Here's how it works:

We prepare a tariff that includes averaged rates - based on the participating companies' costs of providing interstate access service and forecasted demand quantities

• We file the tariff with the FCC
• Participating companies bill long distance companies at the pool tariff rates
• Participating companies submit the revenues and individual costs to us
• We reimburse the companies for their individual costs
• We divide any remaining access revenues among participants according to each company's share of pool investment

Two choices for pooling

NECA members participate in revenue pooling as either cost companies or average schedule companies.

• cost companies receive pool revenues (settlements) for interstate telecommunications services based on their actual interstate investment and expenses, calculated each year from detailed cost studies.

• average schedule companies have their pool "settlement" determined based on a series of statistical formulas.  For qualifying small companies, this option avoids the expense of preparing cost studies.

Calculation of average schedule formulas

Each December 31st, we submit modifications to prior year average schedule formulas for approval by the FCC. We conduct an extensive annual study to determine what revisions are warranted. This study involves:

• selecting a statistical sample of cost and average schedule companies
• collecting data from these companies
• developing mathematical cost allocation models 
• deriving forecasting factors and formulas

With these formulas, we compute average schedule company settlements that approximate amounts that would be received by a cost company.