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Connect America Cost Model (Version 2)

January 16, 2013 - 11:00 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

On December 11, 2012, WCB announced the release of version one of the Connect America Cost Model. Version one of the cost model allowed the Bureau and interested parties to examine various options for different network deployments to serve funded locations (e.g., fiber to the premises or fiber-fed digital subscriber line) and different assumptions about both the amount of existing facilities assumed to exist (e.g., green-field or brown-field deployments, the mix of aerial, buried or underground plant) and unit costs for capital and operating expenses.

Version two of the Connect America Cost Model augments version one in a number of key areas, specifically with regard to input data sets. Version two utilizes 2010 census boundaries and December 2011 broadband map data, as well as the latest available version of GeoResults wire center boundaries. Additionally, version two incorporates updated consumer location and business location counts.

The Bureau expects to adopt a final version of the Connect America Cost Model, with specific inputs, at a later date in 2013, which it will use to set Phase II support amounts to be offered to price cap carriers.

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Connect America Cost Model Platform

December 10, 2012 - 04:00 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

On December 11, 2012, WCB announced the availability of version one of the Connect America Cost Model. Version one of the model provides the ability to calculate costs using a variety of different inputs and assumptions, allowing the Bureau to choose among different network deployments to serve funded locations (e.g., fiber to the premises or fiber-fed digital subscriber line), different assumptions about the amount of existing facilities assumed to exist (e.g., green-field or brown-field deployments, the mix of aerial, buried or underground plant), as well as different assumptions about unit costs for capital and operating expenses.

While version one of the Connect America Cost Model is similar to the CQBAT model submitted into the record by the ABC Coalition, it contains a number of key differences, including an estimate of the cost of providing not only broadband services, but also voice services, and an updated calculation of brown-field costs to include replacement capital expenditures. The Bureau anticipates that a second version of the Connect America Cost Model will be available in the coming weeks and will include an update to 2010 census geographies and updated SBI data. The Bureau expects to adopt the final version of the Connect America Cost Model, with specific inputs, in 2013, which it will use to set Phase II support amounts to be offered to price cap carriers.

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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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