Windstream 2013 Annual Report Download - page 153

F-17
As part of the Order's reform of intercarrier compensation, the FCC established two recovery mechanisms that mitigate the
revenue reductions resulting from the reduction and ultimate elimination of terminating access rates. First, the FCC established
the ARC, a fee which may be assessed to some of our retail customers. Second, the ARM is a form of additional federal
universal service support designed to allow carriers to recover some of the revenue reductions that cannot be recovered through
assessment of the ARC. Carriers are required to use ARM support to build and operate broadband networks in areas
substantially unserved by an unsubsidized competitor offering fixed voice and broadband service.
On April 25, 2012, the FCC decided that originating access rates for intrastate long distance traffic exchanged between an
Internet-protocol network and the traditional telecommunications network should be subject to default rates equal to interstate
originating access rates beginning on July 1, 2014. The FCC refused at that time to adopt a mechanism that would allow
companies to recover the loss of originating access revenues resulting from the change. On July 27, 2012, we filed a petition for
review with the U.S. Court of Appeals of the District of Columbia seeking relief from the April 2012 ruling on the grounds that
it is arbitrary, capricious, in excess of the FCC's statutory authority and otherwise not in accordance with law. That petition for
review was transferred to the U.S. Court of Appeals for the 10th Circuit on August 28, 2012, and on October 1, 2012, our
appeal was consolidated with 30 appeals on the Order. Briefing was completed in the second quarter of 2013 and oral
arguments were held November 2013, with a decision expected in 2014. We continue to assess the impacts of the FCC's
intercarrier compensation reform on our wholesale business activities.
Set forth below is a summary of intercarrier compensation revenue and federal universal service support, included in wholesale
revenues on the consolidated statements of income for the years ended December 31:
(Millions) 2013 2012 2011
Intercarrier compensation revenue $ 210.1 $ 337.3 $ 302.9
Federal universal service support $ 156.0 $ 123.1 $ 100.6
Broadband Stimulus
As part of the American Recovery and Reinvestment Act of 2009 ("ARRA") approximately $7.2 billion was allocated for the
purpose of expanding broadband services to unserved and underserved areas. The RUS approved eighteen of our applications
for these funds for projects totaling $241.7 million. The RUS will fund 75 percent of these approved grants, or $181.3 million,
and we will fund the remainder of at least $60.4 million.
Selected information related to the broadband stimulus expenditures and receipts for the years ended December 31 is as
follows:
(Millions) 2013 2012 2011
Stimulus capital expenditures funded by RUS $ 36.1 $ 105.4 $ 21.7
Stimulus capital expenditures funded by Windstream (a) 41.7 44.0 7.2
Total stimulus capital expenditures $ 77.8 $ 149.4 $ 28.9
Funds received from RUS $ 68.0 $ 45.7 $ 4.0
(a) Stimulus capital expenditures funded by us are included in our capital expenditure totals for each period presented in the
accompanying consolidated statements of cash flows. This total includes certain non-reimbursable charges for which we
are responsible for the full amount of the cost.