Source: OPASTCO Press Release

NECA, NTCA, OPASTCO, and the Western Telecommunications Alliance submitted additional details of the proposals set forth by the Rural Associations in their April 18, 2011 as modified by the Industry Consensus Letter (RLEC Plan). The RLEC Plan is a path forward for Universal Service Fund (USF) and intercarrier compensation (ICC) reform in RLEC service areas that not only serves the interests of consumers in these areas, but also consumers nationwide.

The letter contains a chart that displays the results of the estimated impacts of the transition to the Connect America Fund (CAF) and the ICC reform transition steps in the RLEC Plan. These estimates were produced using industry-wide assumptions and growth rates, together with preliminary inputs and factors, as detailed in the “Preliminary RLEC CAF Computations - Assumptions and Calculations” component of the attachment, as well as the description of the Restructure Mechanism (RM) calculation. While company-specific network and growth characteristics could produce results on an individual company basis that may vary from the industry-wide assumptions, these assumptions and the preliminary inputs and factors used to date indicate that the aggregate results displayed should reasonably reflect the anticipated levels of CAF/USF and RM support under the RLEC Plan. The Rural

Associations said they are currently working, however, with RLEC consultants to evaluate further the RLEC Plan, as modified by the Consensus Framework. This further analysis will help determine if any additional adjustments may be required to achieve these estimated results based upon the Consensus Framework, as well as to assess whether any adjustments may be required to moderate individual company impacts during the transition to a new plan.

As displayed in the chart, the RLEC Plan and modifications thereto consistent with the Consensus Framework are being designed with the objective of staying within the annual funding target for each of the first six years following implementation. The Consensus Framework proposes that the Commission establish an annual funding target for areas served by rate-of-return carriers that begins at $2 billion and, to the extent necessary to help ensure sufficient funding, increases by $50 million per year (i.e., starting with an additional $50 million in the first year and increasing to $300 million, or a total annual budget target of $2.3 billion, in the sixth year). Such incremental funding will be necessary to enable access restructuring, promote further broadband build-out (but only to the extent supported by increases in USF/CAF funding above current levels for any individual company), and provide a reasonable opportunity to recover the costs associated with existing investments in broadbandcapable plant.