Telecom Companies Take Note: Your Form 499-A Deadline Is Less than a Month Away

It’s that time of year again – all telecoms and VoIP providers must file their annual Form 499-A by April 2.

That “other” April deadline is right around the corner: all telecommunications carriers are required to file FCC Form 499-A by April 2, 2012. If you’re an intrastate, interstate or international provider of telecommunications in the U.S., this probably means YOU (but check below for the short list of exemptions).

 Form 499-A is used to true up the carrier’s Universal Service Fund contributions reported during the previous year. The revenues reported on the form will also be used to calculate upcoming 2012 contributions to the Telecommunications Relay Service, the North American Numbering Plan, and the Local Number Portability Fund.  (For 2012, the proposed “contribution factor” – i.e., percentage of revenues that must be paid – will be a whopping 17.9 percent, up from 15.3 percent in the last quarter of 2011. Ultimately, these contributions come from consumers, who are assessed a surcharge as a percentage of their phone bill.)

The new 2012 form was released on March 5, giving carriers less than a month to get on file. It’s mostly the same as last year, except that now non-interconnecting VoIP providers must file to fulfill their new obligation to contribute to the Telecommunications Relay Service Fund. (That new obligation comes courtesy of the Twenty-First Century Communications and Video Accessibility Act of 2010.)

A reporting company’s initial 499-A filing must be paper and ink; after that, carriers can file online through USAC’s website.

Before starting to fill out the form, a reporting company will need to pull together some financial information – i.e.,billed revenues for 2011, broken down into various categories. There is a safe harbor percentage available for entities that have difficulty separating their telecommunications versus bundled non-telecoms revenues. There is also a safe harbor for cell and VoIP providers to use in breaking out their interstate versus intrastate revenues.

Additionally, carriers with a lot of international revenue should take note of the “limited interstate revenues exemption” (LIRE). That allows companies whose interstate revenues are 12% or less than their international revenues to exclude international revenues in their “contribution base” (the amount upon which their contribution is assessed). Don’t look for this exemption in the Form 499-A instructions; it’s buried in a worksheet in an appendix.

If you’re not sure whether you’re a telecommunications carrier or not, you probably are. The category of mandatory 499-A filers is broad, including resellers, non-common carriers and VoIP providers. However, there are limited exemptions for:

  • De minimis providers – whose contribution would be less than $10,000 (available only for exclusively non-common carriers);
  • Government and public safety entities, or carriers who provide services exclusively to the government;
  • Broadcasters;
  • Non-profit schools and libraries;
  • Non-profit health care providers; and
  • Systems integrators and self-providers whose telecoms revenues are less than five percent of the systems integration revenues.

If you have any doubts about whether you’re required to file, you’d best get them resolved sooner rather than later. Failure to file can be expensive. Last year, we reported that the FCC reminded one carrier of its obligations by doling out a $600,000 fine. While we haven’t yet seen any similar forfeitures this year, it’s not hard to run up a big tab quickly. Do the math: $50,000 for each “failure to file,” plus one and a half times the total unpaid amount, plus an extra $100,000 if you also failed to register as a contributor. And you still have to pay the amount in arrears.  For lateness that doesn’t extend long enough to trigger the FCC forfeiture process, USAC still assesses a $100 per month late fee plus 3.5% of the filer’s monthly obligations.

And just because you make the April 2 deadline, don’t think you can kick back and relax: the quarterly Form 499-Q deadline is May 1.

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