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New accounting rule will result in significantly increased liabilities and likely rate base reductions for many telephone companies
On September 29, 2006, the Financial Accounting Standards Board issued Statement No. 158, Employers' Accounting for Defined Benefit & Other Retirement Plans (SFAS 158), which significantly
changes the accounting for single employer defined benefit pension plans and other postretirement benefits (i.e. – health insurance & other benefit plans). The financial statement impact of this standard will result in significantly
higher liabilities for many companies because it will require an accrual for the unfunded liabilities previously not required. Additionally, the liability accounts used are included in cost studies as a reduction to rate base.
A pension plan provides defined amount of retirement income that is promised by an employer as part of an employee's compensation that is available after the employee retires or terminates service. There is no such impact for companies
that offer a defined contribution retirement plan, such as a 401(k). Also, the accounting for multiemployer plans (like the NTCA plan) remains unchanged. A multiemployer plan is a pension plan that two or more unrelated employers
contribute to and does not allocate plan assets and benefit obligations to the individual employers.
Public companies are required to adopt this standard for years ending after December 31, 2006 and all other companies must adopt it for years ending after June 15, 2007.
RESOURCES
[click to access]
Moss Adams' summary of SFAS No. 158
Sample valuation report and the applicable journal entries for SFAS No. 158
Contact:
Camille Christiansen Spokane Office 509.747.2600
Comments on Missoula Plan Filed with FCC
On October 25, 2006 the FCC received approximately 110 sets of comments on the Missoula Plan from interested parties, comprising more than 2,000 pages. Commenters included representatives
from rural ILECs, RBOCs, CLECs, rural CLECs, wireless carriers, cable providers, consumer advocates, state public utilities commissions, and more. In general support/oppose lines fell as follows:
Rural ILECs
Support with some changes suggested
RBOCs
Oppose, with the exception of USTelecom
CLECs
Oppose
Rural CLECs
Rural CLECs should be included in Track 3
Wireless Carriers
Oppose
Consumer Advocates
Oppose
State PUCs
Oppose
Given the level of opposition to the Missoula Plan, Reply Comments are likely to have a significant impact on the plan's future before the FCC. Reply Comments are due to the FCC on
December 11, 2006.
Contact:
Chad Duval Stockton Office 209.955.6124
Reminder: Advertise the Availability of Lifeline Support
Pursuant to 47 C.F.R. §54.405(b), all eligible telecommunications carriers are required to advertise the availability of Lifeline in a manner reasonably designed to reach eligible
households within its study area. The FCC's guidelines regarding advertising the availability of Lifeline and additional Lifeline outreach information can be
found online here.
Contact:
Lorrie Bernstein Stockton Office 209.955.6103
Industry News
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Remember to
check your Red Light status frequently. Companies on the Red Light list are not eligible for payments from the federal government, including federal USF.
Industry CalendarDecember 30
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2Q 2006 High Cost Support Mechanism Line Counts due to USAC (Non-rural carriers Only)
December 31
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3Q 2006 Interstate Access Support Line Counts due to USAC (Non-rural carriers only)
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2005 LSS True-up and Certification (FCC Form 509) due to the FCC
Contact:
Lorrie Bernstein Stockton Office 209.955.6103
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