1. 1 TEXAS STATEWIDE TELEPHONE COOPERATIVE, INC. Accounting and Customer Service Conference - 2014 Regulation and Accounting for VoIP Presented by: Matt Snowden, C.P.A. Bolinger, Segars, Gilbert & Moss, L.L.P.

2. 2 TOPICS Regulation Accounting Taxes

3. 3 Regulation Is it regulated? Depends Three different scenarios

4. 4 Regulation Scenario One  ILEC/CLEC provides basic local exchange service using VoIP technology  Regulated? Yes!

5. 5 Regulation Scenario Two  ILEC/CLEC provides a combination of basic local exchange service and DSL service, over which a VoIP service is provided by an entity other than the ILEC/CLEC  Regulated? Yes and No

6. 6 Regulation Scenario Three  ILEC/CLEC provides a data-only DSL service over which a VoIP service is provided by an entity other than the ILEC/CLEC  Regulated? Yes and No

7. 7 Additional Regulation FCC has acted to ensure VoIP providers comply with important public safety requirements and public policy goals.

8. 8 Additional Regulation – E911 All interconnected VoIP providers must:  Provide 911 service to all of their customers  Obtain customer’s physical location at which the service will first be used  Transmit all 911 calls (including callback number and physical location) to appropriate emergency services call center or local emergency authority  Inform and obtain affirmative acknowledgement from new and existing customers of the limitations of their 911 service

9. 9 Additional Regulation - Other Local Number Portability (LNP) Customer Proprietary Network Information (CPNI) Telecommunication Relay Service (TRS) requirements

10. 10 Accounting VoIP Network

11. 11 Accounting VoIP Network Class 4 or 5 TDM Switch TDM Softswitch STP Media Gateway Media Gateway Controller Border Session Controller Signaling Gateway 2232 Circuit Equipment

12. 12 Accounting What is a “Switch”?  Centers around interconnection  Controls the call  Interfaces other network elements  Must support the origination and termination of a call  Serves functions such as routing, billing, traffic measurement and custom calling

13. 13 Accounting – TDM Softswitch Softswitch Elements FunctionalityClassificationAccount Softswitch controller + Signaling Gateway Call Control SS7 Interface Standalone Softswitch Controller – Not a switch 2232.1 Circuit Equipment Softswitch controller + Signaling Gateway + Line Gateway + Trunk Gateway + Packet Router Call Control SS7 Interface Line Terminations Trunk Terminations Routing for L-L and L-T and possible T - T Softswitch End Office with associated circuit equipment or Softswitch Tandem Switch Softswitch End Office (2212.1 Digital Electric Switching) and other Circuit Equipment (2232.1 Circuit Equipment) Line Gateway + Trunk Gateway + Packet Router Line Terminations Trunk Terminations Routing for L-L and L-T and possible T-T Softswitch Remote with associated circuit equipment (Requires Softswitch controller and Signaling Gateway for call routing and other functionalities) Softswitch Remote (2212.1 Digital Electric Switching) and other Circuit Equipment (2232.1 Circuit Equipment) Line GatewayLine TerminationsSoftswitch Concentrator2232.1 Circuit Equipment Packet RouterRouting between Line and Trunk Gateways Softswitch Circuit Equipment2232.1 Circuit Equipment

14. 14 Accounting VoIP Network Tower  Attached to building (2121 account)  Free standing or guyed (2411 account) Tower Equipment – Antenna Systems  Mostly going to consist of radio equipment (2231.1 accounts) Field Cabinet  Mostly going to consist of circuit equipment (2232 accounts) See embedded RAO Letter 6 for detailed listing of equipment with their respective account classifications

15. 15 Accounting See embedded RAO Letter 6 for detailed listing of equipment with their respective account classifications Broadband Modem (2232 – Circuit Equip) Adaptor (2362 – Other Terminal Equipment) VoIP Phone (2311 – Station Apparatus) Regular Telephone (2311 – Station Apparatus) Satellite (2231.1 – Radio Systems) Antennae (2231.2 – Other Radio Facilities) NID (2232 – Circuit Equipment) Computer (2311 – Station Apparatus) Fiber Wireless

16. 16 Taxes Taxes to be collected and remitted:  State Sales Tax  City, County and Other Local Taxes  TUSF Assessment  Federal Universal Service Charge

17. 17 Taxes Taxes not applicable:  Federal Excise Tax  PUC Gross Receipts Assessment  911 Equalization Surcharge

18. 18 Reference NECA VoIP Guideline PaperRAO Letter 6 Accounting for SoftswitchesRAO Letter 21

19. The End Matt Snowden, Bolinger, Segars, Gilbert & Moss, LLP Email – msnowden@bsgm.commsnowden@bsgm.com Phone – (806) 747-3806 Fax – (806) 474-3815 19