Common Audit Findings: Contributors

Example of Product

Unlimited Local/LD for $50 per month, 1,500 minutes of AnyWhere Minutes for $50 per month, or Unlimited Local and 1500 minutes of long distance for $50 per month.

Description of Finding

Filers that offer their customers a non-VoIP monthly bundle package that includes local exchange service with toll calling in addition to other vertical dialing features can sometimes be confused where to report the revenues associated with the services included in the package.

Finding 1

Filers incorrectly report the local service portion of revenue from the service plans that include interstate calling as part of the flat monthly fee on Line 404.3 of FCC Form 499-A. These revenues should be reported as intrastate on Line 404.1. Because the interstate or international calling is captured by the toll service portion of the plan (reported on Line 404.2 of the form), the local portion reported on Line 404.1 represents intrastate revenues and no allocations are made to designate revenues to the interstate or international jurisdictions on Line 404.1.

Finding 2

Conversely, filers incorrectly report the long distance portion of revenue from such local exchange service plans on Line 414.1 of FCC Form 499-A as separately stated/itemized toll charges. Revenues for the long distance portion of flat rated local/long distance service should be reported on Line 404.2. If the local/long distance service is offered by a local exchange carrier and by its long distance affiliate the revenues are still reported on line 404.1 by the local exchange carrier and on line 404.2 by the affiliate.

Finding 3

Filers that do not have records/documentation or rely on outdated information to (1) determine the amount of revenue generated from the local service portion of revenues from local exchange service plans that include interstate calling as part of the flat monthly fee, (2) determine the amount of revenue from the toll portion of the local exchange service plan, and (3) determine the jurisdiction associated with the toll calling portion of the plan.

How to Address or Prevent this Finding

Filers should take the following steps when reporting local exchange service plans (other than interconnected VoIP plans) that include interstate calling as part of the flat monthly fee:

1. Develop a process for determining the revenue and jurisdiction for the local and long distance portions of the plans that uses data specific for that year,
2. Maintain any documentation or information used to derive these amounts, and
3. Implement procedures to review the form prior to submission to ensure it accurately reports revenues from local exchange service on the correct lines of the form.

If the local exchange service plan is not interconnected VoIP and is offered at a flat monthly fee with other local and toll services, the revenue from the bundle would typically be reported on lines 404.1 and 404.2 and never reported on Lines 404.1 and 414.1. Pursuant to the Rules, if the allocation of revenues cannot be determined directly from corporate books of account or subsidiary records, the filer may prepare a good-faith estimate and should retain the related support.

End User Fixed Local Service/Long Distance Bundled Revenue Reporting Lines

Line 404.1: Local service portion of revenues from local exchange service plans (other than interconnected VoIP plans) that include interstate calling as part of the flat monthly fee.

Line 404.2: Toll portion of revenues from local exchange service plans (other than interconnected VoIP plans) that include interstate calling as part of the flat monthly fee. (Note: if the revenue from the toll portion of such service is attributed to an affiliate, that affiliate must report such revenues on Line 404.2, not on Line 414).

Never include federally tariffed Subscriber Line Charge (SLC) and Pre-subscribed Interexchange Carrier Charge (PICC) charges in the Lines 404.1 and 404.2.

Description of Finding

Filers often fail to report itemized state and federal Universal Service Fund (USF) surcharges as revenue on Line 403 of FCC Form 499-A because they believe that by including it in the contribution base as revenues they are contributing on those revenues again. This is, however, incorrect. The circularity factor subtracts out the amount of USF that would be paid on the USF collected. In determining what a filer contributes to the USF each quarter, both a contribution factor and a circularity factor are applied as percentages to the filer’s revenue. The contribution factor is the percentage of end-user revenue that will be contributed to the USF. The circularity factor adjusts the quarterly contribution base by approximating the filer’s contribution for that quarter and subtracting it from the total, thus decreasing a filer’s contribution base. This prevents the assessment of universal service fees on the pass-through universal service fund charges that filers bill to their customers and are reported as revenue on the FCC Form 499.

How to Address or Prevent this Finding

Be sure to report itemized state and federal USF surcharges as revenue on Line 403. Many states (e.g., Texas, California, and New York) have state universal service programs of their own. You should report state universal service revenues on Line 403 in Column (a) only to the extent that actual payments to state universal service programs were recovered by pass-through charges itemized on customer bills. These line items might not explicitly state “universal service” on the bill, but if the underlying intent of the program is the same as the federal USF, you should add those amounts to the total in Box 403a.

You can find a list of the most current contribution and circularity factors on the Contribution Factors web page.

Description of Finding

Contributors that choose to collect federal Universal Service Fund (USF) fees from their customers collect in an amount that exceeds their contribution obligation for that customer. This occurs when a contributor assesses the universal service fee to an exempt reseller, on intrastate revenues, on a non-telecommunication product, or has not accurately calculated the interstate portion of the customer’s bill. In some insistences a filer has failed to update the universal service contribution factor in its billing system which caused the customer to be incorrectly billed for the period.

How to Address or Prevent this Finding

Contributors that choose to collect universal service fund fees from their customers cannot collect an amount that exceeds their contribution obligation for that customer (47 CFR Section 54.712(a)). In most cases, this is the interstate and international portions of the customer’s invoice times the corresponding contribution factor.

For de minimis companies that are indirectly contributing through their underlying carriers, they can pass these charges through to their customers but the charge cannot exceed what their underlying carrier is charging them. De minimis carriers should be prepared to produce their USF invoices to the carriers they purchase service from and ensure that the amount passed to their customers complies with this amount.

Contributors also have the option of recovering the cost through a flat-rate line item on a customer’s invoice; however, the fee collected cannot exceed the total amount associated with the contribution factor (2002 Contribution Methodology Order, FCC 02-329). If the contributor chooses this methodology, it should ensure that their customer service base is relatively analogous to guarantee that a fair assessment is achieved.

Filers who qualify for the Limited International Revenue Exemption (LIRE) should not include their customer’s international traffic in the amount on which they charge universal service because their contribution base will not include international traffic. LIRE filers who charge a universal service fee on international traffic must refund those amounts to their customers.

The burden of proof rests solely on the company to demonstrate that the line item charge accurately reflects the specific fee it claims to recover (2005 Truth-in-Billing Order, FCC 05-55). Companies should save their end-user bills in the event of an audit. Companies should also be prepared to produce a report detailing the amounts that were collected for state and federal universal service represented as a line item on an end-user bill. In the case of a service bundle on a customer’s invoice, the contributor must be able to break out and identify the USF assessable charges associated with that bundle.

Description of Finding

Companies choose to record the pass-through state and federal Universal Service Fund (USF) in a liability account rather than a revenue account in their general ledger, and then fail to report the pass-through amount as revenue.

How to Address or Prevent this Finding

The pass-through charges are considered revenue collected for the purpose of contributing to the USF. You must report the amount on Line 403 on the FCC Form 499-A regardless if it is recorded as revenue or a liability on the entities corporate book of accounts.

Description of Finding

Carrier does not meet the definition of “reseller.”

How to Address or Prevent this Finding

The Federal Communications Commission (FCC) has defined a “reseller” as a telecommunications carrier or telecommunications provider that:

1. Incorporates purchased telecommunications into its own offerings; and
2. Can reasonably be expected to contribute to federal universal service support mechanisms based on revenues from those offerings.

Specifically, to report your revenues as reseller revenue in Block 3 of the FCC Form 499-A, your customer must be:

1. Purchasing service(s) for resale, at least in part, and that the company is incorporating the purchased services into its own offerings which are, at least in part, assessable U.S. telecommunications or interconnected VoIP service; and
2. Either directly contributing or has a reasonable expectation that another entity in the downstream chain of resellers directly contributes to the federal universal service support mechanisms on the assessable portion of revenue from offerings that incorporate the purchased services.

Each of these conditions must be met if you intend to report your revenues from other carriers as reseller revenue in Block 3 of the FCC Form 499-A, excluding that revenue from your universal service contribution base.

Description of Finding

One of our most common audit findings is that the carrier does not submit the required information about their resellers.

How to Address or Prevent this Finding

Since having a Filer ID is essential to filing an FCC Form 499, you cannot credibly establish that the customer is a direct universal service fund contributor if that customer is not filing the FCC Form 499.

In addition, you need the following information about your resellers:

• 499 Filer ID
• Legal name
• Legal address
• Name of contact person
• Phone number of contact person
• Annual certification by the reseller regarding its reseller status (see below)

Annual Certification
A filer may demonstrate that it had and has a reasonable expectation that a particular customer is a reseller with respect to purchased service(s) by providing a certificate signed each calendar year by the customer that:

• Specifies which services the customer is or is not purchasing for resale pursuant to the certificate; and
• Has wording consistent with the following language, which comes from the 2016 instructions, pages 37-38:
  I certify under penalty of perjury that the company is purchasing service(s) for resale, at least in part, and that the company is incorporating the purchased services into its own offerings which are, at least in part, assessable U.S telecommunications or interconnected Voice over Internet Protocol services. I also certify under penalty of perjury that the company either directly contributes or has a reasonable expectation that another entity in the downstream chain of resellers directly contributes to the federal universal service support mechanisms on the assessable portion of revenues from offerings that incorporate the purchased services.

If your company is audited, we will expect to see these certification documents. Be sure to keep them on file for at least five years. If you are missing certificates for companies you reported as resellers with revenue reported in Block 3, that revenue will be moved to Block 4, and the company will be reclassified as an end user.

Service Specific
Certificates must also be service specific. In the FCC Form 499-A instructions, there are examples of how to make certificates service-specific:

• Entity-Level: that all services purchased by the customer are or will be purchased for resale pursuant to the certificate;
• Account-Level: that all services associated with a particular billing account — the account number for which the customer shall specify — are or will be purchased for resale pursuant to the certificate;
• Service-Specific: that individual services specified by the customer are or will be purchased for resale pursuant to certification; or
• Exception-Specific: that all services except those specified either individually or as associated with a particular billing account, are or will be purchased for resale pursuant to the certificate. The certificate shall specify the account number(s) of specific customers included in the exception.

FUSF Reseller Certification Template
USAC is providing a FUSF Reseller Certification Template for filers to use. This template became available in November 2018.

Specific Time Period
All certificates should be obtained on an annual basis. They must state the calendar year that the certificate covers and must be signed before the filer submits the FCC Form 499-A.

Description of Finding

The entity did not qualify to submit a consolidated FCC Form 499-A. The main reason that entities are not able to submit a consolidated form is because a single entity does not send bills to all of the customers of the consolidated companies.

How to Address or Prevent this Finding

Corporate entities may file a consolidated FCC Form 499-A instead of filing individual forms for each separate entity. Businesses filing on a consolidated basis must certify each year that they meet all of the following conditions:

• A single entity oversees the management of all affiliated systems;
• A single entity sends bills to customers identifying it (or a trade name) as the service provider, rather than identifying the individual legal entities;
• All revenues are posted to a single general ledger;
• If separate revenue and expense accounts exist, they are derived from one consolidated set of books and the consolidated filing must cover all revenues contained in the consolidated books;
• Customers have a single point of contact;
• The consolidated filer acknowledges that process served on it would represent process served on any or all of the affiliated legal entities;
• The consolidated filer agrees to document and resolve all slamming complaints that might be served on either it or any of the affiliated legal entities;
• The consolidated filer obtains a separate FCC Registration Number (FRN) from those assigned to its affiliated legal entities;
• The consolidated filer acknowledges that its universal service, telecommunications relay services (TRS), local number portability (LNP), North American Numbering Plan (NANPA), and regulatory fee obligations will be based on data provided in the consolidated Worksheet filings, that it bears the responsibility of satisfying those obligations, and that all legal entities covered by the filing are jointly and severally liable for such obligations; and
• The consolidated filer acknowledges that it: (1) was not insolvent on the date it undertook to make payments on a consolidated basis or on the date of actual payments to universal service, TRS, LNP, NANPA, and regulatory fees, and did not become insolvent as a result of such undertaking or payments; (2) was not left with unreasonably small capital as a result of such undertaking or payments; and (3) was not left unable to pay debts as they matured as a result of such undertaking or payments.

This annual certification should be filed with USAC and must also include:

• A list of the legal names of all the legal entities covered by the filing,
• The FCC Form 499 Filer IDs of all the legal entities covered by the filing,
• The consolidated filer’s FRN, and,
• For wireless carriers, a list of all radio licenses (call signs) issued to each legal entity covered by the filing.

Report All Entities

It is common for filers to fail to report all of the entities included under their consolidated FCC Form 499-A filing on Line 112. The instructions for Line 112 state that, “Consolidated filers should provide all names used by all telecommunications affiliated [sic] covered by the filing.”

It is important to remember that in addition to meeting and certifying that a filer meets the requirements to file on a consolidated basis, there is also a form reporting requirement to list the entities covered under the filing on Line 112 of the form.

Description of Finding

Consolidated business filers failed to provide adequate documentation.

How to Address or Prevent this Finding

Corporate entities may file a consolidated FCC Form 499-A instead of filing individual forms for each separate entity. Businesses filing on a consolidated basis must certify each year that they meet all of the following conditions:

• A single entity oversees the management of all affiliated systems;
• A single entity sends bills to customers identifying it (or a trade name) as the service provider, rather than identifying the individual legal entities;
• All revenues are posted to a single general ledger;
• If separate revenue and expense accounts exist, they are derived from one consolidated set of books and the consolidated filing must cover all revenues contained in the consolidated books;
• Customers have a single point of contact;
• The consolidated filer acknowledges that process served on it would represent process served on any or all of the affiliated legal entities;
• The consolidated filer agrees to document and resolve all slamming complaints that might be served on either it or any of the affiliated legal entities;
• The consolidated filer obtains a separate FCC Registration Number (FRN) from those assigned to its affiliated legal entities;
• The consolidated filer acknowledges that its universal service, telecommunications relay services (TRS), local number portability (LNP), North American Numbering Plan (NANPA), and regulatory fee obligations will be based on data provided in the consolidated Worksheet filings, that it bears the responsibility of satisfying those obligations, and that all legal entities covered by the filing are jointly and severally liable for such obligations; and
• The consolidated filer acknowledges that it: (1) was not insolvent on the date it undertook to make payments on a consolidated basis or on the date of actual payments to universal service, TRS, LNP, NANPA, and regulatory fees, and did not become insolvent as a result of such undertaking or payments; (2) was not left with unreasonably small capital as a result of such undertaking or payments; and (3) was not left unable to pay debts as they matured as a result of such undertaking or payments.

This annual certification should be filed with USAC and must also include:

• A list of the legal names of all the legal entities covered by the filing,
• The FCC Form 499 Filer IDs of all the legal entities covered by the filing,
• The consolidated filer’s FRN, and,
• For wireless carriers, a list of all radio licenses (call signs) issued to each legal entity covered by the filing.

Report All Entities

It is common for filers to fail to report all of the entities included under their consolidated FCC Form 499-A filing on Line 112. The instructions for Line 112 state that, “Consolidated filers should provide all names used by all telecommunications affiliated [sic] covered by the filing.”

It is important to remember that in addition to meeting and certifying that a filer meets the requirements to file on a consolidated basis, there is also a form reporting requirement to list the entities covered under the filing on Line 112 of the form.

Description of Finding

A common finding in audits is that filers do not correctly identify their local number portability (LNP) percentages for each region reported on Lines 503-509 of the FCC Form 499-A. This is usually due to: 1. including non-telecommunications revenue in the determination of the local number portability administration (LNPA) percentages, and/or 2. using old information to determine these percentages. LNPA percentages should only represent your telecommunications revenues, which excludes revenue from line 418.3.

How to Address or Prevent this Finding

Enter regional revenue percentages for LNP in Block 5 of the FCC Form 499-A. This section shows the distribution of your revenue over LNPA regions. These percentages are used to calculate your LNP contribution. The only filers who do not have to show this distribution are payphone service providers, private service providers, and shared-tenant service providers that have certified that they are exempt from contributing to LNP.

Block 5 is divided into seven (7) regions requiring filers to report percentages on each line:

• Line 503: Southeast,
• Line 504: Western,
• Line 505: West Coast,
• Line 506: Mid-Atlantic,
• Line 507: Mid-West,
• Line 508: Northeast, and
• Line 509: Southwest.

If you have been in telecom for many years, you will notice the above breakdown’s resemblance to the seven regions into which the country was split during the breakup of the Bell system in 1984. The totals of the percentages of all the regions (Lines 503-509) are calculated for you on Line 510, “Totals”. In addition, you should revisit your calculation of LNPA percentages on a periodic basis to ensure the information is current.

The percentage of revenue in each area is based on percent of revenues billed in that location. For example, if you have total end-user revenues of $1000, and $750 is billed to a customer in Maryland and $250 is billed to a customer in North Carolina, then you would report 25 percent for the Southeast region on Line 503 and 75 percent for the Mid-Atlantic on Line 506.

On the Data Entry screen, the left column, “Carrier’s Carrier Revenue Region”, shows the percentage of revenue by region from the revenue reported in Block 3. The column next to it, “End-User Telecom”, shows the percentage by revenue by region from the end-user telecommunication revenue reported in Block 4. Further, it’s important to note that the revenue reported in this column should exclude non-telecommunications revenue reported on Line 418. For each column, if percentages were reported, then the total percentage must add up to 100 percent.

Further Information on Correct Reporting Methods for Excluding Revenue for TRS, NANPA, LNP, and ITSP

Resellers that do not contribute to universal service support mechanisms but contribute directly to the other funds, do not need to be included in the provider’s telecommunications relay services (TRS), North American Numbering Plan (NANPA), local number portability (LNP), and FCC Interstate Telecommunications Service Provider (ITSP) contribution bases. The filer may accomplish this by placing this revenue on Line 511. Please note that you must have the Filer ID for each customer you list on Line 511.

Remember to report uncollectible revenue or bad debt expense associated with TRS contribution base amounts on Line 513. You can find this entry on the main revenue Data Entry screen. It is also listed out separately on the Revenue Information Summary screen. The revenue you enter here is subtracted from your TRS contribution base.

Description of Finding

Contributors that choose to collect federal Universal Service Fund (USF) fees from their Lifeline customers collect an amount that exceeds their contribution obligation for that customer. This occurs when a contributor assesses the universal service fee on services that are fully supported by the Lifeline program.

How to Address or Prevent this Finding

Carriers cannot charge USF to their customers for any revenues that are received by USAC as a Lifeline disbursement and in many cases, the USF disbursement is the only revenue the carriers receive for the Lifeline service. Below are some examples of what this means for filers.

Local – With traditional local service, the USF fee is used to cover the Subscriber Line Charge (SLC) charge of their local service and the SLC charge is the interstate portion of their local service so no carrier should charge USF on a customer’s Lifeline supported local service.  If the customer also received interstate long distance, then they could be assessed USF on those charges.

Cellular/Local and Long Distance Bundled – With cellular (or any plan with anywhere minutes) if a provider offers a customer 250 anywhere minutes for the Lifeline support, meaning that the customer pays nothing, they cannot charge that customer USF because they do not have any end user revenues. But if the provider charges the customer an additional $10 for additional anywhere minutes, then the $10 charge must be reported as “end user” and  the consumer can be assessed on the interstate portion of that $10.

Description of Findings

A misconception for reporting revenue on Line 418.3 is for the filer’s process to map revenue to all other form lines, and then subtract the mapped revenue from the total revenue reported on Line 419. The difference is then recorded on Line 418.3. Such a process is not reasonable as the filer is not performing an analysis to ensure all revenues recorded on Line 418.3 represent other non-telecommunication revenue. As a result, the filer is unable to provide supporting documentation around transactions/products mapped to Line 418.3 and may omit certain non-telecommunications revenues from this line. To be clear, filers should maintain documentation and methodologies utilized for the categorization of revenue for all of their products and services.

How to Address or Prevent this Finding

All non-telecommunications service revenues appearing on the filer’s general ledger, as well as some revenues that are derived from telecommunications-related functions will be reported in categories on Line 418. These revenues are not included in the Universal Service Fund (USF) contribution base that are totaled on Line 420. There are four different lines to report non-telecommunications revenue on. A brief description follows:

• Line 418.1: Non-telecommunications services bundled with circuit switched exchange access service. Revenues from non-telecommunications goods or services that are bundled with U.S. wireline or wireless circuit switched exchange access services are reported on line 418.1. In all cases, these revenues must be based on some reasonable allocation method. A common example of revenue reported on this line would be revenue associated with voice mail service that is included as part of a customer’s local exchange service. In another example, for a wireless carrier, this line would include the revenue associated with a wireless internet access service that is bundled under one price of the monthly mobile plan.
• Line 418.2: Non-telecommunications services bundled with interconnected VoIP local exchange service. Revenues from non-telecommunications goods or services that are bundled with U.S. interconnected VoIP service are reported on line 418.2. Like the revenue reported on line 418.1, these revenues must be based on some reasonable allocation method For VoIP providers, some examples of revenues reported on this line would be the features of voice mail hold music, and reporting services that are included in their packaged VoIP service.
• Line 418.3: If the service is not bundled with a telecommunications or interconnected VoIP service offering, then it will be reported on this line. Easy examples of this would be revenues from construction services and revenues from installation. This line also includes broadband internet access service subject to forbearance and broadband transmission service provided on a non-common carrier basis to a broadband internet access provider.
• Line 418.4: Non-interconnected VoIP revenues not included in any other category. Revenues reported on line 418.4 should include non-interconnected VoIP revenues that aren’t included in any other category. These revenues are included in the telecommunications relay services (TRS) contribution base only.

The following is a helpful list of products and services in which the revenues will be reported on one of the 418 form lines. This list does not represent every product or service that should be reported on the 418 lines, but it should give the filer a frame of reference of the types of non-telecommunications revenues that could be reported on this line.

• Billing and collection service
• Dark fiber service
• Pole attachments
• Inside wiring and inside wiring maintenance insurance
• Cable service
• Sale, lease, installation, insurance and maintenance of Customer Premises Equipment (CPE)
• Construction
• Web and server hosting
• Voice mail
• Email
• Web design
• Internet service:
  • Revenues for the provision of broadband transmission offered on a non-common-carrier basis to providers of broadband internet access.
  • Revenues for the provision of broadband internet access
• Facsimile services
• Monitoring services
• Management and professional services
• Published and non-published directory service
• Late fees
• Dishonored check revenues
• Rebates, discounts and other charges from wireless Internet access service
• Credit memos related to its non-telecommunications and information services
• Firewall services
• Billing and collection services
• Open video systems (OVS)
• Cable leased access
• Direct broadcast satellite (DBS) service

Note: Filers should report on Line 406 revenues derived from the sale of special access service on a common carrier basis to providers of retail broadband internet access service as well as revenues from broadband transmission service, including consumer broadband-only loop service, voluntarily provided on a common carrier basis to providers of retail broadband internet access.

• International traffic, both endpoints in foreign countries
• Revenues from the sale or lease of transmission facilities, such as dark fiber or bare transponder capacity, that are not provided as part of a telecommunications service or as an Unbundled Network Element (UNE)
• Revenues from telecommunications provided in a foreign country where the traffic does not transit the United States or where the provider is offering service as a foreign carrier, i.e., a carrier licensed in that country

Bundled Services

In some instances, the services in the list above are bundled with a telecommunications or VoIP service and offered at a single price. In order to report these non-telecommunications revenues in one of the line 418 categories, the filer must allocate the portions of the bundled service revenues between the non-telecom service reporting line (i.e. Line 418) and the telecommunications/VoIP services reporting lines (i.e. Lines 404 to 417).

Allocation of revenues between either wireline or interconnected VoIP telecommunications and bundled non-telecommunications, such as information services and consumer premises equipment (CPE), are governed by the Federal Communications Commission (FCC)’s bundling rules.

Safe Harbor

The FCC adopted two safe harbor methods for allocating revenue when telecommunications services and non-telecom services are offered as a bundled package.

• The first option is to report revenues from bundled telecommunications and CPE/enhanced service offerings based on the unbundled service offering prices, with no discount from the bundled offering being allocated to the telecommunications services.
• Alternatively, filers may elect to treat all bundled revenues as telecommunications service revenues for purposes of determining their universal service obligations.

Filers may choose to use allocation methods other than the two described above. Filers should realize, however, that any other allocation method may not be considered reasonable and will be evaluated on a case-by-case basis in an audit or enforcement context. When establishing any other allocation method, Filers should not apply discounts to telecommunications services in a manner that attempts to circumvent a filer’s obligation to contribute to the universal service support mechanisms.

Prepaid calling card providers may avail themselves of the bundled service safe harbors for separating revenue between telecommunications and information services.

Similarly, providers of non-interconnected VoIP services that are offered with end-user revenue generating (non-VoIP) services may avail themselves of the bundled service safe harbors for allocating revenue.

Document Retention

It is important to maintain any documentation (e.g., billing or accounting system queries, product/service manuals, service agreements, copies of end user invoices, etc.) that support revenues reported on the 418 lines. Auditors will review such documentation to ensure that all revenues are being properly reported on the 418 lines. All documentation and records should be kept for a time period of five years in order to be compliant.

Good-Faith Estimates

If revenue category breakout cannot be determined directly from corporate books of account or subsidiary records, filers may provide a good-faith estimate of the breakout. Filers need to ensure that the methodology used to estimate their non-telecommunications revenue for reporting on the 418 lines is based on information that is current for the filing period. For example, if a filer developed percentages derived from a competitor analysis performed more than eight years prior and continued to use these percentages to determine the 418 line reporting for its 2016 filing, the filer’s estimate would be considered outdated. It’s incumbent upon filers to maintain documentation that support any estimates applied and to ensure that it reflects current business models.