FCC Record, Volume 26, No. 22, Pages 17663 to 18414, Supplement (November 18, 2011) Page: 17,746
iii, 17663-18414 p. ; 28 cm.View a full description of this book.
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or (b) twenty percent, whichever is lower, times (c) an estimated total loop plant investment amount
(adjusted for inflation). This proposal would do little to limit support for capital expenses if past
investments for a particular company were high enough to be more than sufficient to provide supported
services, and would do nothing to limit support for operating expenses, which are on average more than
half of total loop costs.355 In addition, it would likely be administratively impracticable for the
Commission to verify the inflation adjustments each company would make for various pieces of
equipment acquired at various times.
224. We also conclude that our approach can be more readily implemented and updated than the
specific proposal presented by the Nebraska Companies.3 ' Consultants for the Nebraska Companies, in
their regression analyses, used proprietary cost data. Because the proprietary cost data were not placed in
the record, Commission staff was not able to verify the results of the Nebraska Companies' studies. The
Nebraska Companies subsequently proposed that the Commission begin collecting similar investment and
operating expense data, as well as independent variables such as density per route mile, to be used in
similar regression analyses. For example, they suggest that "loJne useful source for this data would be
the investment costs associated with actual broadband construction projects that meet or exceed current
engineering standards."" Although the Nebraska Companies' proposal shares objectives similar to our
methodology, it would require the collection of additional data that the Commission does not currently
have, which would lead to considerable delay in implementation. We also are concerned about the
difficulty in obtaining a sufficiently representative and standardized data set based on construction
projects that will vary in size, scope and duration. Moreover, regressions based on such data could not
easily be updated on a regular basis without further data collection and standardization. On balance, we
do not believe that any advantages of the Nebraska Companies' approach outweigh the benefits of relying
on cost data that the Commission already collects on a regular basis. As explained in detail in the
attached FNPRM and Appendix II, Commission staff used publicly available NECA cost data and other
publicly available geographic and demographic data sets to develop the proposed benchmarks.359
225. Finally, we note that while the methodology in Appendix IH is specifically designed to
modify the formula for determining I ICLS, we conclude that we should also develop similar benchmarks
for determining ICLS. We direct NECA to file the detailed revenue requirement data it receives from
carriers, no later than thirty days after release of this Order, so that the Wireline Competition Bureau can
evaluate whether it should adopt a methodology using these data. Over time, benchmarks to limit
reimbursable recovery of costs will provide incentives for each individual company to keep its costs
lower than its own cap from prior years, and more generally moderate expenditures and improve
355 Indeed, as one commenter notes, such an approach would lock in past disparities in investment patterns, so that a
company that spent excessively on its current plant could continue to invest significant amounts in the future, while
a company that has not invested sufficiently in the past would face a limited budget to upgrade aging plant.
Nebraska Rural Independent Companies USF/ICC Transformation NPRM Reply, at 6.
356 Parrino Sept. 29 Ex Parte, at Attach. 1 (Letter from Wendy Thompson Fast, Consolidated Companies, and Ken
Pfister, Great Plains Communications, to Carol Mattey, FCC, GN D)ocket No. 09-51I, WC Docket Nos. 10-90, 05-
337, CC Docket No. 01-92).
357 Id. at Attach. 1, 2, 5-7.
35s Id. at Attach. 1, 2 ("Cost data should be derived solely from broadband networks that have been engineered to
ensure that consumer applications in rural areas will remain comparable to those generally available and used in
urban areas.").
359 See National Exchange Carrier Assoc., Inc., Universal Service Fund Data: NECA Study Results, 2010 Report
(filed Sept. 30, 2011), http://transition.fcc.gov/wch/iatd/neca.html17746
FCC 11-161
Federal Communications Commission
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United States. Federal Communications Commission. FCC Record, Volume 26, No. 22, Pages 17663 to 18414, Supplement (November 18, 2011), book, 2011; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc154713/m1/94/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.