Transcript ANPI VOIP UNIVERSITY 2006

THE NEW FCC NPRM
THE CHALLENGES, THE RESPONSES
AND THE PLAN OF ATTACK
A Briefing Provided By The Rural Broadband Alliance
SMITH
STEPHEN G. KRASKIN and DIANE
February 11, 2011
TODAY’S DISCUSSION
HIGHLIGHTS OF WHAT IS IN THE
NEW NPRM
• Overview
• FCC Proposals
Access – long term and short term
USF – long term and short term
• Our Responses and Positions
• Our Thoughts On Strategy
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Here They Go Again . . .
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Like the movie “Groundhog Day”
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Familiar content in a new box
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This time they mean it . . . (sort of)
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Do we really want them to do more
or less?
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LOGISTICS
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Short comment cycle
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State comment opportunity
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Intent to act this year on some
specific
Framework Divides Consideration Of
Existing, Transition, and “End Game”
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FCC Sets 5 Basic Tenets
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Modernization
Fiscal Responsibility
Accountability
Market-driven approaches
No “flash-cuts” – a “sensible
transition”
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LONG TERM FOCUS
INTERSTATE ACCESS
Begin to phase down access and
move network support provided by
access to explicit USF recovery
mechanism.
Provide a “glide-path” with
consideration of reducing large
carrier rates quicker.
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LONG TERM FOCUS
INTRASTATE ACCESS
Objective – reduce intrastate rates;
end arbitrage gaming
Alternatives:
Provide states a “carrot” to move
intrastate access to parity with
interstate; or consider how to
mandate state access reductions.
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LONG TERM FOCUS
Revenue Cost Recovery Mechanism
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Recognition that cost recovery
mechanism will be implemented to
offset access revenue loss.
Reduced rates will begin 2012
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NEAR TERM ACTIONS
Intercarrier Compensation
1.“Access Stimulation” – proposes
that any carrier with a revenue
sharing arrangement will default
interstate access rate to the lowest
interstate access rate of any
incumbent operating in the same
state.
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NEAR TERM ACTIONS
Intercarrier Compensation
2. “Phantom traffic” by proposing to
require signaling information.
3. VoIP Treatment - asks for
comment on 3 proposals:
a. bill and keep
b. using a rate lower ($ .0007)
c. apply access
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UNIVERSAL SERVICE
General Considerations
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Initial proposed inclusion of 4 Mbps
down and 1 Mbps up, subject to
comment and revision
“Everyone will have to adapt”
Focus on legacy investment and
transition mechanisms
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UNIVERSAL SERVICE
Long Term Considerations
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“End Game” – support only from new
Connect America Fund
Current focus is not on “end game”
details
Initiate consideration of three
possible long term approaches:
a. Reverse auctions
b. Models
c. Rate of return with incentives
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UNIVERSAL SERVICE
Beginning The Connect America Fund
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Phase out Interstate Access Support
for Price Cap carriers over 2-3 years
Phase out Identical Support to CETCs
over 5 years
Retarget these funds to unserved and
underserved
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UNIVERSAL SERVICE
Beginning The Connect America Fund
Funding proposal could be for any area
Overlapping with existing incumbent
Distribution could be reverse auction
Continued wireless prejudice
(most “bang for the buck”)
Possible Wireless Opportunities?
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UNIVERSAL SERVICE
Near Term Proposals For
Rate of Return Carriers
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1. Reduce reimbursement rates for high
cost fund – fund is capped – change in
distribution. No immediate cap on ICLS
2. Consider elimination of local switching
support (LSS) to recognize movement to
soft switch
3. Benchmarks – guidelines for capital and
operational expenses may be established
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UNIVERSAL SERVICE
Near Term Proposals For
Rate of Return Carriers
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4. Consider limitation of fund availability
in highest cost to serve areas; last
256,000 estimated cost of $ 14 billion;
alternative use of satellite; carrier and
state role in determination.
5. Streamline study area waivers and
encouragement of study area
consolidation within a state.
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UNIVERSAL SERVICE
Near Term Proposals For
Rate of Return Carriers
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6. Elimination of “parent trap” rule that
limits USF for an acquired exchanges to
the level of USF available to the former
owner. (Sleeves out of vest?)
7. Encourage efficiencies by encouraging
use of shared facilities and resources
(leads to questioning investment - “used
and useful”
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RESPONSES
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Recognize that FCC has divided
issues into:
1. Short term impact on existing
investment and expenses
2. Transitional mechanisms
3. Long-term
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RESPONSES
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Qualitative and quantitative response
needed to proposals that would
jeopardize existing cost recovery
Clarity required to provide
reasonable mechanism to recover
additional investment while FCC
debates long-term
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RESPONSES
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Concern with the possibility that
initial CAF could go to another
provider in your area – rural
incumbent is designated ETC COLR
VoIP – at minimum, retro must be
access. Going forward, should be
left as access to offset USF pressure
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RESPONSES
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Ensuring that cost recovery
mechanism to replace access is
sufficient
Too much new investment cost
recovery for rural left in intrastate
jurisdiction
Rural carrier CETCs should have
recovery based on costs as promised
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RESPONSES
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Potential Reductions In High Cost Funding
and Removal of LSS jeopardize universal
service
Proposed use of expense benchmarks
must include opportunity to recover actual
“used and useful” costs
FCC Should Not Disregard Need For
Universal Fixed and Mobile
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RESPONSES
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Best “bang for buck” requires long
term considerations – short term
wireless in lieu of fixed is not long
term investment-wise
Targeted Funding should not ignore
carrier responsibilities – rural
incumbents make common carrier
service commitments others are
unwilling to make
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RESPONSES
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FCC USF long term plan should not
assume that USF size cannot grow.
FCC should not delay or ignore fixing
“contributions.”
Public interest requires new
contribution mechanism to ensure
“fair share” based on value of
connection
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STRATEGY
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Evaluate proposals in the context of
impact on rural consumers
Impact on ability to invest in
infrastructure
Impact on job creation
Impact on job loss
IDENTIFY CONSTRUCTIVE
ALTERNATIVES
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FOCUS ON OBJECTIVE
Ensure that an explicit universal service
funding mechanism provides carriers
committed to the provision of universal
service with revenues that are sufficient to
enable the company to recover the costs,
including a reasonable return on
investment, that it incurs in the provision of
a universal broadband network to rural
consumers at rates and conditions
comparable to those charged to consumers
in urban areas.
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Build On What We Have Achieved
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We changed the tone and then the
direction
No longer leaving rural behind
No longer ending legacy mechanisms
without recognition of need for cost
recovery
No longer assumes end of ROR
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Strategic Fronts
1. Protect to the extent possible cost
recovery of established investment
and operational expenses incurred to
provide universal service
Reliance on rules, policy – need for
stability, predictability. Emphasize
impact on jobs, infrastructure
investment
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Strategic Fronts
2. Obtain a mechanism to ensure
stability for recovery of needed
additional investment and
operational expenses during the
transition to the “end game.”
Lead the way on “accountability,”
“fiscal responsibility,” and
“modernization.”
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Strategic Fronts
3. Long term – take advantage of the
fact that the FCC is deferring focus.
Use advocacy in Fronts 1 and 2 to
lay a foundation for the long term
answer that works best for rural
carriers and consumers – consistent
with our RBA objective
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QUESTIONS
?????
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NEXT STEPS
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Frame responses to the NPRM and
provide to associations
Work with associations to emphasize
Front 1 (recovery of existing
investment) and Front 2 (mechanism
to recover additional expenses
needed to provide broadband
universal service
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NEXT STEPS
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Work with industry advisors to
“operationalize” the RBA’s
Transitional Stability Plan
Build factual data to support
positions: rural economic
development impact; demonstrate
that bigger provider is not more
efficient provider
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NEXT STEPS
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We won’t stop at FCC comments
Eye on the Hill and legislative
concerns
Rebuild more than the Congressional
“Farm Team”
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NEXT STEPS
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Build the Rural Economic
Development Team – not only
members of Congress with rural
interests - include urban business
interests that need rural
infrastructure
Begins with the grassroots: specific
message, specific “asks,” specific
targets, and reach out to new allies
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OUR TEAM, OUR EFFORT
AND OUR “ASK”
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POLICY AND STRATEGY
FCC AND HILL
State Commissions
Industry Communications
Other parties
Community Interest
OUR “ASK” OF YOU
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