REMINDER: Changes to USF Reseller Exemption Certification Rules To Take Effect January 1, 2014

Carriers Should Review Their Reseller Certification Forms to Ensure Compliance

In 2012, the Federal Communications Commission (“Commission”) clarified its rules concerning the obligations of wholesale carriers and resellers with respect to contributions to the federal Universal Service Fund (“USF”).  A key finding in that order was the conclusion that a ​“reseller” must resell the purchased input as end user telecommunications and must pay USF on the offering that is resold.  This conclusion requires wholesale carriers to obtain a service-specific certification of the reseller’s status, rather than the entity-specific certification commonly in use prior to the FCC’s order.  For more detail on the FCC’s order, see our Kelley Drye Client Advisory here.

Recognizing the need for both wholesale providers and resellers to change their procedures, the FCC delayed the effectiveness of its service-specific certification requirement to services purchased on or after January 1, 2014.  With that deadline approaching, both wholesale providers and resellers should be prepared to modify their procedures relating to the payment of USF.

• For wholesale providers, new certification forms for services purchased in 2014 should be developed.  These forms should incorporate the new safe harbor certification language provided by the FCC in its draft Form 499-A instructions.  In addition, wholesale providers must develop procedures to receive service-specific certifications and, equally importantly, to bill USF correctly for exempt and non-exempt services purchased by other carriers.  Finally, the new rules raise questions concerning services purchased after the date of the reseller certification, and the wholesale carrier should develop procedures to address these services.
• For resellers, the carrier’s vendors can be expected to provide new certification forms soon.  A reseller should be able to determine whether specific services purchased are incorporated into its end user telecommunications offerings and whether that end user offing is subject to USF.  In addition, resellers should be prepared to receive invoices containing USF charges for any services used for internal purposes or incorporated into non-telecommunications offerings.  We expect new certification forms to be provided by wholesale carriers early in the new year.

Attorneys at Kelley Drye are experienced in reviewing and drafting reseller exemption certification forms.  Please contact your usual Kelley Drye attorney if you have any questions or would like assistance in reviewing your reseller certification procedures.