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by: Wireline Competition Bureau

May 17, 2013 - 09:47 AM

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 Connect America Cost Model (CAM v3.1.2) has two input collections for the cost estimation module. The two input collections contain identical default inputs, except one includes values for Annual Charge Factors (ACFs) calculated with a nine percent cost of capital, and the other includes values for ACFs calculated with an eight percent cost of capital. Parties who have signed the Third Supplemental Protective Order will be able to view the input collections by accessing the model and viewing the “ICCQA20130516CAM312ACF8SBI6VoiceCblVoiceFW2” and “ICCQA20130516CAM312ACF9SBI6VoiceCblVoiceFW2” ZIP files on the “Posted Data Sets” page under “Model Inputs.” The input collections include values for such variables as plant mix, network sizing and sharing, company size categories, operating expenses, capital investments by density and terrain, state property tax factors, regional cost adjustments, bandwidth, business and residential take rate, and state sales tax.

Questions for Comment

  1. The Bureau seeks comment on adopting the non-ACF default input values currently used in the cost estimation module input collections of CAM v3.1.2 for the final version of CAM. We are separately seeking comment on whether to adopt ACFs that assume an eight percent cost of capital or ACFs that assume a nine percent cost of capital in a follow-up question to the Rate of Return virtual workshop topic. To the extent commenters argue that different inputs should be used, they should describe in detail their proposals and supply specific input values.
  2. Given the fraction of costs driven by labor, commodities and electronics along with the expected changes in prices for those inputs, net of productivity gains, Bureau staff believe that it is reasonable to assume static input values in estimating costs in the CAM. To the extent parties disagree, they should specify what assumptions we should make and provide evidence on historical or expected price movements for the costs of labor, fiber, electronics, poles, conduit, and land used in network deployment to support their arguments.

Sources

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Updated: May 20, 2013 - 11:41 AM
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