Statewide9-1-1 Level Rate

Study

Thomas A. Petee, Ph.D.

Auburn University at MontgomeryCenter for Government & Public Affairs

j Statewide 9-1-1 Level Rate Study

• Alabama 9-1-1 Board commissioned AUM to conduct a study and determine a Statewide level rate

• A level rate can be determined through a calculation of:– Revenue (wireless) paid by the Wireless Board to each

Emergency Communication District (ECD) for FY 2010-11, plus any other revenue that should have been paid in that fiscal year

– Revenue generated through the 9-1-1 system for land line/VoIP to establish a baseline for each ECD for wire line services

– Total eligible wireless and land line/VoIP connections that are available in the State of Alabama

Statewide 9-1-1 Level Rate Study

To ensure accuracy in the estimation of land line/VoIP rates, ECD’s were categorized into one of three groups:– ECD’s that have not changed their rate since October

1, 2010 – ECD’s that increased rates between October 1, 2010

and September 30, 2011– ECD’s that increased rates between October 1, 2011

and April 30, 2012

Statewide 9-1-1 Level Rate Study

ECD’s that have not changed their rate since October 1, 2010 were asked to provide:– Data on surcharge fees collected for the highest

revenue generating year of the past five fiscal years (2008-2012)

Statewide 9-1-1 Level Rate Study

ECD’s that changed their rates between October 1, 2010 and September 30, 2011 were asked to provide:– The month in which they first collected fees under the

newly established rate– The average monthly revenue for those months in

which fees were collected under the new rate; this would then be annualized by multiplying the average figure by 12 months

Statewide 9-1-1 Level Rate Study

ECD’s that changed their rates between October 1, 2011 and April 30, 2012 were asked to provide:– Specific information as to the amount of the increased

rate for the emergency service charge– A copy of notification to the primary telephone

provider of the district as to when the new increased rate is to go into effect

– The line counts for each month of fiscal year October 1, 2010 – September 30, 2011

Statewide 9-1-1 Level Rate Study

Telephone Providers were asked to provide data for the month of December, 2012 on:

- The number of wire line 9-1-1 surcharges - The number of post-paid wireless 9-1-1 surcharges - The number of pre-paid wireless 9-1-1 surcharges

Statewide 9-1-1 Level Rate Study

For the calendar year 2012, the average surcharge rates were:

Wire line - $3.79 (combined business/residential)

Wireless - $0.70 (for both pre- and post-paid)

Statewide 9-1-1 Level Rate Study

From the data provided by the ECD’s, we calculated an annual baseline revenue estimate for 2012:

Wire line/VOIP $72,964,165.48

Wireless $32,188,151.86

TOTAL $105,152,317.34

Statewide 9-1-1 Level Rate Study

In addition to the baseline revenue, a number of adjustments needed to be factored in to arrive at a target revenue estimate:

- a 2% ECD revenue buffer (not including pre-paid wireless)- a 20% cost recovery for wireless- the 7% add-on for pre-paid wireless point of sale - the fee paid to the Examiners for Public Accounts for auditing

Statewide 9-1-1 Level Rate Study

The calculation of those costs were as follows:

Baseline revenue $105,152,317.342% revenue buffer $1,967,856.1120% cost recover for wireless $6,437,630.387% add on for pre-paid point of sale $473,165.84Auditing costs $1,390,322.30TARGET REVENUE ESTIMATE $115,421,291.97

Statewide 9-1-1 Level Rate Study

From the telephone providers, we determined the following line estimates per month for each type of telephone line:

Landline/VOIP 1,603,970Post-paid Wireless 2,965,589Pre-paid Wireless 794,192

Statewide 9-1-1 Level Rate Study

Annualized, those estimates are as follows:

Landline/VOIP 19,247,640Post-paid Wireless 35,587,068Pre-paid Wireless 9,530,304TOTAL LINE SURCHARGES 64,365,012

Statewide 9-1-1 Level Rate Study

Consequently, the estimated level rate was calculated as follows:

$115,421,291.97/64,365,012 =

$1.7932

Statewide 9-1-1 Level Rate Study

Using that rate (rounded up to $1.80), the estimated post-implementation surcharge collections would be as follows:

Landline/VOIP $34,645,752.00 Post-paid Wireless $64,056,722.40 Pre-paid Wireless $17,154,547.20