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Statewide 9-1-1 Level Rate Study

Statewide 9-1-1 Level Rate Study. Thomas A. Petee, Ph.D. Auburn University at Montgomery Center 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

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Statewide 9-1-1 Level Rate Study

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  1. Statewide9-1-1 Level RateStudy Thomas A. Petee, Ph.D. Auburn University at Montgomery Center for Government & Public Affairs

  2. 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

  3. 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

  4. 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)

  5. 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

  6. 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

  7. 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

  8. 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)

  9. 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

  10. 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

  11. 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

  12. 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 1,603,970 Post-paid Wireless 2,965,589 Pre-paid Wireless 794,192

  13. Statewide 9-1-1 Level Rate Study Annualized, those estimates are as follows: Landline/VOIP 19,247,640 Post-paid Wireless 35,587,068 Pre-paid Wireless 9,530,304 TOTAL LINE SURCHARGES 64,365,012

  14. 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

  15. 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

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