Joint Board Recommendation USF Reform NARUC Winter Meeting February 2008 Ray Baum Commissioner...
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Transcript of Joint Board Recommendation USF Reform NARUC Winter Meeting February 2008 Ray Baum Commissioner...
Joint BoardRecommendation
USF Reform
NARUC Winter Meeting February 2008
Ray BaumCommissioner
Oregon Public Utility CommissionState Chair USJB
2
Growth in High Cost Fund threatens sustainability and burdens telecom consumers Total fund grew from $2.6B in 2001 to over $4B in 2007
Over $1B of growth due to increased payments to CETCs
What’s the Problem?
ILECs
CETCs
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2001 2002 2003 2004 2005 2006 2007
$ b
illio
ns
3
Other rural states receive less than 10% of that amount
• Examples:
– Idaho: $0 Utah: $0.3m
– Missouri: $0.1m Tennessee: $1.5m
= $1.9 million
What’s the Problem? (continued)
CETC support distribution is skewed heavily toward a few states and is unrelated to need Top ten states (exclusive of Alaska & Puerto Rico)
receive almost 45% of CETC support• Examples:
– Mississippi: $140m Wisconsin: $51m
– Kansas: $55m Washington: $44m
= $290 million
4
Broadband services are not explicitly supported despite need in many unserved areas
What’s the Problem? (continued)
Current mechanism encourages duplicative networks/subsidizes competition, while many rural areas remain without wireless service
CETC support is based on costs of incumbents
5
Background
3.Public Notice - Comments on reverse auctions, use of GIS technology, disaggregation of support and support for broadband, etc.
May 2007 Recommended Decision –
1.Emergency/interim cap--Limits growth in high cost support to competitive eligible telecommunications carriers (CETCs) to 2006 level
2.Committed to comprehensive high-cost USF reform by November 2007
6
Background (continued)
January 29 NPRM – FCC seeks comment on Recommended Decision
Sept. 2007 Public Notice
1. Support for voice, broadband and mobility
2. Comprehensive reform: cost control, accountability, state participation, and infrastructure build-out in unserved areas
November 2007 Recommended Decision – Board’s long-term reform proposal released
7
Objectives
Avoid increasing financial burden on consumers
Universal availability of broadband and mobility services
Universal availability of wireline voice services at affordable and comparable rates
8
Objectives (continued)
Strengthen state-federal partnership
Increase effectiveness of funding; avoid duplicative support and eliminate subsidization of competition
Eliminate equal support rule and explore alternative distribution mechanisms, e.g. competitive bidding
9
Key Elements of Proposal
Separate distribution mechanisms, funding allocations, and caps for each fund
Cap total high-cost funding near current level ($4.5 B)
Transition to three new funds
Provider of Last Resort (POLR)MobilityBroadband
10
Key Elements of Proposal (continued)
Explicit support for broadband and mobility services
Distribute support to only one provider per fund in given area
Target funds to extend mobile and broadband infrastructure into unserved areas
Eliminate equal support rule for CETCs
11
POLR Fund
Recommend FCC develop new unified POLR mechanism to apply to all ILECs
High cost support for wireline providers of last resort (initially ILECs)
Sum of all existing ILEC support mechanisms
Board unable to reach consensus on specific changes to legacy mechanisms
12
POLR Fund (continued)
“Rural” and “non-rural” company distinctions
Some costs are not recognized, e.g. transport
Cost averaging across wide areas vs. wire centers
Non-regulated revenues not reflected
Drawbacks of current ILEC support mechanisms
13
Mobility Fund - Purpose
Primary purpose
Expand availability of wireless voice services to unserved areas, focus on populated unserved rural areas and public safety concerns
Secondary purpose
FCC to seek additional comment on whether to expand availability to underserved areas where service is not reliable
14
Mobility Fund – Support Type
Funding should decrease as build-out occurs
Primary support type
One-time, project-specific grants for construction of new wireless facilities
15
Mobility Fund - Distribution
FCC determines allocations to each state (unserved population, highway miles, etc.)
USAC processes and audits funds
State cannot exceed allocation
States develop and publish maps of unserved areas
States award support based on federal standards and accountability safeguards; options (RFPs, reverse auctions, etc.)
16
Mobility Fund - Recipients
Eligible Recipients
Eligibility rules specific to fund to be established
Only one carrier supported for wireless services per geographic area/project
17
Broadband Fund - Purpose
Primary purpose
Expand availability of broadband internet services to unserved areas
Secondary purpose
Enhance broadband services in areas with substandard service
18
Secondary support type
Ongoing support for expenses in areas where subsidy is required for continuing operations
Broadband Fund – Support Type
Primary support type
One-time, project-specific grants for construction of new broadband facilities
Funding should decrease as build-out occurs
19
Broadband Fund - Distribution
FCC determines allocations to each state (based on number of residents without broadband, etc.)
State cannot exceed allocation
States develop and publish maps of unserved areas/stimulate demand
States award support based on federal standards and accountability safeguards; options (RFPs, reverse auctions, etc.)
USAC processes and audits funds
Focus on high-cost areas of non-rural carriers
20
Broadband Fund - Recipients
Eligible Recipients
Eligibility rules specific to fund to be established
Only one carrier supported for broadband services per geographic area (includes ILECs, cable, satellite, wireless broad, etc.)
21
Funding Levels - Caps
Total cap of $4.5 billion (approx. 2007 level) Excludes any new support ordered in response to
Tenth Circuit Remand in Qwest II
Mobility Fund cap = $1 B (Jt. Board’s May 2007 decision recommendation)
POLR Fund cap = $3.2 B (2007 ILEC level)
Collection of funds targeted to constant $4.5 B annual total; not based on variable forecasts of support as currently
Broadband Fund (initial) = $0.3 B
22
High Cost Fund Changes
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
In B
illio
ns
POLR Mobility Broadband
Proposed Levels
$1.0
$3.2
$0.3
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
In B
illio
ns
ILECs CETCs
Current Levels
$1.3
$3.2
23
More on Funding
State Matching Funds
For broadband and mobility funds
Base funding level; supplemental funding available if state provides matching funds
Broadband Funding
Available support can accumulate from year-to-year if unspent
Will grow as other funds decrease
RUS monies also available for broadband expansion in RLEC areas
Avoid duplication of funding
24
Issues for Further Comment
Compliance with federal law
MoreIssues Allocation of funds among states
Identification of unserved areas
Definition of broadband
Impacts on Lifeline/LinkUp
Implementation, transition and review
25
FCC Actions
FCC released RD for comment on January 29, along with two other NPRMs
Elimination of identical support rule; support to CETCs based on own costs
Reverse auctions to determine support
No FCC order on interim cap to date
Approximately 50% wireless support capped at June 2007 levels via merger/sale conditions (Alltel, AT&T/Dobson); Verizon/RCC (pending)
26
FCC Actions (continued)
Reply comments due 60 days after publication
Comments due 30 days after publication in Federal Register
Will any action be
taken before
elections?
27