EX PARTE Wednesday, March 23 rd · FWA, Inc. 8282 S. Memorial Dr. #301 Tulsa, OK 74133 EX PARTE...

FWA, Inc.

8282 S. Memorial Dr. #301

Tulsa, OK 74133

EX PARTE Wednesday, March 23rd, 2011

Marlene H. Dortch, Secretary

Federal Communications Commission

Re: Notice of ExParte Presentation:

WC Docket #10–90

WC Docket #05-337

GN Docket #09-51

Dear Ms. Dortch,

On Behalf of Fred Williamson & Associates, Inc., I hereby confirm that on

Tuesday, March 22nd:

Mr. Paul Cooper FWA, Inc.

Ms. Catherine Moyer Pioneer Communications

Brian Boisvert Wilson Telephone Company, Inc.

Tom Gleason Gleason & Doty, Chartered

Scott Bannister KanOkla Telephone Association, Inc.

Rhonda Goddard Rural Telephone Service Company

Kathy Billinger Peoples Telecommunications, LLC

Denis Doyle Blue Valley Tele-Communications

Terry Force Blue Valley Tele-Communications

Steve Davis South Central Telephone Association

Members of NTCA’s Kansas Delegation met with:

1:30pm Brad Gillen – Legal Advisor

Commissioner Atwell-Baker’s Office

2:00pm Angela Kronenberg – Wireline Legal Advisor

Commissioner Clyburn’s Office

2:30pm Margaret McCarthy – Policy Advisor

Commissioner Copps’ Office

Also, at:

FWA, Inc.

8282 S. Memorial Dr. #301

Tulsa, OK 74133

3:00pm Christine Kurth – Policy Director & Wireline Council

Commissioner McDowell’s Office

Mr. Paul Cooper FWA, Inc.

Ms. Catherine Moyer Pioneer Communications

Tom Gleason Gleason & Doty, Chartered

Scott Bannister KanOkla Telephone Association, Inc.

Rhonda Goddard Rural Telephone Service Company

Kathy Billinger Peoples Telecommunications, LLC

Denis Doyle Blue Valley Tele-Communications

Terry Force Blue Valley Tele-Communications

Steve Davis South Central Telephone Association

Discussed were the attached documents.

In accordance with FCC rules, this letter and its attachments are being

filed electronically in the dockets identified above.

Sincerely,

Tom Karalis

Fred Williamson & Associates, Inc.

Effect of the FCC’s

NPRM on Universal

Service in Kansas

1March 22, 2011

Kansas Rural ILECs:

• 35 small businesses that cover a significant, low customer density

rural geographic area of the state.

• Provide, or are deploying, state-of-the-art networks that support basic and broadband services.

• Provide networks that link Schools, Libraries, Rural Healthcare,and other Anchor Institutions.

• Provide many rural jobs and are the anchor institution in rural communities.

• Are RoR regulated and are subject to earnings reviews by the

KCC.

2March 22, 2011

Rural ILECs in Kansas

*See next slide for Legend3March 22, 2011

Legend for Kansas Map

The FCC’s NPRM:

• Proposes significant near term changes to Universal Service

Mechanisms that will cause major revenue reductions starting in

2012.

• Negatively impacts Rural ILECs ability to provide Universal

Broadband and Telecom Services.

• Rural ILECs have borrowed significant sums to invest in the

broadband network of tomorrow – the proposed changes put

broadband networks and loan obligations at risk.

• Endangers small business, jobs and rural economies.

5March 22, 2011

Estimated Percentage Change in Universal Service

Funding for Kansas Rural ILECs

2013 2014

6March 22, 2011

L ine De sc ription Source 20 10 2 0 11 201 2 20 1 3 2 01 4

R EG ULA TE D RE VE NUES

R eve nues - USF Support:

LN1 NE CA-ICLS 3 yea r fore ca st $ 1 ,2 1 6,4 86 $ 1,2 42 ,25 2 $1 ,27 6 ,00 4 $1 ,324,219 $1,391 ,2 34

LN2 NE CA-LSS 3 yea r fore ca st $3 2 5,3 25 $ 3 36 ,00 5 $ 31 7 ,95 1 $ 302,315 $ 288 ,7 61

LN3 USF SNA From USAC Appendix 1 $ 7 1,4 05 $ 69 ,62 5 $4 7 ,76 0 $47,760 $18 ,7 20

LN4 USF H CL 3yr forecas t and USA C Appedix 1 $7 8 1,5 71 7 26 ,05 6$ $ 63 1 ,36 8 $ 615,102 $ 587 ,4 20

LN5 S UBTO TA L -USF =( Sum LN1 thru LN4 ) $ 2,3 94 ,7 87 $2 ,3 73 ,93 8 $ 2 ,27 3 ,0 8 2 $2,28 9,396 $2 ,2 86,13 6

LN6 1 .3 Loops 3,0 29 2 ,88 8 2 ,75 3 2,626 2 ,5 06

LN7 A nnual U SF Support pe r Line =( LN 5 / LN6 ) $ 7 91 $ 82 2 $8 2 6 $ 872 $9 12

LN7 a M onthly USF Support per Line =( LN 7 / 12) $6 6 $ 69 $6 9 $7 3 $7 6

O ther Reg ula te d R eve nues:

LN8O the r Inte rstate Reve nue s (ie . NE CA

s ett le m ents, In te rstate Acce ss , etc .)Inters ta te Les s ICLS a nd LSS $ 2 ,1 5 0,6 19 $ 1,9 88 ,73 6 $1 ,98 8 ,15 9 $2 ,000,812 $2,028 ,1 10

LN9O the r Re venue (ie Local, Intrastate A cces s,

e tc)Total Reg Re venue Le ss Above $ 2 ,0 7 6,0 41 $ 2,0 76 ,04 1 $2 ,07 6 ,04 1 $2 ,076,041 $2,076 ,0 41

LN1 0 S UBTO TA L - A ll other R eg . Re ve nue s: =( Sum LN8 + LN9 ) $ 4,2 26 ,7 26 $4 ,0 64 ,84 6 $ 4 ,06 4 ,2 6 9 $4,07 6,926 $4 ,1 04,22 7

LN 11 T OT A L REG ULA T ED R EV ENUE S =( LN 7 + LN10 ) $ 6,6 21 ,5 14 $6 ,4 38 ,78 4 $ 6 ,33 7 ,3 5 2 $6,36 6,322 $6 ,3 90,36 3

R eg ula te d O perating Expens e, Inte res t, Othe r:

LN1 2 O p. Expense From Forecast $ 5 ,7 0 3,3 79 $ 5,7 90 ,08 6 $5 ,77 6 ,58 0 $5 ,820,671 $5,862 ,4 06

LN1 3 Interes t From Forecast $4 9 6,3 09 $ 5 00 ,33 5 $ 54 8 ,67 7 $ 542,240 $ 509 ,5 01

LN1 4 O the r Al l Othe r Incom e Stm t Ite ms $ 1 0,6 57 $2 ,32 9 $1 2 ,36 4 $6,506 $3 ,4 23

LN1 5 T OT A L OPE RAT ING EXPE NSE, INT ERE ST, ET C =( Sum LN1 2 + LN1 4) $ 6,2 10 ,3 45 $6 ,2 92 ,75 0 $ 6 ,33 7 ,6 2 1 $6,36 9,417 $6 ,3 75,33 1

LN1 6 N et Incom e Be fore T ax =( LN 11 - LN1 5 ) $4 1 1,1 69 $ 1 46 ,03 4 ($26 9) ($3,095 ) $15 ,0 33

LN 17 N et Inves tm ent 3 Y ear Forec as t $ 1 1,0 68 ,0 44 $ 11 ,3 34 ,56 0 $1 1 ,48 7 ,0 2 1 $12,0 14,263 $1 3,0 79,5 52

LN 18 R OR =( LN 16 / LN 17 ) 3 .7 1% 1 .29 % 0.00 % - 0.0 3% 0.1 1 %

LN 18a HCL Ca p Re ve nue E ff ec t From Forec as t ( $8 0 ,2 1 3) ( $21 8,469 ) ( $3 60,3 62)

LN 19 T IER =( (LN1 3+ LN1 6)/LN1 3) 1 .828 5 1 .2 9 19 0.9 99 5 0 .9 94 3 1 .0 29 5

N PRM Im pac ts 201 2 20 1 3 2 01 4

LN 20 H igh Cost Loop Fund ( $2 0 ,09 7) ( $2 7,373 ) ( $20 ,76 6)

LN 21 Sa fe ty Net Addit ive ( $2 2 ,63 5) ( $4 1,717 ) ( $36 ,50 8)

LN 22 LSS ($ 11 9 ,34 0) ($ 242,296 ) ($ 361 ,6 36)

LN 23 ICLS ( $5 5 ,71 0) ($ 113,108 ) ($ 168 ,8 18)

LN 24 $ 3 00 0/Ln Support L im ita tion = Com pare to L ine 7 ( $6 4 ,88 8) ( $4 5,169 ) ( $20 ,61 1)

LN 25 T otal Support Re duction =( Sum LN2 0 thru LN2 4) ($ 28 2 ,6 6 9) ( $46 9,664 ) ( $6 08,3 40)

LN 25A T otal M onthly Support Re duc tion Per Line =( Line 2 5 / L ine 6 / 1 2) ($ 9) ($15 ) ($ 20)

LN 26 E stim ate d USF Support to be rec e iv ed if c urrent N PRM is im ple me nted: $ 1 ,99 0 ,4 1 3 $1,81 9,732 $1 ,6 77,79 6

LN 27 M odified Net Income =( LN1 6 + LN25 ) ($ 28 2 ,93 8) ($ 472,759 ) ($ 593 ,3 07)

LN 28 M odified ROR =( LN2 8 / LN 1 7) -2.4 6 % - 3.9 3% - 4.5 4 %

LN 29 M odified TIER =( (LN1 3+ LN2 7)/LN1 3) 0.4 84 3 0.1 28 1 -0.1 64 5

Specific Analysis of FCC NPRM Proposals

A Strong National Broadband Plan Should:

Meet the Objectives of Universal Service

- Provide high quality basic and broadband service to

consumers in Rural ILEC study areas at rates that are

comparable to those in urban areas.

Recognize Critical Rural Carrier of Last Resort Responsibilities

Provide Predictable and Sufficient Funding

- Receive sufficient support funding to allow the recovery

and operation of existing network costs plus committed

ARRA deployment – enables ILEC to pay existing loans.

Incent future rural broadband investment

- For future network costs - Receive funding sufficient to

enable efficient build out of broadband service.

8March 22, 2011

The FCC Should Adopt A Mechanism Like The

Rural Association CAF Proposal:

Broadband last mile loop costs (including additional costs

resulting from Broadband Allocation Factor)

+

Second Mile, Middle Mile, and related Internet backbone

connection costs

÷

Broadband lines

=

_Rural Broadband Costs Per Line_

-

Urban Benchmark

x

Subscribed Broadband Lines

=

Rural ILEC costs eligible for recovery via CAF support

9March 22, 2011

This Proposal Incorporates Efficiencies and Accountability

• A cap on corporate operations expense;

• Potential controls on prospective capital investment levels;

• A formula for funding middle mile transmission capacity based

on customer demand, ensuring the ability to deliver on promised

speeds;

• Existing cost accounting, verification, and audit procedures

remain in place; including RoR earnings reviews in Kansas.

• Existing PoLR obligations remain in place.

10March 22, 2011

The Association Proposal Provides A Specific Broadband Support Mechanism for Rural ILECs That:

• Incorporates effective incentives for deployment, network maintenance, upgrades and adoption;

• Includes reasonable funding constraints;

• Promotes predictability, sufficiency, efficiency & accountability;

• Recognizes critical Provider of Last Resort (PoLR) responsibilities;

• Is consistent with existing statute and legal framework;

• Does not unduly burden consumers;

• Avoids disruption to existing customers;

• Is ready to begin implementation by 1/1/2012.

11March 22, 2011

Analysis of USF Reform NPRM Released 2/9/2011COMPANY: AVERAGE OF ALL FWA CLIENT COMPANIES

Line Description Source 2010 2011 2012 2013 2014

REGULATED REVENUES

Revenues - USF Support:

LN1 NECA-ICLS 3 year forecast $1,216,486 $1,242,252 $1,276,004 $1,324,219 $1,391,234

LN2 NECA-LSS 3 year forecast $325,325 $336,005 $317,951 $302,315 $288,761

LN3 USF SNA From USAC Appendix 1 $71,405 $69,625 $47,760 $47,760 $18,720

LN4 USF HCL 3yr forecast and USAC Appedix 1 $781,571 726,056$ $631,368 $615,102 $587,420

LN5 SUBTOTAL -USF =(Sum LN1 thru LN4) $2,394,787 $2,373,938 $2,273,082 $2,289,396 $2,286,136

LN6 1.3 Loops 3,029 2,888 2,753 2,626 2,506

LN7 Annual USF Support per Line =(LN5 / LN6) $791 $822 $826 $872 $912

LN7a Monthly USF Support per Line =(LN7 / 12) $66 $69 $69 $73 $76

Other Regulated Revenues:

LN8Other Interstate Revenues (ie. NECA

settlements, Interstate Access, etc.)Interstate Less ICLS and LSS $2,150,619 $1,988,736 $1,988,159 $2,000,812 $2,028,110

LN9Other Revenue (ie Local, Intrastate Access,

etc)Total Reg Revenue Less Above $2,076,041 $2,076,041 $2,076,041 $2,076,041 $2,076,041

LN10 SUBTOTAL - All other Reg. Revenues: =(Sum LN8 + LN9) $4,226,726 $4,064,846 $4,064,269 $4,076,926 $4,104,227

LN 11 TOTAL REGULATED REVENUES =(LN7 + LN10) $6,621,514 $6,438,784 $6,337,352 $6,366,322 $6,390,363

Regulated Operating Expense, Interest, Other:

LN12 Op. Expense From Forecast $5,703,379 $5,790,086 $5,776,580 $5,820,671 $5,862,406

LN13 Interest From Forecast $496,309 $500,335 $548,677 $542,240 $509,501

LN14 Other All Other Income Stmt Items $10,657 $2,329 $12,364 $6,506 $3,423

LN15 TOTAL OPERATING EXPENSE, INTEREST, ETC =(Sum LN12 + LN14) $6,210,345 $6,292,750 $6,337,621 $6,369,417 $6,375,331

LN16 Net Income Before Tax =(LN11 - LN15) $411,169 $146,034 ($269) ($3,095) $15,033

LN 17 Net Investment 3 Year Forecast $11,068,044 $11,334,560 $11,487,021 $12,014,263 $13,079,552

LN 18 ROR =(LN16 / LN17) 3.71% 1.29% 0.00% -0.03% 0.11%

LN 18a HCL Cap Revenue Effect From Forecast ($80,213) ($218,469) ($360,362)

LN 19 TIER =((LN13+LN16)/LN13) 1.8285 1.2919 0.9995 0.9943 1.0295

NPRM Impacts 2012 2013 2014

LN 20 High Cost Loop Fund ($20,097) ($27,373) ($20,766)

LN 21 Safety Net Additive ($22,635) ($41,717) ($36,508)

LN 22 LSS ($119,340) ($242,296) ($361,636)

LN 23 ICLS ($55,710) ($113,108) ($168,818)

LN 24 $3000/Ln Support Limitation = Compare to Line 7 ($64,888) ($45,169) ($20,611)

LN 25 Total Support Reduction =(Sum LN20 thru LN24) ($282,669) ($469,664) ($608,340)

LN 25A Total Monthly Support Reduction Per Line =(Line 25 / Line 6 / 12) ($9) ($15) ($20)

LN 26 Estimated USF Support to be received if current NPRM is implemented: $1,990,413 $1,819,732 $1,677,796

LN 27 Modified Net Income =(LN16 + LN25) ($282,938) ($472,759) ($593,307)

LN 28 Modified ROR =(LN28 / LN 17) -2.46% -3.93% -4.54%

LN 29 Modified TIER =((LN13+LN27)/LN13) 0.4843 0.1281 -0.1645

CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY

Peoples TelecommunicationsNational Broadband PlanUSF/ICC NPRM

Safety Net Additive2010 2011 2012 2013 2014 2015 2016

Line Actual Payments Payments Payments Payments Payments Payments Total

1 Current Estimated Support 26,028 26,028 26,028 26,028 26,028 ‐ ‐ 2 NPRM Phase Down 75% 50% 25% 0% 0%3 Revised Estimated Support w/ NPRM 19,521 13,014 6,507 ‐ ‐ 45 Annual NPRM Impact (6,507) (13,014) (19,521) ‐ ‐ (39,042)

$

$30,000

Safety Net Additive

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2012 2013 2014 2015

Safety Net Additive

Current Estimated Support Revised Estimated Support w/ NPRM

Page 1


Local Switching Support (LSS)

Line 2011 2012 2013 2014 2015 2016 Total

1 Current Estimated Support 112,476 69,340 69,340 69,340 69,340 69,340 2 Estimated Support w/ Corp Exp Phase Out 59,838 50,047 40,543 40,543 40,543 3 Revenue Lost Due to Corp Exp Phase Out (9,502) (19,293) (28,797) (28,797) (28,797) (115,186) 45 Estimated Support w/ Corp Exp Phase Out 59,838 50,047 40,543 40,543 40,543 6 NPRM Phase Down 67% 33% 0% 0% 0%7 Revised Estimated Support w/ NPRM 40,091 16,516 ‐ ‐ ‐ 8 Revenue Lost Due to LSS Phase Out (19,747) (33,531) (40,543) (40,543) (40,543) 910 Annual NPRM Impact (29,249) (52,824) (69,340) (69,340) (69,340) (290,093)

Local Switching Support

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2012 2013 2014


Current Estimated Support

Estimated Support w/ Corp Exp Phase Out

Revised Estimated Support w/ NPRM

Page 2


Interstate Common Line Support (ICLS)

Line 2010 2011 2012 2013 2014 2015 2016 Total

1 Current Estimated Support 661,153 695,080 781,656 876,899 981,731 1,097,171 1,224,344 2 Estimated Support w/ Corp Exp Phase Out 720,955 746,555 775,977 879,561 994,195 3 Revenue Lost Due to Corp Exp Phase Out (60,702) (130,344) (205,754) (217,610) (230,150) (844,559) 456 Estimated CCL Revenue Requirement 764,667 795,506 878,993 971,242 1,073,172 1,185,800 1,310,247 7 Estimated Access Lines 1,307 1,268 1,229 1,191 1,155 1,119 1,085 8 Average monthly SLC per Line 6.6 6.6 6.6 6.6 6.6 6.6 6.69 Estimated ICLS 661,153 695,080 781,656 876,899 981,731 1,097,171 1,224,344 1011 CCL Corporate Expense 177,467 173,922 183,944 194,544 205,754 217,610 230,150 12 NPRM Phase Down of allowed Corp Exp 67% 33% 0% 0% 0%13 CCL Corporate Expense Allowed 123,242 64,199 ‐ ‐ ‐ 14 Reduction in CCL Corporate Expense (60,702) (130,344) (205,754) (217,610) (230,150)

Page 3

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

2012 2013 2014 2015 2016

Interstate Common Line Support

Current Estimated Support Estimated Support w/ Corp Exp Phase Out

Page 3


High Cost Loop Support (HCLS)2012 2013 2014 2015 2016

Line Payments Payments Payments Payments Payments Total

1 Current Estimated Support 1,110,824 1,006,294 1,258,495 1,180,296 1,093,362 2 Revised Estimated Support w/ NPRM 959,478 868,603 984,883 811,744 634,149 3 Impact of NPRM (151,346) (137,691) (273,612) (368,552) (459,213) (1,390,415) 456 Corp Exp Phase out only impact (117,627) (238,738) (356,204)

$1,000,000

$1,200,000

$1,400,000

High Cost Loop Support


$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

2012 2013 2014 2015 2016




Page 4


USF

Line 2011 2012 2013 2014 2015 2016

1 Estimated Annual USF Business as Usual 2,114,480 1,987,848 1,978,561 2,335,594 2,346,807 2,387,046 2 Estimated Access Lines 1,268 1,229 1,191 1,155 1,119 1,085 3 Estimated Business As Usual Annual USF per Access Line 1,668 1,617 1,661 2,023 2,097 2,201 45 Estimated Annual USF with NPRM Impacts 2,114,480 1,740,045 1,644,687 1,767,367 1,691,305 1,628,344 6 Estimated Access Lines 1,268 1,229 1,191 1,155 1,119 1,085 7 Estimated Annual USF with NPRM Impacts 1,668 1,416 1,381 1,531 1,511 1,501 89 Max Annual USF per Access Line Allowed per NPRM 3,000 3,000 3,000 3,000 3,000 1011 Annual NPRM Impact ‐ (247,803) (333,874) (568,227) (655,502) (758,703)

Total Universal Service Support Proposed Cap per Line Comparison

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2012 2013 2014 2015 2016

Total Universal Service Support

Estimated Annual USF Business as Usual

Estimated Annual USF with NPRM Impacts

‐

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014 2015 2016

Proposed Cap per Line Comparison

Max Annual USF per Access Line Allowed per NPRM

Estimated Business As Usual Annual USF per Access Line


Page 5

South Central Telephone Association ‐ KS & OK Combined FILE: F:\CLIENT\Sck\USF NPRM\[USF NPRM Analysis_wGraphs ‐ SCK & SCO Combined.xlsx]SNA

National Broadband Plan PRINTED: 14‐Mar‐11USF/ICC NPRM

Safety Net Additive2010 2011 2012 2013 2014 2015 2016

Line Actual Payments Payments Payments Payments Payments Payments Total

1 Current Estimated Support 104,256 104,256 104,256 104,256 104,256 ‐ ‐ 2 NPRM Phase Down 75% 50% 25% 0% 0%3 Revised Estimated Support w/ NPRM 78,192 52,128 26,064 ‐ ‐ 45 Annual NPRM Impact (26,064) (52,128) (78,192) ‐ ‐ (156,384) 67 % Reduction ‐25% ‐50% ‐75%

$80 000

$100,000

$120,000

Safety Net Additive

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

2012 2013 2014 2015

Safety Net Additive

Current Estimated Support Revised Estimated Support w/ NPRM

1



Local Switching Support (LSS)

Line 2011 2012 2013 2014 2015 2016 Total

1 Current Estimated Support 198,591 146,426 146,426 146,426 146,426 146,426 2 Estimated Support w/ Corp Exp Phase Out 139,390 132,139 125,102 125,102 125,102 3 Revenue Lost Due to Corp Exp Phase Out (7,036) (14,287) (21,324) (21,324) (21,324) (85,295) 45 Estimated Support w/ Corp Exp Phase Out 139,390 132,139 125,102 125,102 125,102 6 NPRM Phase Down 67% 33% 0% 0% 0%7 Revised Estimated Support w/ NPRM 93,391 43,606 ‐ ‐ ‐ 8 Revenue Lost Due to LSS Phase Out (45,999) (88,533) (125,102) (125,102) (125,102) 910 Annual NPRM Impact (53,035) (102,820) (146,426) (146,426) (146,426) (595,133) 1112 % Reduction ‐36% ‐70% ‐100% ‐100% ‐100%


$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

2012 2013 2014





2



Interstate Common Line Support (ICLS)

Line 2010 2011 2012 2013 2014 2015 2016 Total

1 Current Estimated Support 1,638,382 1,877,863 1,940,899 2,004,839 2,071,018 2,139,532 2,210,482 2 Estimated Support w/ Corp Exp Phase Out 1,819,579 1,750,292 1,677,853 1,732,095 1,787,676 3 Revenue Lost Due to Corp Exp Phase Out (121,320) (254,547) (393,165) (407,436) (422,806) (1,599,274) 456 Estimated CCL Revenue Requirement 1,787,014 2,020,841 2,078,385 2,138,201 2,200,379 2,265,012 2,332,198 7 Estimated Access Lines 1,774 1,707 1,641 1,592 1,544 1,498 1,453 8 Average monthly SLC per Line 6.98 6.98 6.98 6.98 6.98 6.98 6.989 Estimated ICLS 1,638,424 1,877,863 1,940,935 2,004,874 2,071,052 2,139,565 2,210,514 1011 CCL Corporate Expense 348,724 356,249 367,636 379,921 393,165 407,436 422,806 12 NPRM Phase Down of allowed Corp Exp 67% 33% 0% 0% 0%13 CCL Corporate Expense Allowed 246,316 125,374 ‐ ‐ ‐ 14 Reduction in CCL Corporate Expense (121,320) (254,547) (393,165) (407,436) (422,806) 1516 % Reduction ‐6% ‐13% ‐19% ‐19% ‐19%

3

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2012 2013 2014 2015 2016

Interstate Common Line Support

Current Estimated Support Estimated Support w/ Corp Exp Phase Out

3



High Cost Loop Support (HCLS)2012 2013 2014 2015 2016

Line Payments Payments Payments Payments Payments Total

1 Current Estimated Support 3,441,769 4,360,671 4,594,058 4,491,364 4,377,978 2 Revised Estimated Support w/ NPRM 2,978,512 3,774,549 3,727,481 3,381,496 3,033,732 3 Impact of NPRM (463,257) (586,122) (866,577) (1,109,868) (1,344,246) (4,370,069) 456 Corp Exp Phase out only impact (287,200) (583,104) (870,304) 78 Estimated Support w/ Corp Exp Phase Out 3,441,769 4,360,671 4,306,858 3,908,260 3,507,674 910 % Reduction ‐13% ‐13% ‐19% ‐25% ‐31%

$4,000,000

$4,500,000

$5,000,000



$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

2012 2013 2014 2015 2016





4



USF

Line 2011 2012 2013 2014 2015 2016 Total

1 Estimated Annual USF Business as Usual 5,811,011 5,633,349 6,616,192 6,915,758 6,777,321 6,734,886 38,488,518 2 Estimated Access Lines 1,707 1,641 1,592 1,544 1,498 1,453 3 Estimated Business As Usual Annual USF per Access Line 3,404 3,433 4,157 4,479 4,525 4,636 45 Estimated Annual USF with NPRM Impacts 5,811,011 4,969,674 5,620,576 5,431,398 5,113,591 4,821,408 6 Estimated Access Lines 1,707 1,641 1,592 1,544 1,498 1,453 7 Estimated Annual USF with NPRM Impacts 3,404 3,028 3,531 3,518 3,414 3,319 89 Annual NPRM Impact Before $3,000 Limitation ‐ (663,675) (995,617) (1,484,360) (1,663,730) (1,913,478) 1011 Max Annual USF per Access Line Allowed per NPRM 3,000 3,000 3,000 3,000 3,000 12 Max Annual USF per NPRM** 4,258,445 4,775,310 4,632,051 4,493,089 4,358,297

Annual NPRM Impact After $3,000 Limitation (1,374,905) (1,840,882) (2,283,707) (2,284,232) (2,376,590) (10,160,316) 1314 % Reduction ‐24% ‐28% ‐33% ‐34% ‐35% ‐26%

**$3,000 Threshold applied on an individual company basis

5

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2012 2013 2014 2015 2016

Total Universal Service Support

Estimated Annual USF Business as Usual


‐500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

2012 2013 2014 2015 2016

Proposed Cap per Line Comparison

Estimated Business As Usual Annual USF per Access Line

Max Annual USF per Access Line Allowed per NPRM


5

South Central Telephone Association ‐ KS & OK CombinedNational Broadband PlanUSF/ICC NPRM

Issues Analysis

Line Issue 2014 % 2015 % 2016 %

1 Elimination of LSS (125,102) 5% (125,102) 5% (125,102) 5%2 Elimination of SNA (78,192) 3% ‐ 0% ‐ 0%3 Phase‐out of Corporate Expense (701,690) 31% (1,011,864) 44% (1,314,434) 55%4 HCL Tier Reduction (579,376) 25% (526,764) 23% (473,942) 20%5 $3,000 per Line Limitation (799,347) 35% (620,502) 27% (463,112) 19%67 Total (2,283,707) 100% (2,284,232) 100% (2,376,590) 100%

Elimination of LSS , (125,102), ‐4%

Elimination of SNA , (78,192), ‐3%

Phase‐out of Corporate Expense, (701,690), ‐31%

HCL Tier Reduction,

(579,376), ‐25%

$3,000 per Line Limitation, (799,347), ‐

35%

2014


$3,000 per Line2015


Elimination of SNA , (78,192), ‐3%

Phase‐out of Corporate Expense, (701,690), ‐31%

HCL Tier Reduction,

(579,376), ‐25%

$3,000 per Line Limitation, (799,347), ‐

35%

2014


Elimination of SNA , ‐ , 0%

Phase‐out of Corporate Expense, (1,011,864), ‐

44%

HCL Tier Reduction, (526,764), ‐23%

$3,000 per Line Limitation,

(620,502), ‐27%

2015


Elimination of SNA , ‐ , 0%

Phase‐out of Corporate Expense, (1,314,434), ‐55%

HCL Tier Reduction, (473,942), ‐20%

$3,000 per Line Limitation,

(463,112), ‐18%

2016

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Estimate Job Loss

Line 2012 2013 2014 2015 2016

1 Estimated Annual USF Business as Usual 5,633,349 6,616,192 6,915,758 6,777,321 6,734,886 2 Estimate USF w/ NPRM Impacts 4,258,445 4,775,310 4,632,051 4,493,089 4,358,297 3 Net Reduction in USF Revenues (1,374,905) (1,840,882) (2,283,707) (2,284,232) (2,376,590) 45 Estimated Average Annual Loaded Labor Rate 80,000 80,000 80,000 80,000 80,000 67 Estimated Job Loss ‐17 ‐23 ‐29 ‐29 ‐30

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Corporate Expense Recovery for 2012

Adjusted % RecoveryCorp. Expense LSS ICLS HCL Total

South Central ‐ KS 844,735 1.67% 24.01% 59.56% 85.23%South Central ‐ OK 643,744 1.13% 27.45% 68.03% 96.61%Total 1,488,479 1.43% 25.50% 63.22% 90.15%

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EX PARTE Wednesday, March 23 rd · FWA, Inc. 8282 S. Memorial Dr. #301 Tulsa, OK 74133 EX PARTE...

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