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NECA PRICING OPTIONS

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Julie Keim, CPA

ILEC Rate Band Choices

Through a new rate band buy down option implemented by NECA, your ILEC can select a lower rate band rate for Ethernet, DSL, and non-DSL services than what you were originally assigned.


You can choose to charge different rate band rates for one, two, or all of the special access services. If you do select a different rate band than the one originally assigned to you by NECA, you must charge all customers the same rate for that service.

The rate band buy down option has no impact on your ILEC’s settlement process.

Your company reports to the special access pool the higher amount of revenues it would have charged if it did not lower its rate band rate.

The following example presents the impact to revenues if demand is constant:

          NECA Assigned
Rate Band
        ILEC Selected
Rate Band
        (Decrease)
in Revenue
ADSL Line Charge $55 $53 -
Demand 3,000 3,000  -

 

$165,570 $159,720 ($5,850)


However, if the rate band is less, your company may attract and/or retain more customers/demand and generate more revenue. The following example presents the impact to revenues if your demand increases by 10% (due to the lower rate):

          NECA Assigned
Rate Band
        ILEC Selected
Rate Band
           Increase
in Revenue
ADSL Line Charge $55 $53 -
Demand 3,000 3,300  -

 

$165,570 $175,692 $10,122


How the process works:

  1. Contact your NECA Member Service Manager to confirm your ILEC is interested in the rate band buy down process and request an Impact Analysis spreadsheet to consider various scenarios.
  2. If NECA determines the selected rate band rate is higher than your direct costs, a signed agreement will be executed between NECA and your company.
  3. NECA will revise Tariff No. 5 to reflect the rate band change.
  4. You report revenues to the NECA pool based on the assigned rate band, not the selected rate band.

This is a great opportunity for companies  looking for pricing flexibility, while maintaining the stability of the pool settlement process.  

BerryDunn telecom experts can help you work through the process to help you capitalize on this opportunity and fully understand your options. Please contact Julie Keim you have any questions or would like to discuss the rate band buy down option in more detail.