OCA Reports

Issued: August 2009

This audit is one of a series of audits conducted by the Office of the City Auditor designed to explore how well management has optimized revenue. Prior revenue work includes sales tax, property tax, hotel occupancy tax, natural gas franchise fee, and cable television franchise fee audits. The goal of this phase of the Telecommunications Access Line Fee audit is to determine the effectiveness of the control decisions made by the Office of Telecommunications and Regulatory Affairs (TARA) by testing whether the certificated telecommunications providers (CTPs) fully remit access line fees for all access lines within the Austin city limits.

CTPs use access lines as the transmission path connection to their customers. When these lines are located within a public right of way (ROW), the providers must compensate the municipality for ROW use. The Public Utility Commission of Texas (PUCT) establishes the ROW usage rates for each municipality. The CTPs collect access line fees from customers and pay the City. The revenue goes to the City’s General Fund.

Currently 66 CTPs operate within the Austin city limits (as of the fourth quarter of 2008). For this audit, we selected the 10 largest CTPs, representing just over 98 percent of the access lines in Austin. This audit was split into two separate phases due to challenges we faced obtaining requested data from some CTPs in a timely fashion. On May 19, 2009, we presented the results of our first phase, in which we assessed remittances from five CTPs and found that they owed a total of $58,111. In this report, we present the results from the remaining five.

The City of Austin does not have franchise agreements with the CTPs. Instead, the PUCT monitors access line reporting for CTPs serving the local market. TARA, a division of the City’s Financial and Administrative Services Department, does play a local regulatory role in overseeing the private use of public ROWs.

We found that, among the five providers audited in this second phase of the project, access line fees not paid to the City of Austin total more than $225,000. When added to the results from Phase I, this brings the total to more than $283,000 not collected by the City. This represents only a small fraction of total access line revenue and at the same time represents more than 1,700 access lines which should now be credited to Austin each month.

We have issued one recommendation to assist the City of Austin in collecting revenue owed and minimizing future unpaid fees. This recommendation is an extension of one of the recommendations made in Phase I of this audit, and management has concurred with it.

Download the entire text of our Telecommunications Access Line Fees: Phase II in Adobe Acrobat. You will need Adobe's Acrobat Reader to view these files. Or request a hard copy of this audit report, No. AU08105B, by submitting this audit report request form.

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