Ohio Alternative Regulation A form of “Rate Freeze” An off-the-shelf plan for all ILECs Applies to ILECs Services in Tiers –Tier 1 Core –Tier 1 non-Core –Tier 2

What does an ILEC agree to Provide flat-rate residential calling option Cap rates for Tier 1 core services for life of plan –Basic local and basic caller ID Cap rates for Tier 1 non-core services for 24 months –After 24 months can raise second line and call waiting by no more than 10% per year, till get to double the original price –After 24 months can raise all other services to a cap that is double the initial rate Tier 2 services are tariffed, but may be priced at market rates

The Tiers Tier 1 non-core –2 nd basic local service line, 3 rd basic local service line, call trace, PBX trunks, Centrex, non-published numbers, payphone access lines, N-1-1 service Tier 2 –All other regulated services

Notification of rate changes New Tier 1 services—30 day approval timeframe Customer 15 day notice of increases within the range for Tier 1 services Concurrent customer notice for Tier 2 increases All customer notices approved by PUCO

More ILEC agreements Provide advanced services –High Density Class 5 offices (500 people per square mile) 12 months, offer broadband to within 12,000 feet of CO 24 months, offer broadband to within 18,000 feet –County Seat Class 5 offices 12 months, broadband to within 12,000 feet of CO 24 month, broadband to within 18,000 feet of CO

Even more ILEC agreements Lifeline program –Flat-monthly line service with touch-tone— applies to only one access line per household –Credit the subscriber for installation charges and also to match the Federal SLC credit –Waiver of deposit to start service, free toll blocking, option to purchase vertical features needed for medical or safety reasons

More on Lifeline Eligibility tied to qualifying programs--SSI, food stamps, etc.—automatic Special payment arrangements to help customers with past due local bills Annual marketing effort to inform citizens of Lifeline availability

What do all the parties get? ILEC –Pricing flexibility in competitive services; no earnings limitations Consumers –Advanced services –Frozen local rates –Expanded Lifeline assistance