If you are an average schedule company, you may question what factors would lead you to convert to cost.The answers are complicated and depend on many company specific factors, but the most common factor is if your costs are high or are significantly increasing from past levels. For example, if your investments and/or expenses are high and your accumulated depreciation is low (or if you are planning large investments in your outside plant e.g. fiber to the home/curb project), you should have an analysis done to determine if converting to cost is advisable.
At Kiesling Associates, we perform high level reviews called "Quick Look Studies" to determine if converting to cost based settlements and USF would increase your total interstate revenues as compared to remaining an average schedule company.The Quick Look Study relies upon some company specific data and also some proxy or composite data from other cost companies. If the Quick Look points to cost conversion, we then recommend a "Full Feasibility" study.This study is more in depth, using company specific data for factor development instead of a proxy model.Additional data requirements include time studies, traffic studies, building/floor space diagrams, network diagrams, central office equipment categorization at the card level, cable and wire categorization, etc.
We work closely with you during the Full Feasibility study to make sure we have a clear understanding of your company structure and your network operations.If the results of the Full Feasibility study indicate that you should convert to cost, we prepare the cost conversion documentation and assist you with the required notifications to the National Exchange Carrier Association (NECA).We are also available to speak to your board members to explain the study results.
If you convert to cost, generally speaking, the costs of converting might be eligible to be directly assigned to interstate and get paid back dollar for dollar from the interstate jurisdiction.