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by: Wireline Competition Bureau

June 1, 2012

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 has a statutory obligation to ensure that schools, libraries, and health care providers have access to advanced telecommunications and information services. In the USF/ICC Transformation Order, the Commission established a performance goal of ensuring "universal availability of modern networks capable of delivering broadband and voice services . . . to community anchor institutions." Community anchor institutions are defined by the Order to include such entities as schools, libraries, hospitals and other medical providers, public safety entities, institutions of higher education, and community support organizations that facilitate greater use of broadband by vulnerable populations, including low-income, the unemployed, and the aged.

The Commission recognized that community anchor institutions typically require more bandwidth than a residential customer, and it established a requirement that ETCs engage with community anchor institutions in the network planning stages for networks supported with the Connect America Fund. The Commission observed that because community anchor institutions typically are located in or near small towns in rural areas (which typically are denser), carriers are likely to offer broadband to these entities at higher speeds than the 4 Mbps/1Mbps standard. The Commission stated it would allocate a budget of no more than $1.8 billion for price cap areas to maximize the number of expensive-to-serve residences, businesses, and community anchor institutions that will have access to modern networks providing voice and robust, scalable broadband. At the same time, the Commission stated that its reference to community anchor institutions did not signal an intention that the model would skew more funds to communities that have more community anchor institutions. The Commission also stated its expectation that ETCs would provide higher bandwidth offerings to community anchor institutions at rates that are reasonably comparable to comparable offerings provided to community anchor institutions in urban areas.

We note that the National Telecommunications and Information Administration's State Broadband Initiative (SBI) data on community anchor institutions show a varying number of such institutions per housing unit by state. Some states have more than five times as many such institutions per housing units compared to other states. For example, Colorado and Missouri, each with between two and three million housing units, report only 10 and five "Community Centers—Non-government support" respectively, and Arizona reports none. In contrast, Nevada, with fewer than 1.5 million housing units, reports almost 850 such centers. California, with over 10% of the housing units in the country, reports no "Public Safety" or "Community Centers—Government support" locations. There are similarly wide variations in the number of Medical/Healthcare institutions reported: for instance, while Nevada reports one healthcare institution for every 253 housing units, Connecticut reports one for every 31,000 – different by a factor of over 250.

The Connect America Cost Model version 3.1.3 (CAM v3.1.3) sizes its network to account for demand for higher speed connections by community anchor institutions by assuming dedicated fiber connections. This approach also captures the efficiencies of a network designed to serve all locations in an area, by assuming the network can accommodate voice and broadband demand of residential customers and certain business customers, and higher speed special access and/or private line demand of other business customers as well as community anchor institutions and wireless towers. Effectively, it is more economical to build a network that serves a wide range of users in the community.

The model identifies the locations of community anchor institutions based on June 2012 SBI data. The CAM v3.1.3's network topology builds out to each community anchor institution using a dedicated, special access/private line fiber. The model does not include any cost for the associated electronics necessary to light that fiber service, nor are the locations served by such dedicated fiber included when unitizing total cost within a census block.

The CAM v3.1.3 determines how many fiber strands are used by the various demand locations and allocates the cost of fiber and structure between special access/private line locations (including cell towers, business locations with more employees and community anchor institutions) and other locations (i.e., residential locations and business locations with fewer employees), with support calculated based only on costs related to the latter group of locations. The model similarly captures the sharing of middle mile network by estimating that 50 percent of the costs of an interoffice route are attributable to special access/private line services provided to specified locations, including community anchors, and those costs are excluded from cost calculations. Community anchor institution locations served by such special access/private line services (which includes direct Internet access) are also excluded from the unitization of total middle mile cost of a census block, i.e., when the total middle mile cost of serving the census block is divided by all locations passed, the locations passed only include residential and those business locations assumed to receive the same type of voice and broadband services as residential customers.

Additional information about how CAM v3.1.3 models demand for higher bandwidth services and treats the costs associated with such services can be found in sections 5.2.3.2 and 5.2.3.3 and Appendix Seven of the CAM Methodology document.

Questions for Comment

  1. Does CAM v3.1.3's approach for sizing the network, i.e., anticipating that each community anchor institution will require a dedicated fiber, reasonably capture the needs of these entities? To the extent any commenter argues that the final version of the model should take a different approach for sizing the network to properly take into account the needs of community anchor institutions, they should describe in detail their proposal, including specifying any sources of data that should be used to identify the specific bandwidth needs of these entities.
  2. Given the Commission's expectation that the model not skew more funds to communities that have more community anchor institutions, is it appropriate for the model to exclude the costs of dedicated fiber to community anchor institutions from cost to serve calculations? Is it appropriate for the model to exclude these locations when unitizing total costs in a census block? To the extent commenters think that the model should include the cost of dedicated fiber to community anchor institutions, we seek comment on what changes should be made to the model to include such costs. More specifically, in light of the Commission's statutory responsibility for the schools, libraries and health care providers, are there any changes that should be made to the approach taken in the current version of the model with respect to the treatment of those institutions?
  3. To the extent any commenter argues that the final version of the model should include the costs of dedicated fiber to community anchor institutions in general, or schools, libraries and health care providers in particular, in costs to serve calculations, or should include the number of such locations when estimating costs per location, they should describe in detail their proposal, and explain how such a proposal could be implemented in a way that does not result in a disproportionate amount of funding for census blocks with a greater number of such institutions.
  4. Eighty percent of schools and libraries have reported that their connection speeds are inadequate to meet their needs. The ConnectED initiative has established the goal to modernize and leverage the schools and libraries support mechanism to, within five years, connect 99 percent of America's students, through next-generation broadband (at speeds no less than 100 Mbps and with a target of 1Gbps) to, and high-speed wireless within, their schools and libraries.  What changes, if any, should be made to the current version of the cost model to enable it to be used as a tool for estimating the cost of extending fiber to schools and libraries that could be funded under the schools and libraries support mechanism?
  5. Does CAM v3.1.3 reasonably capture the efficiencies that carriers will be able to take advantage of when connecting community anchor institutions to Connect America-funded networks?
  6. Are there any other issues related to the unique needs of community anchor institutions that the Bureau should consider when adopting a final model?

Sources

  • Connect America Fund et al., WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17681,17700-01, 17728, paras. 51, 102, 167, nn. 163-64, 269 (2011) (USF/ICC Transformation Order or Order), pets. for review pending sub nom. In re: FCC, No. 11-9900 (10th Cir. filed Dec. 8, 2011).
  • National Broadband Map, http://www.broadbandmap.gov (last visited June 5, 2013).
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