Transcript 9-1-1 Level Rate Study Reportx - Alabama 9-1

Statewide
9-1-1 Level Rate
Study
Thomas A. Petee, Ph.D.
Auburn University at Montgomery
Center for Government & Public Affairs
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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
$105,152,317.34
2% revenue buffer
$1,967,856.11
20% cost recover for wireless
$6,437,630.38
7% add on for pre-paid point of sale
$473,165.84
Auditing costs
$1,390,322.30
TARGET 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
Post-paid Wireless
Pre-paid Wireless
1,603,970
2,965,589
794,192
Statewide 9-1-1 Level Rate Study
Annualized, those estimates are as follows:
Landline/VOIP
Post-paid Wireless
Pre-paid Wireless
TOTAL LINE SURCHARGES
19,247,640
35,587,068
9,530,304
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
Post-paid Wireless
Pre-paid Wireless
$34,645,752.00
$64,056,722.40
$17,154,547.20