Options Available to Rate-of-Return Carriers Introducing CBOL

NECA Response Due By December 6

Beginning in January, the FCC will begin distributing universal service support for qualifying data-only lines or what is now known as “Consumer Broadband-Only Loops” or CBOL. The support will initially go to all rate-of-return carriers that have reported on Form 508 that they currently have data-only broadband lines or are projected to have such lines in 2017. This support is part of the Connect America Fund Broadband Loop Support (CAF-BLS), a new Universal Service support mechanism which replaces Interstate Common Line SupportĀ (ICLS). After the A-CAM has been implemented, carriers that receive A-CAM support will no longer receive CAF-BLS and thus will no longer receive support for CBOL under that mechanism.

In order to calculate support for CBOL, a carrier’s loop cost associated with providing broadband-only service (the CBOL revenue requirement) is reduced by the CBOL calculated rate. To determine the CBOL calculated rate, a base amount of $42 per loop per month is assumed, or “imputed.” (This amount could be lower if the total CBOL revenue requirement is less than the $42 per CBOL per month). In addition to this amount, FCC rules require that if, due to the application of the budgetary constraint mechanism, an increase in a carrier’s initial CBOL rate is required to meet a carrier’s CBOL revenue requirement, the shortfall must be added to the $42 per loop per month amount. NECA has determined the shortfall amount and provided the total “imputed rate” ($42 plus the attributed budget shortfall amount) for each carrier that will be receiving CBOL support.

Companies that offer CBOL have the option of offering the service as either tariffed or “permissively detariffed” (i.e., post rates, terms and conditions on their website). Over the past week, JSI has held discussions with FCC Wireline Bureau staff and NECA regarding these and other options available to those that will be offering CBOL. From these discussions, we have learned that the rate that would be charged, whether it is to your affiliated ISP or another customer, may be “delinked” from the imputed rates used to calculate CBOL support and that a rate lower than the imputed rate can be charged. Charging a lower rate is advantageous because the Federal Universal Service Charge (FUSC) is imposed on the CBOL rates charged to the customer, whether tariffed or detariffed, not on the imputed rate. It should be noted that charging a lower rate would not affect any CAF-BLS you would be eligible to receive for your CBOL service due to the imputation of the differential for settlement purposes.

Listed below are some of the options available to companies that will be offering CBOL. Please note that if you have selected NECA to tariff your CBOL rate, you have until tomorrow, Tuesday, December 6, to inform NECA if you would like to tariff a rate lower than the imputed rate. Also, if you have previously informed NECA that you do not want the agency to tariff your CBOL rate and now would like for them to do so, you have until tomorrow to so indicate.

  1. CBOL rate can be shown at the full amount ($42 plus the attributed budget shortfall amount). In that case, the FUSC would be assessed on the full CBOL rate.
  2. CBOL rate can be shown at less than the full amount. In such cases, the FUSC would be assessed on the lesser amounts. Some options to consider are:
    • Rate can be shown as $42 (the additive would be imputed and not charged to the affiliate).
    • Rate can be shown as a reasonable approximation of cost basis such as your R-1 rate.
    • Rate can be as low as a $1.00. JSI cautions that charging too low a rate runs the risk of attracting an ISP competitor who is able to purchase the wholesale CBOL service at the tariffed or permissively de-tariffed rate.

If you would like to discuss these options or have any questions about the CBOL support mechanism, please contact our experts by clicking the button below.

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