FEDERAL CHARGES

• Federal Excise Tax – ACS is required to collect this three percent (3%) tax mandated by the federal government on local telecommunications service.

• Subscriber Line Charge (“SLC”) – This charge appears as “FCC Subscriber Line Chg” on your bill. The SLC was established by the Federal Communications Commission (“FCC”) to cover costs of the local phone network used to originate and terminate interstate long distance calls that are not recovered through charges paid by long distance companies.

• Federal Universal Service Charge (“FUSC”) - The Universal Service Fund is a federal program funded by the "Federal Universal Service Charge" (FUSC). The program is designed to keep local phone service rates affordable in all areas of the United States, including high cost to serve rural areas. The fund also supports schools and libraries, rural health care providers, and low income consumers. This rate may change quarterly.

STATE CHARGES

• Network Access Fee (“NAF”) – The Regulatory Commission of Alaska (“RCA”)
adopted a new Intrastate Access structure to lower the rates that Iong distance
phone companies pay for using the local exchange companies’ networks. As a
result of the change, the Commission instituted a Network Access Fee or “NAF”
beginning April 1, 2005. Although not required, the surcharge provides an
opportunity for long distance carriers to reduce in-state long distance calling
rates. The RCA has set the NAF at $3.00 per line as per April 1, 2007.

• E-911 (“Enhanced 911”) Emergency System Surcharge – The E-911 system
provides support for emergency communication services provided by
municipalities. The surcharge is authorized by Alaska law (AS 29.35.131-
29.35.137). The statutes provide that an E-911 surcharge of up to $2.00 per
month, per local access line and wireless telephone number, may be imposed
where an enhanced 911 system is utilized. ACS remits the proceeds from these
surcharges, less a small administrative fee, directly to the municipalities that
have adopted them by ordinance.

• Regulatory Cost Charge (“RCC”) – The Regulatory Cost Charge is a
surcharge applied to all regulated instate retail customer billings to pay the local
and long distance phone companies’ share of the budget of the Regulatory
Commission of Alaska.

• Alaska Universal Service Fund Surcharge (“AUSF”) – AUSF is a surcharge
on a customer’s local and Intrastate services to pay the state portion of the
Lifeline Program. This program helps qualified low income customers receive
basic telephone service. The surcharge also provides financial support for
certain high-cost rural companies and offers limited assistance for the operation
of public interest pay telephones.

• Universal Access Surcharge (“UAS) for Telecommunications Relay Service
- Alaska Statute 42.05.296 requires that telephone companies provide service to
the deaf, hard of hearing, and speech impaired subscribers so that they can
communicate by telephone. The regulations require cost recovery through a
surcharge added to the local service rate. The rates are as follows:

• Local Sales Taxes – ACS is required to collect local taxes on behalf of
organized cities and boroughs within Alaska.