Impact of Non-Rural Rules on Rural ILECs Rural Task Force – Jan. 13, 2000 Bob Schoonmaker-VP.
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Transcript of Impact of Non-Rural Rules on Rural ILECs Rural Task Force – Jan. 13, 2000 Bob Schoonmaker-VP.
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Purpose of Analysis
Assume that inputs to model and methodology adopted for non-rural companies was applied to both rural and non-rural ILECs
Analyze impacts on both rural and non-rural ILECs Identify concerns with non-rural methodology if
applied to rural companies as well
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Data sources for Analysis
Non-rural ILECs– Data supplied by USTA based on data for non-rurals
received from FCC staff
Rural ILECs– Data supplied by AT&T based on AT&T runs of SYN
model for rural study areas
Data from both sources was transmitted as SYN output file for each company/study area
Total data - 9 CD’s, over 4 gigabytes
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Known Data “anomalies”
Neither rural or non-rural data included LNP costs as data inputs - FCC did adopt LNP cost
Non-rural data contained Gallatin River, IL study area which is a rural company
Rural data not included for:– Alaska study areas (24)– Guam– Virgin Islands– Micronesia– Numerous “mismatches” between model study areas and
USAC study areas (over 50)
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Unknown Data Issues
NECA letter to FCC of December 23, 1999– NECA calculated non-rural high cost support of $391
million vs. FCC calculated $437 million– Appears to be program error using incorrect “default”
value of special access lines
Verification of individual rural study area information
FCC issued public notice January, 2000 correcting model and non-rural results.
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Known Impact of Data Anomalies
Impact on non-rural only calculations of– No LNP cost in non-rural data– Gallatin River, IL in non-rural data
National USF cost per month– FCC - $23.84– GVNW - $23.52
Annual Support non-rural only (model only)– FCC - $252.1 million– GVNW - $262.5 million
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Analysis Results - National Loop Cost National Loop Cost - Non-Rural Only
– Non-Rural $23.52
National Loop Cost - Combined Rural and Non-Rural
– Combined $26.09– Non-Rural Companies - $23.52– Rural Companies - $59.36
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Analysis Results - # of States
# of States receiving support - Non-Rural Only– Currently - 20– Non-Rural Only - 7
# of States receiving support - Combined Rural and Non-Rural
– Currently - 52– Non-Rural Companies - 15– Rural Companies - 15
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Analysis of Results - USF Support(excluding Hold Harmless)
Non-Rural Companies Only– Current Support - $207.4 million– FCC Method Support - $262.5 million
Combined Non-Rural and Rural Companies– All Companies
Current Support - $1,760.7 million FCC Method Support - $692.0 million Change $(1,068.7) million
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Analysis of Results - USF Support(excluding Hold Harmless)
Combined Non-Rural and Rural Companies– Non-Rural Companies
Current Support - $207.4 million FCC Method Support - $241.1 million Change - $33.7 million
– Rural Companies Current Support - $1,553.3 million FCC Method Support - $450.9 million Change -$(1,068.7) million
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Analysis of Results - USF Support(excluding Hold Harmless)
Impact on Non-Rural Companies-FCC Method– Support with Non-Rural Only - $262.5 million– Support with Combined companies - $241.1 million– Change - $(21.4) million
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Alternative Values - Lower Support Level
Support Level Total Support # of States
135% $692.0 million 16
125% $1,070.2 million 17
120% $1,382.2 million 21
115% $1,847.5 million 24
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Alternative - Study Area Support Higher Support Level
Support Level Total Support # of States
135% $3,382.3 million 44
150% $2,787.4 million 43
175% $2,140.9 million 43
200% $1,728.3 million 42
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Summary
Application of FCC methods and model inputs to rural companies has major negative impacts
Single biggest impact is likely the decision to base support on statewide average cost rather than study area average cost
Personal opinion - Use of FCC methods and model inputs for rural companies does not provide sufficient, predictable support for those companies