States Decreasingly Mandating 911 Wireless Cost Recovery, Which Some Call a Mistake
Small carriers bemoaned the shrinking number of states paying 911 wireless cost recovery to carriers. After Delaware Gov. Jack Markell (D) signed a bill Aug. 10 to end compensation for wireless carriers’ 911 costs, we could find only nine other states' with laws requiring annual payments. Delaware said it will use the saved money to fund 911 systems, but the Competitive Carriers Association said ending wireless cost recovery is an example of fee diversion. National Emergency Number Association CEO Brian Fontes urged states to seek carrier transparency on 911 costs and to consider reducing payments with depreciation. The money adds up to millions of dollars annually.
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States providing 911 wireless cost recovery are at least Alaska, Arizona, Florida, Illinois, Kentucky, Montana, Nebraska, North Carolina and Tennessee, said National Association of State 911 Administrators (NASNA) Executive Director Evelyn Bailey. Most states have abandoned the policy, she said. The amount of money paid to carriers yearly for wireless 911 varies by state, with up to $70,000 in Delaware, $2.4 million in Nebraska and $2.8 million in Illinois, those states’ officials told us.
The FCC never required states to provide wireless cost recovery. When it adopted E-911 rules in 1996, the agency said states may consider passing laws requiring compensation. In a 2002 order, the FCC set a demarcation point for what costs states would pay and what costs wireless carriers would pay in states that hadn’t passed legislation on the issue. State wireless cost recovery requirements came into effect because, unlike wireline carriers, wireless carriers were exempt from filing tariffs for 911 cost recovery, Fontes said. To help wireless companies recover 911 service costs, states passed laws allowing wireless carriers to be compensated, he said.
Over time, some carriers stopped asking for compensation for a variety of reasons, including depreciated equipment or off-loading 911 service to third parties, Fontes said. Other carriers still ask for compensation and the amount of money sought hasn’t necessarily reduced over time with depreciation, he said. Fontes said it’s probably smaller wireless carriers that are still requesting reimbursement due to costs and “simply because they have the right do so.”
The CCA condemned states that end wireless cost recovery. “Moving away from paying carriers cost recovery is an example of states ‘short-changing their own 911 programs with fee diversion,’” emailed a CCA spokeswoman, quoting FCC Commissioner Jessica Rosenworcel from a recent Senate Commerce Committee hearing. Diversion of 911 fees is a practice in which some states use money collected from 911 fees on consumer bills for other purposes (see 1605310046). CCA represents small and rural wireless carriers. Rosenworcel didn’t comment.
Delaware
Delaware ended wireless carrier compensation, but isn’t diverting the money collected from state 911 fees to different purposes, said Safety and Homeland Security Department Deputy Principal Assistant Kimberly Chandler. The money saved under the new law will be used entirely to fund the 911 system, including upgrades and improvements to the system, she said. The new requirement is expected to save the First State between $60,000 and $70,000 annually in revenue from state 911 fees, she said.
When it required wireless cost recovery, Delaware intended the money to help wireless carriers install technology to locate latitude and longitude of wireless 911 callers, but they finished implementation more than 10 years ago, Chandler said. “Because we still had it in our law, vendors were able to still charge us for that even though we weren’t necessarily obligated on the federal level to pay that,” she said. “The technology was already in place and it has been for quite some time, so to continue paying that kind of money out just did not make any sense.”
“Wireless carriers must continually invest in and upgrade their 911 systems,” the CCA spokeswoman emailed. “Carriers and states must work together to provide critical emergency number services, particularly during the ongoing transition to NG911.” The 911 services are costly, and carriers and public safety must be compensated for upgrades, she said.
“It needs to be examined on a carrier-to-carrier basis,” and “there has to be some depreciation component built in if there is to be this invoicing,” Fontes said. The amount paid to the carriers should approach zero over the term of the equipment, he said. States with wireless cost recovery policies “could certainly ask for information to substantiate the cost of the investment," he said. "Is it still costing this much and how much of this equipment have you depreciated over the term of the fees?” States should audit all disbursements from 911 funds, not only wireless cost recovery, said Fontes. “What is that money going to? Is it going to 911? Is it not going to 911? Are states keeping some money in reserve or in the general treasury? Is it going to pay for fire trucks, police cars or other general public safety services?”
State Reviews
Some of the other states with wireless cost recovery laws have been assessing 911 funding issues, said state officials.
Illinois law mandates wireless cost recovery. A 2015 law will end transfers to the state’s wireless carrier reimbursement fund after June 30, 2021, said State Police Master Sgt. Mike Link. Incremental decreases in the payments will take place each year between now and then, he said. In FY 2016, the Illinois Commerce Commission paid $2.8 million in reimbursements to wireless carriers for 911 costs, a spokeswoman said.
Tennessee reduced the amount of wireless cost recovery in 2010, emailed Tennessee Emergency Communications Board Executive Director Curtis Sutton. The money saved continues to fund 911, he said. “Tennessee terminated all cost recovery agreements in 2009 and began providing cost recovery at 5 percent of all allowable costs in 2010 under new agreements." The state paid $14.2 million in FY 2006, reduced to about $43,600 in FY 2016, when only three carriers applied for cost recovery, he said. “The state reviews invoices to ensure the work is in the scope of the cost recovery agreement. No other auditing is done. Depreciation is not a factor.”
A Nebraska law signed April 18 by Gov. Pete Ricketts (R) required the Public Service Commission to prepare a plan for a 911 service system, including information on costs and cost recovery, emailed PSC Telecommunications Infrastructure and Public Safety Department Director Sue Vanicek. “This plan may recommend changes to the current funding and funding mechanisms.” Currently, however, “there are no changes to the payment of LECs for wireless 911 services currently being considered in Commission proceedings,” she said. Nebraska pays about $2.4 million annually in 911 wireless cost recovery, she said. Since 2010, wireless providers have reported quarterly on the number of subscribers and annually file tariffs with a per-wireless-subscriber rate, she said. Not all of the wireless carriers seek compensation from the fund, and what’s paid out doesn't account for depreciation, she said.
Wireless cost recovery remains part of Florida statute, a Department of Management Services spokeswoman confirmed. Under a state rule (60FF1-5.001), “The E911 Board pre-approves the cost recovery plan, and then the vendor submits sworn invoices for payment,” she said. She didn’t say how much the state pays annually. Other states with wireless cost recovery policies didn’t comment on them.