The “America’s Broadband Connectivity Plan,” submitted to the FCC by six of the nation’s largest carriers on Friday would, in large part, apply only to price cap carriers such as themselves. The plan proposes how to reform today’s Universal Service high-cost voice program to instead cover broadband, but it doesn’t detail reforms for smaller rate of return carriers, instead leaving those details up to the ROR carriers to decide.
A letter sent jointly by the large carriers and three rural telco associations—including the NTCA, OPASTCO and the Western Telecommunications Alliance—on Friday outlines key differences between what is collectively proposed for the two different telco camps. The recommendations for ROR carriers are based in large part, on a proposal that NTCA, OPASTCO and WTA filed in April with the endorsement of several other rural telco associations—although several important modifications to those recommendations are detailed in the letter sent to the FCC on Friday. These include a reduction in the rate of return percentage from 11.25% to 10% and steeper reductions in access charges than originally recommended.
Price cap carriers and ROR telco associations were already in agreement on at least one important recommendation. Both camps have long agreed that the FCC should fund only a single carrier per area.
In the following table, Telecompetitor highlights the key differences between what the accord or brokered deal reached on Friday means for price cap and ROR carriers.
|Proposed parameter||Price cap carriers||ROR carriers|
|Amount to be redirected from today’s high-cost fund*||$2.2 billion||$2 billion|
|Future fund growth||None proposed||$50 million per year for next six years|
|Access charge reductions||Would decrease to $.0007 within five years||Would decrease to $.005 within five years, at which time the FCC would determine how much to reduce charges in the three following years|
|Access charge replacement||To be funded from the $2.2 billion||To be funded from the $2 billion, which rises to $2.3 billion in sixth year—if sufficient funding is not available, access charge increases would be adjusted accordingly|
|How broadband funding would be awarded||A cost model would determine support for an area. If the incumbent has built out a certain percentage of broadband, it would have the option of accepting that support level or forgoing support, in which case another carrier could volunteer to serve the area. If more than one carrier volunteers an auction would be held. If no one volunteers, the FCC would need to reconsider the support level or service obligation.||Incumbent carriers would be compensated for deploying broadband based on how their costs and revenues compare with national averages.|
|Minimum broadband speed target||4 Mb/s downstream-768 kb/s upstream||Comparable with what is available in urban areas|
*In addition wireless carriers would get $300 million through a mobility fund
Image courtesy of flickr user More Than Math's.