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Impact of Non-Rural Rules on Rural ILECs Rural Task Force – Jan. 13, 2000 Bob Schoonmaker-VP.

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Presentation on theme: "Impact of Non-Rural Rules on Rural ILECs Rural Task Force – Jan. 13, 2000 Bob Schoonmaker-VP."— Presentation transcript:

1 Impact of Non-Rural Rules on Rural ILECs Rural Task Force – Jan. 13, 2000 Bob Schoonmaker-VP

2 2 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

3 3 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

4 4 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)

5 5 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.

6 6 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

7 7 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

8 8 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

9 9 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

10 10 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

11 11 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

12 12 Alternative Values - Lower Support Level

13 13 Alternative - Study Area Support Higher Support Level

14 14 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


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