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Blog Posts by Wireline Competition Bureau

Calculating Average Per-Unit Costs/Take Rate

December 10, 2012 - 02:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop's guidelines.

Background

Hybrid Cost Proxy Model: The HCPM calculated the average cost-per-line in use by dividing the total cost of serving current customer locations within a wire center by the number of lines in use, as determined by National Exchange Carrier Association (NECA) data. Because it used current lines, the Commission used the number of households (i.e., occupied housing units) as a proxy for current residential customer locations, rather than the number of housing units (i.e., occupied and unoccupied housing units). At the time, the Commission observed that "as long as there is consistency in the development of total lines and total cost, it makes little difference whether households or housing units are used in determining cost per line."

The Commission found that if it were to calculate the cost of a network that would serve all potential customers, it would not be consistent to calculate average cost-per-line by using current demand, and it declined to estimate future demand because "[t]he level and source of future demand . . . is uncertain." The Commission was "concerned that including such a highly speculative cost . . . may not reflect forward-looking cost and may perpetuate a system of implicit support."

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Assigning Shared Costs

December 10, 2012 - 12:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop's guidelines.

Background

The Commission required that the HCPM calculate the average cost of serving lines to at least the wire center level. The USF/ICC Transformation Order requires that the Connect America Phase II cost model be capable of calculating cost "on a census block or smaller basis"—a much more granular level.

Connect America Cost Model: To allocate costs within a census block, the first version of the CACM (CACM v.1) uses a "cost causation" allocation method where the fraction of shared costs is allocated according to the number of customers attached to each line.

In the Model Design Public Notice, the Bureau proposed to model the costs associated with the entire network, and then assign shared costs between eligible and ineligible areas. The Bureau sought comment on the appropriate methodology for allocating costs between these areas. The Bureau noted in the Model Design Public Notice that cost allocations can be problematic, and the "subtractive" method—determining the costs of supported areas by taking the cost of both supported and unsupported areas and then subtracting the cost of the unsupported areas—could be too complicated to calculate. Although some commenters urged the Bureau to adopt the subtractive approach, none have proposed a computationally tractable method for actually implementing such an approach.

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WCB Cost Model Virtual Workshop 2012 Plant Mix

October 1, 2012 - 07:48 PM

Please provide comments to the issue below as part of the Read more »

WCB Cost Model Virtual Workshop 2012 Determining the Sharing Factor for Outside Plant

October 1, 2012 - 07:28 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop's guidelines.

Background

The sharing factor represents the extent to which outside plant costs are shared among multiple providers, typically local exchange carriers, cable companies, and electric utilities.

Hybrid Cost Proxy Model: The HCPM assigns the following sharing factors to local exchange carriers:

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WCB Cost Model Virtual Workshop Labor-Cost Adjustment Based on Location

October 1, 2012 - 07:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop's guidelines.

Background

Hybrid Cost Proxy Model: When adopting the HCPM, the Commission discussed the possibility of adjusting costs due to regional variation in the context of plant-specific operating expenses. The Commission ultimately did not make those adjustments, however, because it could not determine how much of the variation among providers and areas was due to inefficiency by those providers as opposed to differences in labor rates. In addition, the Commission noted that "it would be preferable to use an index [of regional wage variation in determining operating costs] specific to the telecommunications industry."

CQBAT: The CQBAT model includes a cost adjustment based on the three-digit ZIP code of every area of the country. These cost adjustments are based on construction cost variations and are applied to capital costs—i.e., labor and materials.

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WCB Cost Model Virtual Workshop 2012 - Routing

October 1, 2012 - 05:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

Hybrid Cost Proxy Model: The HCPM builds loop plant directly to customer locations via individual micro-grids. At the time the HCPM platform was adopted, micro-grids were hundreds of feet across. This approach allowed for an error of up to a few hundred feet in determining customer locations. The model defines customer "lots" within each micro-grid based on the customer population. The model allows for spanning-tree optimization of routes, although this is recommended only in sparsely populated locations. The feeder network is built on explicit spanning-tree algorithms, with user-defined inputs to select various approaches (e.g., airline v. rectilinear distance, allow artificial junction nodes).

CQBAT: The CQBAT model builds loop plant along road segments. It utilizes a spanning tree algorithm in order to find the optimal route (i.e., the lowest cost route) to serve all customer locations along road paths—a minimum spanning road tree.

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WCB Cost Model Virtual Workshop 2012 - Capturing Variation by Geography

October 1, 2012 - 05:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

Hybrid Cost Proxy Model: The HCPM varies costs by nine density zones. Many of the inputs are the same across multiple density zones, while others show more variation among lower-density zones. The model also varies installation costs by geologic conditions, like soil type.

CQBAT: The CQBAT model varies costs according to three density zones (urban, suburban, and rural). The model as submitted in the record does not specify how locations are assigned to those zones.

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WCB Cost Model Virtual Workshop 2012

October 1, 2012 - 05:00 PM

The virtual workshop is now closed. Parties should submit any additional input regarding the model development, including any follow-up commentary to topics that have been previously posted in the virtual workshop, in WC Docket No. 10-90.

Welcome to the home page for the Wireline Competition Bureau's (WCB) cost model virtual workshop, through which the Bureau is soliciting input from the public on Connect America Fund (Connect America) Phase II cost model design and inputs. A notice announcing this virtual workshop was released on September 12, 2012.

The virtual workshop will take place over a period of weeks sufficient to allow public input on all material issues. Discussion on multiple related topics will be facilitated through the various subject matter-specific discussion forums listed below. The Bureau will announce which topics will be discussed in which timeframes by Public Notice and on this page.

If you would like to make longer posts, we encourage you to place them in the Commission’s public comment site (ECFS) as an ex parte and place a summary of the post with the relevant URL in the forum. Similarly, if you would like to include an attachment to a post, include the URL for the attachment in your post. To ensure security, the forums will not support live links or attachments. ECFS can be reached here.

At the close of the virtual workshop, an electronic copy of all posts will be placed in the official record of the relevant dockets, much as a transcript of a hearing would be placed in the record.

If you have any questions about the format or operation of the virtual workshop or have any difficulties accessing any of the subject matter forums, please contact Katie King at 202-418-1500, katie.king@fcc.gov.

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WCB Cost Model Virtual Workshop 2012 - Determining Customer Locations

October 1, 2012 - 05:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

Hybrid Cost Proxy Model: When adopting the HCPM, the Commission concluded that it should use geocode data to the extent available for determining customer locations. The Commission later affirmed this conclusion, but found that "no source of actual geocode data has yet been made adequately accessible for public review." The Commission expected that a source of accurate and verifiable actual geocode data would be identified in the future for use in calculating federal support.

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WCB Cost Model Virtual Workshop 2012 - Clustering

October 1, 2012 - 05:00 PM

Please provide comments to the issue below as part of the 2012 WCB cost model virtual workshop for inclusion in the record. Comments are moderated for conformity to the workshop’s guidelines.

Background

Hybrid Cost Proxy Model: In developing the HCPM, the Commission concluded that a clustering algorithm should group customer locations into serving areas in an efficient manner to minimize costs while maintaining a specified level of network performance quality. Efficient clustering of customers leads to a least-cost and most-efficient network design that is consistent with forward-looking modeling principles.

The HCPM limits clusters by engineering constraints. It attempts to group customers so that they are no further away than allowed by network design, and so that no more customers are attached to a digital loop carrier remote terminal (DLC) than is permitted by network design. Initially, the model groups all customer locations into one cluster, then divides the cluster if one or more of the engineering constraints is violated. The model then uses several optimization routines that reassign certain customers to different clusters in order to lower the cost of constructing distribution areas.

CQBAT: The CQBAT model largely uses the same clustering approach as the HCPM, but uses road-based routing to determine the maximum size of the clusters. Thus, clusters defined by CQBAT are likely smaller but more realistic estimates of cluster size; by using road segments in clustering, CQBAT avoids the problem of having the length of some loops along roads exceed maximum loop length.

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