2,655,984 808,208 (69,682) 0 Ohio 4,310,309 5,267,052 5,711,859 7,608,876 7,914,813 9,331,800 8,895,759 9,267,637 Oklahoma 27,562,422 28,098,519 33,049,110 38,365,380 42,104,889 52,561,601 50,775,218 55,337,147 Oregon 18,043,353 20,258,403 22,565,850 23,832,882 25,604,163 26,098,741 26,828,285 24,112,761 Pennsylvania 1,312,806 896,637 1,067,316 1,205,328 1,555,002 1,673,597 1,660,598 1,992,727 Puerto Rico 47,664,546 44,205,888 50,570,226 21,018,612 1,362,300 3,331,586 (1,102) 0 Rhode Island 0 0 0 0 0 0 0 0 South Carolina 22,635,875 20,855,634 19,341,595 19,226,232 29,466,579 27,890,743 24,380,825 25,404,697 South Dakota 2,882,766 4,275,900 6,804,816 9,150,504 13,745,820 17,814,953 22,424,124 29,120,489 Tennessee 8,383,365 10,578,075 11,571,882 13,837,946 17,116,157 17,887,232 17,627,624 15,465,947 Texas 75,126,397 73,408,401 72,485,676 80,486,007 91,039,953 100,021,058 118,967,811 103,553,869 Utah 3,483,006 3,919,044 3,883,188 4,989,777 6,517,500 8,826,246 7,290,812 7,909,872 Vermont 4,465,536 4,246,788 3,465,117 3,897,540 5,820,054 5,266,379 5,802,432 6,305,709 Virgin Islands 11,214,702 15,839,880 16,580,460 17,939,550 18,471,948 14,370,630 13,998,480 13,786,484 Virginia 4,490,867 4,665,192 4,344,974 3,993,210 4,190,754 4,355,514 2,503,213 3,696,107 Washington 22,999,149 24,193,620 23,202,165 30,567,945 31,400,460 28,338,470 28,001,141 26,140,107 West Virginia 20,018,869 18,391,848 17,303,676 21,725,004 24,940,026 21,773,507 20,032,209 15,039,097 Wisconsin 13,238,421 14,893,403 17,414,784 21,166,212 21,970,530 24,462,311 25,492,966 33,536,785 Wyoming 11,952,520 16,082,514 13,609,407 12,984,456 13,639,758 15,150,551 15,827,639 14,852,550

Industry 827,291,508 864,325,961 874,138,788 927,191,939 1,044,880,917 1,084,649,792 1,136,638,538 1,196,302,085 Source: Universal Service Administrative Company filings to the FCC. Note: Payments are actual disbursements made in each year and may include out- of- year adjustments to payments made for previou s years. Payments for 2005 are projections based on the filing for the 3rd quarter of 2005.

Table 3.6 High- Cost Loop Support Payments By State or Jurisdiction (Dollars)

3 - 18 18 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama ----- 283,722 200,208 277,257 Alaska ----- 201,264 253,680 282,186 American Samoa ----- 000 Arizona ----- 0118,896 129,159 Arkansas ----- 326,880 247,440 364,509 California ----- 0196,500 187,380 Colorado ----- 11,514 71,145 59,268 Connecticut ----- 000 Delaware ----- 000 District of Columbia ----- 000 Florida ----- 000 Georgia ----- 296,532 388,078 404,037 Guam ----- 000 Hawaii ----- 9,744 (1,074) 5,964 Idaho ----- 85,452 114,564 190,335 Illinois ----- 262,608 208,116 300,348 Indiana ----- 134,328 151,920 301,998 Iowa ----- 767,515 1,193,847 1,736,466 Kansas ----- 283,601 638,355 822,480 Kentucky ----- 232,068 176,436 159,276 Louisiana ----- 75,888 139,501 131,832 Maine ----- 000 Maryland ----- 106,584 74,328 90,180 Massachusetts ----- 006,348 Michigan ----- 75,912 73,946 115,224 Minnesota ----- 1,525,104 954,603 1,696,830 Mississippi ----- 6,444 4,356 239,538 Missouri ----- 208,968 272,828 369,759 Montana ----- 24169,704 194,757 Nebraska ----- 201,684 842,220 823,941 Nevada ----- 226,579 153,111 206,133 New Hampshire ----- 000 New Jersey ----- 000 New Mexico ----- 109,652 117,906 139,692 New York ----- 0831,192 835,650 North Carolina ----- 000 North Dakota ----- 82,741 99,363 115,356 Northern Mariana Islands ----- 000 Ohio ----- 541,740 347,772 445,212 Oklahoma ----- 221,136 248,988 318,984 Oregon ----- 23,904 165,069 157,209 Pennsylvania ----- 29,344 21,104 25,962 Puerto Rico ----- 000 Rhode Island ----- 000 South Carolina ----- 668,088 530,796 641,916 South Dakota ----- 57,508 440,843 658,617 Tennessee ----- 128,892 73,872 161,304 Texas ----- 458,676 391,145 486,054 Utah ----- 39,180 47,712 29,037 Vermont ----- 000 Virgin Islands ----- 000 Virginia ----- 171,492 151,159 88,356 Washington -----( 4,509) 23,292 35,742 West Virginia ----- 54,816 35,928 96,117 Wisconsin ----- 1,148,605 1,337,861 1,447,380 Wyoming ----- 87,144 83,997 165,213

Industry ----- 9,140,824 11,590,707 14,943,006 Source: Universal Service Administrative Company filings to the FCC. Note: Payments are actual disbursements made in each year and may include out- of- year adjustments to payments made for previou s years. Payments for 2005 are projections based on the filing for the 3rd quarter of 2005.

Table 3.7 Safety Net Additive Support Payments by State or Jurisdictio n (Dollars)

3 - 19 19 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama ------- 0 Alaska ------- 174,612 American Samoa ------- 0 Arizona ------- 0 Arkansas ------- 0 California ------- 0 Colorado ------- 0 Connecticut ------- 0 Delaware ------- 0 District of Columbia ------- 0 Florida ------- 0 Georgia ------- 0 Guam ------- 0 Hawaii ------- 0 Idaho ------- 0 Illinois ------- 7,440 Indiana ------- 0 Iowa ------- 9,318 Kansas ------- 0 Kentucky ------- 0 Louisiana ------- 0 Maine ------- 0 Maryland ------- 0 Massachusetts ------- 0 Michigan ------- 0 Minnesota ------- 0 Mississippi ------- 0 Missouri ------- 0 Montana ------- 0 Nebraska ------- 0 Nevada ------- 0 New Hampshire ------- 0 New Jersey ------- 0 New Mexico ------- 0 New York ------- 0 North Carolina ------- 0 North Dakota ------- 0 Northern Mariana Islands ------- 0 Ohio ------- 0 Oklahoma ------- 0 Oregon ------- 0 Pennsylvania ------- 0 Puerto Rico ------- 0 Rhode Island ------- 0 South Carolina ------- 0 South Dakota ------- 13,764 Tennessee ------- 0 Texas ------- 0 Utah ------- 141,480 Vermont ------- 0 Virgin Islands ------- 0 Virginia ------- 0 Washington ------- 0 West Virginia ------- 0 Wisconsin ------- 4,388,832 Wyoming ------- 0

Industry ------- 4,735,446 Source: Universal Service Administrative Company filings to the FCC. Note: Payments for 2005 are projections based on the filing for the 3rd quarter of 2005.

Table 3.8 Safety Valve Support Payments by State or Jurisdiction (Dollars)

3 - 20 20 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama - - 51,743,652 46,445,571 42,927,069 42,116,427 42,621,753 46,094,139 Alaska - - 0 0 0 0 0 0 American Samoa - - 0 0 0 0 0 0 Arizona - - 0 0 0 0 0 0 Arkansas - - 0 0 0 0 0 0 California - - 0 0 0 0 0 0 Colorado - - 0 0 0 0 0 0 Connecticut - - 0 0 0 0 0 0 Delaware - - 0 0 0 0 0 0 District of Columbia - - 0 0 0 0 0 0 Florida - - 0 0 0 0 0 0 Georgia - - 0 0 0 0 0 0 Guam - - 0 0 0 0 0 0 Hawaii - - 0 0 0 0 0 0 Idaho - - 0 0 0 0 0 0 Illinois - - 0 0 0 0 0 0 Indiana - - 0 0 0 0 0 0 Iowa - - 0 0 0 0 0 0 Kansas - - 0 0 0 0 0 0 Kentucky - - 1,165,656 0 3,262,920 3,189,189 16,315,065 17,170,329 Louisiana - - 0 0 0 0 0 0 Maine - - 10,775,778 8,873,436 5,480,907 5,653,734 2,137,286 2,017,408 Maryland - - 0 0 0 0 0 0 Massachusetts - - 0 0 0 0 0 0 Michigan - - 0 0 0 0 0 0 Minnesota - - 0 0 0 0 0 0 Mississippi - - 103,707,456 103,996,830 120,595,569 120,967,993 136,773,388 148,098,462 Missouri - - 0 0 0 0 0 0 Montana - - 1,541,526 4,383,033 10,887,342 10,757,091 17,806,404 17,193,713 Nebraska - - 0 0 0 04,189,576 7,064,549 Nevada - - 0 0 0 0 0 0 New Hampshire - - 0 0 0 0 0 0 New Jersey - - 0 0 0 0 0 0 New Mexico - - 0 0 0 0 0 0 New York - - 0 0 0 0 0 0 North Carolina - - 0 0 0 0 0 0 North Dakota - - 0 0 0 0 0 0 Northern Mariana Islands - - 0 0 0 0 0 0 Ohio - - 0 0 0 0 0 0 Oklahoma - - 0 0 0 0 0 0 Oregon - - 0 0 0 0 0 0 Pennsylvania - - 0 0 0 0 0 0 Puerto Rico - - 0 0 0 0 0 0 Rhode Island - - 0 0 0 0 0 0 South Carolina - - 0 0 0 0 0 0 South Dakota - - 0 0 0 01,536,621 2,462,014 Tennessee - - 0 0 0 0 0 0 Texas - - 0 0 0 0 0 0 Utah - - 0 0 0 0 0 0 Vermont - - 15,103,584 10,007,652 9,117,498 9,646,596 10,792,938 10,305,479 Virgin Islands - - 0 0 0 0 0 0 Virginia - - 0 0 0 0 0 0 Washington - - 0 0 0 0 0 0 West Virginia - - 31,234,866 25,875,165 30,651,192 31,654,752 25,846,873 26,056,549 Wisconsin - - 0 0 0 0 0 0 Wyoming - - 3,399,585 6,150,825 9,879,543 10,044,726 15,405,661 14,388,869

Industry - - 218,672,103 205,732,512 232,802,040 234,030,508 273,425,565 290,851,511 Source: Universal Service Administrative Company filings to the FCC. Note: Payments are actual disbursements made in each year and may include out- of- year adjustments to payments made for previou s years. Payments for 2005 are projections based on the filing for the 3rd quarter of 2005.

Table 3.9 High- Cost Model Support Payments by State or Jurisdiction (Dollars)

3 - 21 21 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama 7,166,124 7,260,720 7,334,976 7,444,164 7,596,475 7,571,025 3,837,982 -Alaska 16,989,936 16,782,816 16,954,464 17,206,932 17,622,828 18,052,434 9,441,522 -American Samoa 0 0 258,360 262,212 268,176 274,524 137,262 -Arizona 3,031,056 3,079,740 3,111,216 3,171,553 3,285,558 3,453,125 1,759,437 -Arkansas 14,992,212 15,238,044 15,393,852 15,623,064 15,302,418 14,134,308 6,681,546 -California 13,236,636 13,136,832 13,271,160 13,468,788 12,984,942 12,635,988 6,392,190 -Colorado 12,580,056 11,989,644 12,112,248 12,292,620 12,643,747 13,237,232 7,715,859 -Connecticut 177,480 161,316 162,960 165,396 169,152 173,160 87,558 -Delaware 0 0 0 0 0 0 0-District of Columbia 0 0 0 0 0 0 0-Florida 6,312,636 5,267,508 5,321,388 5,400,636 5,406,816 5,074,572 2,408,435 -Georgia 17,295,180 17,682,108 17,862,864 18,128,952 18,506,856 18,707,226 9,612,378 -Guam 1,006,872 1,926,708 1,946,412 1,975,392 2,326,686 2,573,239 906,998 -Hawaii 215,547 253,188 158,700 0 82,368 84,312 84,350 -Idaho 2,773,224 3,424,068 3,459,084 3,510,564 3,590,412 3,642,672 1,875,978 -Illinois 5,254,932 6,149,376 6,212,292 6,304,812 6,363,432 6,431,490 3,283,092 -Indiana 5,069,148 5,082,132 5,134,140 5,210,520 5,311,080 5,431,512 2,755,277 -Iowa 7,443,672 7,164,144 7,237,440 7,348,661 7,504,416 10,026,153 5,539,203 -Kansas 9,196,188 11,335,920 11,451,864 11,622,384 11,839,008 12,293,675 6,198,366 -Kentucky 5,281,620 4,849,836 4,899,432 4,972,416 5,013,564 4,996,386 2,547,696 -Louisiana 16,804,272 16,559,940 16,729,284 16,978,404 17,095,236 16,889,904 9,678,077 -Maine 5,620,956 5,947,728 6,008,532 6,098,040 6,128,058 6,300,581 3,352,960 -Maryland 95,628 90,408 91,332 92,700 94,812 97,056 49,074 -Massachusetts 100,956 101,184 102,228 103,752 106,104 107,976 55,176 -Michigan 8,770,020 9,721,740 9,821,136 9,967,428 10,124,478 10,372,897 5,849,090 -Minnesota 11,512,875 12,031,404 12,154,464 12,337,665 12,595,827 13,210,959 8,240,168 -Mississippi 4,958,280 5,024,460 5,075,832 5,151,432 5,249,814 5,331,570 2,693,490 -Missouri 10,297,848 10,608,516 10,660,200 10,876,632 10,982,550 10,385,796 5,040,366 -Montana 9,871,788 9,907,968 10,009,296 10,158,348 10,389,300 10,630,326 5,376,420 -Nebraska 3,745,176 3,821,904 3,861,012 3,918,516 3,984,318 4,043,706 2,050,026 -Nevada 1,114,488 907,116 916,380 930,024 965,097 1,047,916 539,184 -New Hampshire 1,529,400 1,496,724 1,512,012 1,534,536 1,524,972 1,562,118 812,382 -New Jersey 0 0 0 0 0 0 0-New Mexico 6,171,888 6,097,620 6,159,972 6,251,736 6,419,120 6,806,409 3,388,194 -New York 6,895,260 6,737,412 6,806,316 6,907,692 6,792,648 6,402,138 3,076,368 -North Carolina 13,687,176 11,931,264 12,053,268 12,232,788 12,110,298 12,179,982 6,276,930 -North Dakota 5,652,804 5,921,508 5,982,072 6,071,148 6,210,909 8,092,932 4,466,998 -Northern Mariana Islands 0 0 0 0 0 0 0-Ohio 5,256,576 5,160,552 5,213,316 5,185,116 5,397,954 5,467,686 2,710,908 -Oklahoma 16,099,620 16,246,176 16,412,304 16,656,708 16,886,808 16,497,282 8,146,740 -Oregon 10,457,100 9,159,840 9,253,548 9,391,344 9,593,304 9,807,666 5,533,047 -Pennsylvania 13,950,696 13,993,764 14,136,852 14,347,404 14,604,618 14,653,146 7,258,806 -Puerto Rico 91,200,252 89,253,768 90,871,314 96,930,129 95,186,238 96,296,564 60,779,136 -Rhode Island 0 0 0 0 0 0 0-South Carolina 10,720,464 10,986,012 11,098,404 11,263,620 11,005,990 11,457,343 5,875,128 -South Dakota 4,389,072 4,989,084 5,040,072 5,115,180 5,274,207 6,417,324 3,453,158 -Tennessee 10,611,060 10,287,924 10,393,116 10,547,916 10,787,772 10,695,102 5,251,596 -Texas 31,326,576 29,350,572 29,650,692 30,092,220 29,298,066 28,928,034 15,215,244 -Utah 1,585,764 1,472,940 1,488,012 1,510,188 1,544,508 1,581,084 799,488 -Vermont 3,357,552 2,364,576 2,388,756 2,424,312 2,479,464 2,538,132 1,283,448 -Virgin Islands 4,984,620 7,133,280 7,206,216 7,313,544 7,479,852 7,656,900 3,871,830 -Virginia 3,268,404 3,308,460 3,342,300 3,392,076 3,464,832 3,490,458 1,764,364 -Washington 12,093,252 13,133,580 13,267,908 15,576,630 14,457,411 15,565,225 9,274,016 -West Virginia 1,166,220 1,050,600 1,061,352 1,077,144 1,101,636 1,127,724 570,246 -Wisconsin 13,786,572 13,294,332 12,832,080 13,023,234 13,219,584 14,342,192 7,926,280 -Wyoming 3,661,764 4,455,408 4,500,960 4,568,004 4,671,864 5,311,505 2,899,035 -Industry

472,766,898 473,331,864 478,383,390 492,134,676 493,045,583 504,088,666 274,822,502 -Source: Universal Service Administrative Company filings to the FCC. Note: Payments are actual disbursements made in each year and may include out- of- year adjustments to payments made for previou s years.

Table 3.10 Long- Term Support Payments by State or Jurisdiction (Dollars)

3 - 22 22 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama ---- 2,997,286 6,706,895 10,718,371 17,387,289 Alaska ---- 4,387,324 15,550,250 23,550,291 47,750,112 American Samoa ---- 144,933 547,316 522,810 1,066,410 Arizona ---- 2,395,184 5,884,058 8,486,091 11,858,364 Arkansas ---- 10,561,406 21,278,826 38,001,941 48,428,154 California ---- 3,195,885 7,834,700 14,128,296 21,128,796 Colorado ---- 2,348,337 4,846,640 12,785,023 17,806,290 Connecticut ---- 145,251 466,003 694,602 923,820 Delaware ----0 0 0 0 District of Columbia ----0 0 0 0 Florida ---- 1,843,719 4,798,794 8,007,505 11,283,798 Georgia ---- 7,985,127 9,888,884 27,164,972 30,777,699 Guam ---- 01,944,590 1,545,726 8,520,459 Hawaii ---- 1,042,112 3,382,714 4,434,927 12,716,607 Idaho ---- 2,118,685 4,783,780 6,607,977 8,846,532 Illinois ---- 4,873,202 12,099,372 12,250,149 21,971,328 Indiana ---- 2,732,462 5,593,217 9,688,566 13,203,657 Iowa ---- 6,392,962 17,673,953 26,765,011 33,694,776 Kansas ---- 8,374,144 20,491,336 30,035,858 43,790,832 Kentucky ---- 3,842,169 8,828,617 12,433,074 17,233,344 Louisiana ---- 2,940,771 6,886,736 18,004,380 27,277,521 Maine ---- 1,874,680 4,558,496 8,073,634 11,942,532 Maryland ---- 233,111 540,299 692,952 750,144 Massachusetts ---- 135,412 528,252 276,714 286,800 Michigan ---- 2,097,739 4,106,032 11,056,226 17,948,235 Minnesota ---- 7,623,604 17,502,520 31,652,264 45,215,958 Mississippi ---- 1,767,876 3,848,737 6,772,463 12,057,255 Missouri ---- 8,083,575 16,439,859 20,941,169 27,939,645 Montana ---- 3,584,002 7,602,374 13,759,473 21,161,229 Nebraska ---- 2,720,092 9,660,618 10,625,529 14,348,292 Nevada ---- 924,702 2,391,068 3,904,803 5,897,280 New Hampshire ---- 801,512 1,015,355 2,477,748 2,363,112 New Jersey ---- 23,624 65,576 23,622 0 New Mexico ---- 2,088,710 5,183,424 8,584,512 12,863,676 New York ---- 1,302,190 2,843,569 5,862,711 9,149,622 North Carolina ---- 3,678,899 7,733,613 16,324,944 25,112,190 North Dakota ---- 3,450,144 10,308,986 18,271,132 21,617,187 Northern Mariana Islands ----0 0 0 0 Ohio ---- 1,302,254 3,343,392 6,097,836 9,795,690 Oklahoma ---- 6,572,534 15,817,757 22,639,634 36,852,849 Oregon ---- 2,703,805 5,692,166 12,091,101 18,953,871 Pennsylvania ---- 5,117,516 13,783,938 21,724,172 37,562,442 Puerto Rico ---- 0053,951,634 110,392,005 Rhode Island ----0 0 0 0 South Carolina ---- 8,449,503 18,335,121 25,478,385 32,620,698 South Dakota ---- 4,051,624 13,018,722 17,865,539 22,290,321 Tennessee ---- 3,171,610 7,695,735 14,255,811 23,288,409 Texas ---- 10,578,327 23,790,625 38,987,117 61,702,218 Utah ---- 2,997,786 6,548,404 7,302,810 8,960,316 Vermont ---- 1,798,600 4,121,057 6,183,540 7,241,568 Virgin Islands ---- 1,573,244 4,841,481 3,782,208 10,973,502 Virginia ---- 1,330,261 3,153,427 5,608,254 8,047,206 Washington ---- 1,890,078 4,067,291 14,638,544 22,955,640 West Virginia ---- 525,724 1,021,869 1,779,675 2,375,916 Wisconsin ---- 10,591,177 26,810,522 41,676,984 57,061,125 Wyoming ---- 1,529,326 3,277,385 7,855,230 11,822,613

Industry ---- 172,894,199 409,134,351 727,043,940 1,107,215,334 Source: Universal Service Administrative Company filings to the FCC. Note: Payments for 2002 and 2003 are final trueups that include adjustments made in subsequent years. Payments for 2004 are a ctual disbursements made in that year and may include out- of- year adjustments to payments made for previous years. Payments for 2005 are project ions based on the filing for the 3rd quarter of 2005.

Table 3.11 Interstate Common Line Support Payment Trueups by State or Jurisdictio n (Dollars)

3 - 23 23 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama - - 8,828,091 17,767,491 24,056,472 11,299,565 18,797,196 20,001,912 Alaska - - 0 0 0 0 0 0 American Samoa - - 0 0 0 0 0 0 Arizona - - 2,140,941 12,768,167 20,376,165 18,700,551 19,449,051 20,341,791 Arkansas - - 3,378,933 6,822,129 4,787,478 8,015,127 17,186,127 17,872,182 California - - 16,211,703 32,326,125 31,961,553 32,634,651 31,135,644 31,166,550 Colorado - - 8,099,265 16,016,586 15,852,048 19,092,198 20,910,102 21,145,005 Connecticut - - 0 340,266 544,332 822,528 809,772 527,619 Delaware - - 199,512 385,947 373,665 320,397 266,283 267,078 District of Columbia - - 0 0 0 0 0 0 Florida - - 30,507,915 62,063,139 61,218,594 54,381,078 59,856,746 63,242,808 Georgia - - 5,957,415 11,891,154 13,484,496 14,168,910 15,808,323 21,471,693 Guam - - 0 0 0 0 0 0 Hawaii - - 744,795 2,702,961 2,254,638 2,159,208 2,331,290 2,493,801 Idaho - - 6,935,610 14,488,992 14,985,027 15,481,290 15,995,493 16,118,406 Illinois - - 6,698,124 13,200,369 13,216,725 12,664,326 12,452,580 12,532,983 Indiana - - 11,687,559 23,902,872 24,211,953 25,112,991 25,104,358 24,727,356 Iowa - - 3,745,074 7,056,894 6,895,944 6,716,220 6,691,367 5,990,250 Kansas - - 3,345,489 7,045,917 7,581,021 5,139,362 8,049,550 8,090,187 Kentucky - - 9,056,898 16,185,444 19,290,270 17,609,436 16,827,594 17,558,448 Louisiana - - 5,445,729 10,805,082 10,315,482 10,083,627 10,607,348 11,934,090 Maine - - 431,805 725,691 359,514 156,371 305,553 357,549 Maryland - - 1,984,422 3,752,091 3,555,162 1,676,697 1,174,311 2,317,452 Massachusetts - - 681,882 788,682 128,256 172,320 1,097,472 1,943,655 Michigan - - 99,879 145,413 238,794 356,853 396,309 454,077 Minnesota - - 2,086,566 3,428,328 4,429,914 5,312,741 4,502,815 4,971,897 Mississippi - - 5,952,876 11,797,332 20,357,364 17,219,518 17,958,436 18,339,399 Missouri - - 7,711,950 15,880,248 13,954,164 15,419,076 14,500,926 14,974,707 Montana - - 266,052 559,239 663,987 969,060 1,181,556 1,195,212 Nebraska - - 603,621 1,325,355 2,629,749 5,571,516 4,974,468 5,329,800 Nevada - - 3,033,204 8,394,360 7,789,374 11,046,549 10,085,637 10,485,813 New Hampshire - - 1,008,735 1,971,087 3,453,606 3,523,182 1,998,219 1,868,292 New Jersey - - 2,536,380 5,000,085 2,562,480 375,450 438,402 445,185 New Mexico - - 3,880,002 7,735,743 7,857,828 9,231,663 7,980,834 8,516,007 New York - - 12,196,734 23,369,421 19,654,758 16,928,592 15,901,489 16,307,049 North Carolina - - 5,808,558 12,088,692 23,010,936 33,845,778 34,870,061 37,570,758 North Dakota - - 589,725 1,159,116 711,963 760,722 761,854 772,554 Northern Mariana Islands - - 126,321 250,371 248,817 272,676 286,995 295,854 Ohio - - 3,902,088 11,584,665 15,038,265 15,200,220 15,632,610 15,494,889 Oklahoma - - 3,429,762 6,931,635 5,057,199 6,330,615 4,784,511 6,474,465 Oregon - - 7,787,661 19,583,346 21,956,826 21,784,824 18,852,033 20,720,637 Pennsylvania - - 6,535,158 13,375,383 16,013,835 18,902,013 19,181,096 19,354,032 Puerto Rico - - 0 0 0 0 0 0 Rhode Island - - 25,686 96,477 60,198 46,491 56,457 56,379 South Carolina - - 8,337,342 16,797,183 15,749,205 14,701,164 14,089,749 14,037,969 South Dakota - - 31,119 71,940 86,637 171,569 177,072 220,716 Tennessee - - 4,499,133 8,638,695 7,768,041 8,773,317 9,955,481 10,177,413 Texas - - 19,343,871 38,621,091 39,305,025 41,354,421 37,331,712 39,262,737 Utah - - 1,798,356 2,711,406 2,436,198 2,326,740 2,189,661 2,202,516 Vermont - - 191,970 1,194,909 1,970,931 2,145,891 2,421,292 2,446,728 Virgin Islands - - 0 0 0 0 0 0 Virginia - - 25,632,867 52,028,370 55,598,061 59,525,562 63,058,434 65,650,518 Washington - - 11,103,702 22,905,042 23,674,848 25,561,148 28,958,896 29,576,844 West Virginia - - 9,946,782 19,314,279 19,824,648 19,580,352 16,479,853 19,770,312 Wisconsin - - 1,323,642 2,631,846 1,406,055 256,329 315,939 405,174 Wyoming - - 2,966,646 6,072,090 6,478,326 7,840,214 7,566,871 7,332,084

Industry - - 278,837,550 576,699,146 615,436,827 621,741,099 641,745,828 674,810,832 Source: Universal Service Administrative Company filings to the FCC. Note: Payments are actual disbursements made in each year and may include out- of- year adjustments to payments made for previou s years. Payments for 2005 are projections based on the filing for the 3rd quarter of 2005.

Table 3.12 Interstate Access Support Payments by State or Jurisdiction (Dollars)

3 - 24 24 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama 9,863,334 7,349,622 6,731,295 6,771,888 6,234,524 6,261,958 6,423,210 6,751,238 Alaska 15,140,835 14,175,093 14,769,177 13,573,329 13,073,054 13,629,364 14,291,775 16,731,498 American Samoa 0 124,410 214,791 179,040 462,129 410,532 531,489 412,260 Arizona 9,271,179 9,732,288 10,637,322 9,516,402 8,930,867 9,515,657 8,658,162 12,378,308 Arkansas 7,457,826 7,035,777 7,353,954 7,289,430 7,908,315 8,479,740 8,618,335 8,639,252 California 6,954,408 6,794,022 6,399,933 6,521,277 6,009,440 5,760,996 6,071,804 6,014,776 Colorado 3,818,154 3,721,788 3,909,582 4,305,947 4,546,744 4,661,294 5,316,663 4,743,706 Connecticut 1,035,240 797,637 789,657 686,412 647,701 780,972 619,357 787,141 Delaware 0 0 0 0 0 0 0 0 District of Columbia 0 0 0 0 0 0 0 0 Florida 4,220,451 3,442,098 3,570,501 4,300,156 3,918,308 3,904,512 3,739,675 4,319,620 Georgia 13,521,924 13,123,731 12,859,902 13,588,262 13,892,267 14,193,144 15,740,595 14,862,529 Guam 0 0 0 0 0 0 0 0 Hawaii 39,648 840,993 1,121,160 1,368,760 1,559,675 1,315,884 1,227,548 3,155,392 Idaho 6,202,335 6,166,839 6,515,499 7,881,547 7,633,664 7,174,584 8,048,391 7,315,748 Illinois 11,998,443 12,457,695 12,221,301 11,899,200 12,135,972 11,200,944 12,058,506 10,996,218 Indiana 8,341,722 8,755,638 8,908,611 8,598,134 8,091,963 8,861,364 8,415,271 9,755,618 Iowa 15,075,849 14,710,702 14,985,528 15,535,527 14,430,044 20,700,339 24,763,812 24,059,716 Kansas 14,131,281 13,664,862 12,942,879 13,598,238 13,743,190 13,385,756 14,086,379 16,357,648 Kentucky 5,490,699 5,242,098 5,317,815 5,353,004 4,443,159 5,054,280 4,666,251 5,097,195 Louisiana 6,574,767 6,179,073 6,589,386 6,291,088 6,342,269 6,239,388 6,776,863 6,948,216 Maine 7,714,515 7,722,324 7,780,815 7,537,371 7,380,662 7,048,839 8,252,926 7,958,873 Maryland 473,400 506,382 504,963 765,011 620,696 658,416 583,556 725,137 Massachusetts 383,571 493,053 480,966 648,664 731,992 1,155,972 721,294 701,761 Michigan 8,270,259 8,200,446 8,002,278 7,638,095 7,566,044 8,189,930 8,968,573 9,495,147 Minnesota 17,503,701 17,560,428 17,662,626 16,841,415 16,092,328 16,899,638 21,529,375 22,392,006 Mississippi 3,596,718 3,482,388 3,484,518 3,608,845 3,469,620 3,536,112 3,336,519 3,961,061 Missouri 7,656,195 7,548,462 6,377,469 6,623,599 6,484,070 7,433,510 7,317,118 7,641,690 Montana 8,932,746 8,390,469 8,428,140 8,963,262 8,990,569 8,621,580 9,974,215 9,062,994 Nebraska 10,129,721 10,897,575 10,718,199 11,198,680 10,881,237 11,044,080 10,438,594 10,763,940 Nevada 5,815,119 5,871,945 6,439,410 6,890,199 6,700,770 7,195,129 7,201,453 7,530,388 New Hampshire 4,699,155 5,375,313 4,679,721 4,924,103 5,143,237 4,415,472 5,860,812 4,741,082 New Jersey 1,232,427 993,234 1,151,775 1,020,055 905,089 1,092,276 692,989 836,514 New Mexico 8,400,984 7,554,042 8,767,137 9,326,957 10,062,728 9,664,846 10,281,681 10,625,751 New York 17,322,360 17,838,462 17,843,838 17,133,941 16,354,539 15,814,788 16,628,204 16,722,247 North Carolina 6,082,674 5,636,580 5,810,920 5,703,355 5,417,894 5,826,960 5,803,750 5,920,899 North Dakota 10,830,486 10,709,298 9,840,591 10,240,836 8,353,188 13,297,296 15,148,649 16,567,890 Northern Mariana Islands 667,803 798,222 705,837 660,533 621,466 572,028 663,682 773,068 Ohio 4,473,951 4,629,063 4,676,637 4,867,749 4,258,209 4,363,296 4,361,841 4,161,663 Oklahoma 15,840,726 14,001,165 14,510,214 14,668,500 15,206,699 14,815,608 15,394,652 17,068,171 Oregon 7,255,236 7,391,592 7,747,791 8,043,837 7,534,165 7,435,848 8,028,810 8,679,008 Pennsylvania 6,905,862 6,721,311 6,733,593 6,510,344 5,421,431 6,132,228 4,886,427 6,208,318 Puerto Rico 0 0 0 0 0 0 0 0 Rhode Island 0 0 0 0 0 0 0 0 South Carolina 11,068,493 8,161,467 7,290,804 8,359,632 6,678,733 6,465,300 5,703,001 6,597,156 South Dakota 9,652,416 10,213,983 10,349,034 9,575,970 9,192,674 11,085,063 10,637,491 14,287,978 Tennessee 8,401,485 7,583,802 8,018,046 7,710,598 7,512,313 7,700,016 8,114,964 8,179,294 Texas 16,636,698 15,841,335 16,620,900 18,510,072 18,962,362 19,027,244 20,821,955 19,926,953 Utah 4,860,150 4,786,446 5,365,695 4,898,082 4,583,074 4,590,864 4,879,846 5,156,279 Vermont 4,716,894 4,637,340 5,095,044 5,068,918 4,617,768 4,421,460 5,081,290 4,755,973 Virgin Islands 0 0 0 0 0 0 0 0 Virginia 4,681,620 4,863,735 5,156,877 5,075,806 5,325,061 5,933,277 6,079,903 6,168,493 Washington 5,850,558 5,838,087 6,311,820 7,998,375 6,624,004 6,766,254 8,583,625 8,016,009 West Virginia 3,235,917 3,548,727 3,904,146 4,171,461 3,422,479 3,236,400 3,683,887 3,592,410 Wisconsin 22,644,561 22,794,588 23,021,091 22,007,452 21,361,341 23,927,316 26,702,329 29,331,259 Wyoming 5,172,102 5,416,926 5,420,082 5,419,675 5,412,066 6,358,662 5,887,528 7,410,909

Industry 390,246,598 380,322,556 384,739,270 389,869,033 375,891,793 396,256,416 422,305,025 445,286,402 Source: Universal Service Administrative Company filings to the FCC. Note: Payments for 1998 to 2003 are final trueups that include adjustments made in subsequent years. Payments for 2004 are ac tual disbursements made in that year and may include out- of- year adjustments to payments made for previous years. Payments for 2005 are project ions based on the filing for the 3rd quarter of 2005.

Table 3.13 Local Switching Support Payment Trueups by State or Jurisdiction (Dollars)

3 - 25 25 1998 1999 2000 2001 2002 2003 2004 2005 State or Jurisdiction Total Total Total Total Total Total Total Total Alabama 38,830,293 36,318,951 88,214,302 93,882,843 99,862,304 92,281,837 99,526,703 109,517,175 Alaska 64,131,034 67,816,605 70,315,653 74,543,499 79,758,279 90,253,444 95,578,022 117,590,943 American Samoa 0 124,410 473,151 458,928 875,238 1,230,722 1,959,261 2,153,855 Arizona 32,845,473 31,174,674 35,577,804 49,905,596 61,391,530 68,081,699 78,320,220 77,564,361 Arkansas 68,338,557 73,247,163 71,691,402 75,398,793 101,091,641 113,093,878 136,215,399 148,887,585 California 52,643,600 49,657,305 64,070,553 82,347,999 86,528,021 92,182,679 95,373,290 95,755,252 Colorado 43,928,578 43,789,464 53,761,542 62,003,540 66,831,777 76,528,120 84,475,160 77,930,147 Connecticut 1,212,720 958,953 952,617 1,192,074 1,506,436 2,242,663 2,211,289 2,238,580 Delaware 0 0 199,512 385,947 373,665 320,397 266,283 267,078 District of Columbia 0 0 0 0 0 0 0 0 Florida 20,036,950 18,547,026 49,781,316 84,627,004 85,609,445 80,109,504 84,700,303 90,854,909 Georgia 74,656,229 71,765,064 79,228,268 91,334,696 110,244,701 110,373,162 111,137,458 110,100,287 Guam 1,006,872 2,321,256 3,169,872 2,318,838 2,326,686 5,955,731 7,228,589 17,847,923 Hawaii 286,766 1,472,913 2,403,015 5,348,833 7,010,380 9,967,573 12,928,365 30,401,355 Idaho 28,885,473 29,219,598 35,787,777 44,531,158 49,013,604 51,909,601 54,000,607 55,164,697 Illinois 22,589,490 38,898,339 31,342,473 39,137,373 48,484,898 55,082,865 52,603,815 60,521,346 Indiana 16,278,436 17,058,453 30,488,022 42,060,071 47,141,468 53,161,533 54,799,487 57,624,438 Iowa 25,990,409 25,802,260 30,643,488 35,299,664 43,877,192 70,438,242 81,841,701 86,529,354 Kansas 59,007,494 64,603,071 67,053,729 81,025,797 94,416,663 111,477,724 127,848,672 157,502,370 Kentucky 24,460,486 19,501,563 29,807,009 36,026,757 57,147,036 59,773,467 71,027,739 78,368,719 Louisiana 65,332,257 63,648,414 72,467,664 80,748,606 87,583,016 91,029,193 104,532,436 105,912,621 Maine 18,175,357 18,968,121 32,099,073 30,927,750 29,496,861 30,558,142 31,037,489 29,318,775 Maryland 569,028 596,790 2,580,717 4,657,430 4,704,481 3,451,702 2,853,887 4,135,188 Massachusetts 489,687 641,841 1,285,080 1,657,924 1,340,972 2,120,262 2,253,112 3,158,045 Michigan 31,188,240 34,738,875 39,393,036 40,442,672 45,278,445 45,932,413 49,783,358 52,980,051 Minnesota 37,439,032 41,442,858 48,130,605 49,793,043 65,892,881 80,638,979 95,465,921 109,644,563 Mississippi 26,793,296 26,773,044 132,785,751 141,139,843 170,586,927 170,300,475 186,960,692 207,429,069 Missouri 47,215,940 50,654,082 65,568,381 73,681,087 84,316,081 92,171,760 90,105,227 91,509,315 Montana 42,065,201 43,346,418 45,254,916 51,694,230 62,832,464 66,314,404 75,088,960 75,543,747 Nebraska 19,868,058 21,377,097 23,729,919 26,378,585 31,464,331 44,359,887 47,039,465 54,841,116 Nevada 10,462,430 10,994,325 15,066,537 22,847,013 23,263,410 30,132,348 28,052,812 30,592,460 New Hampshire 8,487,987 8,506,026 8,489,304 9,433,625 11,898,687 11,384,021 11,831,100 9,679,157 New Jersey 2,976,024 993,234 3,688,155 6,020,140 3,491,193 1,533,302 1,155,013 1,281,699 New Mexico 33,552,080 34,527,114 37,100,202 41,421,404 46,431,624 50,546,709 50,978,112 54,984,129 New York 35,363,672 37,395,060 51,532,557 59,942,192 56,182,579 51,833,73