NASUCA

2012 mid-year meetingbobloube@earthlink.net

The Importance of the Wireline Network

• NSTAC Report to the President on • Communications Resiliency • April 19, 2011

Universal Service Concerns

• Technology- the FCC’s long term goal is 100 mbps service

• To reach that goal it is necessary to have fiber to the premise

• There is need to integrate wire and wireless services and not treat those services as separate silos

• The HCL regression penalizes small carriers who have built FTTP systems

Wireless is dependent on the wire line infrastructure

• Wireless is dependent on wire line service not only for special access for connecting cell towers but also to sell most 4g services

• To purchase 300 gbits of service per month would cost:

$80 for the first 10 gbits and $10 for each additional gbit

$80 + 290 * $10= $2980

$4.8 billion is not enough

• The FCC’s national broadband plan estimated a need of approximately $23 billion

• The ABC plan, using the current cost benchmark requires $15b , $10b for price cap carriers and $5b for rate of return carriers

• The ABC plan, using a high benchmark requires $9b , $6b for price cap carriers and $6b for rate of return carriers

• The ABC plan, using a double tier benchmark requires $3b , $2.2b for price cap carriers and $800m for rate of return carriers

Results of Underfunding

• Decent but less than world class service in urban and suburban areas

• Rural stagnation and bankruptcy• Possible solutions:– Massive expansion of state universal service funds– RUS requires rural coops to purchase bankrupt

companies with funding from Congress

Expressed Reasons for adopting Bill and Keep or I can get it for you wholesale

• Eliminate Arbitrage – zero rate or one rate• Eliminate the incentive to retain circuit based

switch and to an IP network – In Wyoming high access rate carriers invested in IP switches while low access rate carrier did not

• Provide Incentive to reduce investments in switching

• Total Benefit Exceeds Total Cost

Other wholesale markets are still collecting revenue from other carriers• Special Access• Long distance• Internet Transport• Video content• Wireless Roaming• These are market where dominant firms is

increasing costs for smaller firms and potential entrants

The Results of Bill and Keep and Related ICC Reforms

• Increases local rates with a new SLC called an ARC

• Eliminates funding for the IP network• Transfers resources from ILECs to Wireless

and Long Distance Carriers• Possible Response: Enlarge the local calling to

the entire state