1. Statewide 9-1-1 Level Rate Study Thomas A. Petee, Ph.D. Auburn University at Montgomery Center for Government & Public Affairs

2. jStatewide 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/VOIP1,603,970 Post-paid Wireless2,965,589 Pre-paid Wireless 794,192

13. Statewide 9-1-1 Level Rate Study Annualized, those estimates are as follows: Landline/VOIP19,247,640 Post-paid Wireless35,587,068 Pre-paid Wireless 9,530,304 TOTAL LINE SURCHARGES64,365,012

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