2 11, 2021

CAF-BLS Cos. Without Locations in HUBB Must Contact USAC About Samples for Broadband Pre-Testing

2021-11-02T14:02:42-04:00November 2, 2021|e-Lerts|

Legacy CAF-BLS companies that may not have adequate locations in the HUBB for a random sampling before broadband performance pre-testing begins in January 2022 must contact USAC by Monday, November 8, 2021. All Legacy CAF-BLS companies, along with A-CAM II, Alaska Plan and CAF Phase II Auction carriers, must begin pre-testing in first quarter 2022 as part of the FCC’s performance measures testing framework. Companies will use a USAC-generated random sample of broadband locations deployed (and reported in the HUBB) that have active subscribers.

However, USAC has identified three scenarios where CAF-BLS companies may not have any locations or enough locations reported in the HUBB for the random sampling:

  1. Fully Deployed Prior to May 25, 2016 – Under this scenario, CAF-BLS companies have not reported any locations into the HUBB because they were fully deployed in their service territory prior to May 25, 2016 and therefore have no HUBB filing obligations.
  2. No Reported Deployments to Date – Since CAF-BLS companies only have one deployment milestone at the end of 2023, there may be some companies that do have a HUBB filing obligation but have not yet submitted any locations in HUBB due to no deployment of 25/3 broadband during the period May 25, 2016 to present.
  3. Limited Deployment to Date – Under this scenario, CAF-BLS carriers have entered some locations in the HUBB due to deployment of 25/3 broadband after May 25, 2016 but must rely on locations that were fully deployed prior to May 25, 2016 to meet their buildout obligations. For example, a company may have a buildout requirement of 3,000, but 2,800 of these were prior to May 25, 2016 and therefore only 200 locations are in the HUBB.

USAC has asked any Legacy CAF-BLS companies that fall under scenarios 1 and 2 to contact them at HCproduct@USAC.org by November 8. USAC is meeting with the FCC to discuss scenario 3 and is planning to send an updated email with language that is directly applicable to this situation. USAC is likely to ask companies under scenario 3 to tell them how many locations and at what speeds were deployed pre-2016 to be added to those that they did upload into HUBB. Regardless, USAC will follow up with CAF-BLS companies under each of the three scenarios on how to obtain random location samples for speed and latency pre-testing in 2022.

If you have any questions about this requirement or any other questions related to broadband performance testing, please contact Lans Chase at 770-569-2105 or Paul Nesenson at 651-452-2660.

2 05, 2019

A-CAM II Offers Released with June 17 Decision Deadline (Delayed)

2019-06-06T15:48:17-04:00May 2, 2019|e-Lerts|

New 5-Year Buildout Obligations Announced for Carriers Remaining on Legacy  

Today, the FCC released the official Alternative Connect America Cost Model (A-CAM) II offer (v2.5.1) to rate-of-return carriers that are not already receiving model-based high-cost support. Carriers have until June 17, 2019 July 17, 2019, to indicate, on a state-by-state basis, if they choose to elect the model support. The A-CAM II 10-year term began January 1, 2019, despite the delay in releasing the offer. The FCC also released the new buildout obligations for companies that want to remain on Legacy high-cost support.

see our e-Lert: FCC Delays A-CAM II Election Deadline

A-CAM II Offers
Like the previous versions and the A-CAM I offer, v2.5.1 includes four reports. The first report (15.1) shows a list of state-level support for each eligible carrier, including the amount of annual support for 10 years and the total number of funded locations in each eligible census block. As a reminder, companies with multiple study areas are required to elect on a statewide basis. The second report (15.2) shows the specific broadband deployment obligations for each carrier, including “fully funded” and “capped” locations, the number of locations where 25/3 Mbps and 4/1 Mbps will be required, and the number of very high-cost locations subject to the reasonable request standard. The third report (15.3) shows the A-CAM II support amount, total eligible locations, fully funded, and capped locations by Tribal and non-Tribal component. Finally, the fourth report (15.4) lists the eligible census blocks.

The election letters must be submitted by June 17 July 17 to ConnectAmerica@fcc.gov. The letter must be signed by an officer of the company and confirm that the carrier elects support for the state(s) in which it serves, and the carrier must commit to satisfying the service obligations. JSI has a template letter for use in accepting the offer. Please contact us if you would like the template letter or if you’d like it customized for your company.

A-CAM II support will not be disbursed until after the FCC releases a Public Notice authorizing USAC to move forward with the disbursements. Carriers who elect A-CAM II must also exit the NECA common line pool before they can receive model-based support, and they are eligible to move their business data services (BDS) offerings to incentive regulation next year.

New 5-Year Plan
The FCC also released revised deployment obligations for rate-of-return carriers that are not currently receiving A-CAM I support, or the new “five-year plan” which companies can compare to the A-CAM II offer. This data shows how many 23/5 locations must be built out over the period of five years from 2019 to 2024. Companies that choose to stay on CAF-BLS can have their deployment obligations determined either by a calculation with the weighted average cost per loop or with the A-CAM II cost per location. It is our understanding that in the near future, USAC will be reaching out to obtain each company’s choice as the agency did for the previous five-year plan.

Assistance for Companies Considering A-CAM II
To assist clients in making the decision whether to remain Legacy or elect A-CAM II, JSI can provide detailed analysis which compares the support that a company would receive under A-CAM II with projected support under CAF-BLS for 10 years. Clients for which we have already performed this analysis should discuss with their JSI consultants any changes to their A-CAM II support offer that may have been revised in today’s offer, as it was based on Form 477 data that was also just released today. Additionally, JSI can produce maps showing the funded census blocks and location data and we can assist companies remaining on Legacy support with HUBB reporting related to the revised buildout requirements.

JSI will be covering A-CAM II in our Management Seminars which begin next week. We also plan to host a webinar prior to the election deadline to review implementation considerations, such as tariff-related matters, HUBB reporting, and ways to ensure your company can meet the buildout requirements.

Please contact your cost consultant, Steve Meltzer, Brian Sullivan, or John Kuykendall in JSI’s Maryland office at 301-459-7590 if you would like JSI to perform an in-depth A-CAM II analysis, would like our mapping service, or if you have any questions regarding the A-CAM II offer.

1 05, 2018

USF Orders Published in Federal Register, Effective May 31

2018-05-01T14:51:46-04:00May 1, 2018|e-Lerts|

On May 1, 2018, the FCC’s Report and Order and Third Order on Reconsideration (Orders), which were released on March 23 and detailed in JSI’s March 27 e-Lert, were published in the Federal Register (FR) with a stated effective date of May 31. As of May 31, all items in the Orders will be effective except for two rules that require Office of Management and Budget (OMB) approval: the requirement for cost consultants to be listed on the Form 481 as a “low burden” way to enforce the expense recovery rules; and a change in the rule regarding reporting Consumer Broadband-Only Loop (CBOL) line counts, which will reduce the lag in line count reporting from 15 to 3 months.

Today’s publication of the Orders in the FR triggers the timeframe when the FCC will disburse additional funds to Legacy carriers in a lump sum for the reduction in the Budget Control Mechanism that they experienced from the period of July 1, 2017 – June 30, 2018. The lump sum payments will be made sometime in the fourth quarter of this year. For the A-CAM companies that will also receive additional funding, the Wireline Competition Bureau will release a Public Notice (PN) announcing the revised support offer at the $146.10 per location level for non-glidepath A-CAM recipients. These companies will have 45 days to decide whether to elect the additional funding and revised buildout obligations, which will be specified in the PN. Then, the Wireline Bureau will release a PN authorizing carriers that accept the revised offer to receive the additional funds, which will be disbursed in a one-time lump sum payment by USAC one month later.

In addition to the Orders, the FCC’s USF NPRM that was released at the same time was published in the FR last week. As explained in JSI’s April 25 e-Lert, the FCC is seeking comment on a variety of important items pertaining to the USF budget for rate-of-return carriers. JSI encourages clients to consider filing comments individually or jointly on any of the items.

JSI will be covering the Orders and NPRM extensively during its 2018 Management Seminars, which kick off this week in Minneapolis, followed by Atlanta and San Antonio in subsequent weeks. Registration for the Management Seminars is still open if your company has not yet signed up.

For questions about how the Orders will impact your USF, contact Steve Meltzer, Brian Sullivan or John Kuykendall in the Maryland office at 301-459-7590.

27 03, 2018

FCC Provides Additional Funds for All RLECs, Makes Other High-Cost Support Changes

2018-03-27T13:02:28-04:00March 27, 2018|e-Lerts|

New USF Orders Applauded for Rural Broadband Funding Increase, though Some Details are Concerning

On Friday, March 23, 2018, the FCC released a long-anticipated Report and Order, Third Order on Reconsideration (Orders), and Notice of Proposed Rulemaking (NPRM) on various aspects of high-cost universal service reform. In the Orders, the FCC adopted reforms relating to recoverable expenses in two major areas, universal service high-cost support (USF) and interstate rates; provided additional funding for carriers that elected Alternative Connect America Model (A-CAM) support; and fully funded legacy carriers for the amounts withheld from July 2017 to June 2018 due to the implementation of the budget control mechanism. In the NPRM, the FCC seeks comment on ways to modify the budget control mechanism and other reforms, some of which cause concern as described below.

Eligible Expenses
Regarding recovery of expenses from USF, the Orders emphasize that when determining whether an expense is recoverable or not, carriers should ensure that the expense is used only for the provision, maintenance, and upgrading of facilities and services for which support is intended, i.e., supported voice and broadband. For interstate ratemaking, the Orders cite the Communications Act requirement that only “reasonable” investments and expenses be recovered through interstate rates, which is determined through a “used and useful” standard.

Under both areas, the Orders discuss three categories of expenses that, except for in very limited circumstances, cannot be recovered: personal expenses, expenses unrelated to operations, and corporate luxury goods. To enforce the new rules, the FCC adopted the “low-burden” measure of requiring rate-of-return ETCs to identify their cost consultants on the annual FCC Form 481, in order to help the FCC, USAC and NECA identify patterns of noncompliance.

Additional USF Funding
The Orders also provide additional support for RLECs receiving A-CAM support for those that elect to receive the support along with adjusted deployment obligations. When the revised offer was made to carriers electing A-CAM, the FCC first reduced the funding cap from $200 per location to $146.10 and then further reduced support by varying percentages based on the percentage of locations lacking 10/1. For those carriers electing to receive the additional support, all locations will be funded up to the cap of $146.10. The FCC estimates that an additional $36.5 million per year for the 10-year period will be available for broadband deployment if all A-CAM recipients accept the offer. (A lump sum payment will be made for the months prior to the issuance of the Orders.) According to the Orders, a Public Notice should be released soon announcing the revised support amounts and corresponding buildout obligations, which will allow for a 45-day period for A-CAM electors to make their decisions.

The Orders also provide approximately $180 million to legacy carriers, which is the amount of support taken from legacy carriers due to the implementation of the budget control mechanism for the period of July 2017 to June 2018. In the Orders, the FCC directs USAC, working with the FCC’s Wireline Bureau, to determine a methodology to calculate the amounts and make payments to “fully fund support claims to the affected carriers in a lump sum payment.” The payments, however, will likely be made later in the year as the Orders instruct USAC to issue them in the second full quarter after the Orders’ effective date. The Orders will not become effective until after publication in the Federal Register, which likely will not occur until April.

In the NPRM, the FCC seeks comment on a variety of options regarding the A-CAM, including allowing legacy carriers to elect A-CAM if they would receive less support under that mechanism (unlike the original offer, carriers with over 90% 10/1 would be eligible); “fully funding” the A-CAM at the original $200 per-location cap; and/or extending the A-CAM at reduced amounts to RLECs that did not elect it previously. For carriers remaining on legacy, the NPRM seeks comment on ways to modify the budget control mechanism, including no longer using a per-line reduction or providing carriers with a threshold level of annual support that would not be subject to a budget cap.

However, comment being sought on some issues raises concerns. For example:

  • Lowering the $250 per-line monthly cap on support to $225 or $200
  • Replacing the 100% overlap process, which occurs every two years, with an auction mechanism where the rate-of-return carrier could compete for support with competitors in the study area
  • Reducing the 100% threshold to a lesser percent to consider a study area fully competitively overlapped
  • If a lesser percentage were to be adopted, should an auction mechanism replace the competitive overlap process for legacy carriers which was adopted in the 2016 Reform Order?

Also in the NPRM is a recommendation to review the $2 billion rate-of-return budget which has not been revised since 2011 and therefore does not account for inflation. The FCC notes that consumers’ expectations and demands for broadband have changed since 2011 when the rate-of-return budget was designed for the deployment of 4/1 Mbps broadband. Among a number of specific questions about the various components of the rate-of-return budget, the FCC seeks comment on the “appropriate level of support” to advance universal service for broadband, including a detailed economic analysis.

JSI will be providing more details regarding the Orders and NPRM in the coming weeks and will cover all the ins and outs at its upcoming Management Seminars in Minneapolis, Atlanta, and San Antonio. In the meantime, if you have questions about how the new rules and proposals will impact your USF, contact Brian Sullivan, Steve Meltzer or John Kuykendall in the Maryland office at 301-459-7590.

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