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RTF FLEC MODEL ACTIVITIES July 7, 1999 NECA Town Meeting

RTF FLEC MODEL ACTIVITIES July 7, 1999 NECA Town Meeting. Why Review FLEC Models?. Initial charge for RTF FCC Acceptance of FLEC models for USF Evaluate effectiveness of models for use in rural areas Validate acceptability of use for rural, or Demonstrate invalidity for rural telcos

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RTF FLEC MODEL ACTIVITIES July 7, 1999 NECA Town Meeting

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  1. RTF FLEC MODEL ACTIVITIESJuly 7, 1999NECA Town Meeting

  2. Why Review FLEC Models? • Initial charge for RTF • FCC Acceptance of FLEC models for USF • Evaluate effectiveness of models for use in rural areas • Validate acceptability of use for rural, or • Demonstrate invalidity for rural telcos • Competitive neutrality considerations

  3. FCC Synthesis Model • Adopted by the FCC in November, 1998 • Series of versions released between 11/98 and 6/99 • May, 1999 NPRM on FCC proposed inputs • Model results only one factor in developing actual USF support for the company

  4. FCC Model Inputs • FCC prefers geocoded locations, but proposes use of 100% road surrogate locations • 1,200 to 1,300 input values • Proposed values may or may not be appropriate for rural companies • RUS data used extensively in developing input values

  5. Evaluations of FCC Model • Model Design • Documentation review • Review of comments • Analysis by outside parties, as available

  6. Evaluations of FCC Model • Input Evaluation • - Prioritization of inputs • Sensitivity analysis • Judgmental evaluation • Importance to rural telco results • Perceived ability to influence • - Variability of inputs • - Variability between rural companies • - Input Values • - Review of FCC orders and comments • - Other evaluations as appropriate

  7. Evaluation of FCC Model • Evaluation of model results • Comparisons to Actual • - Physical units • - Access lines • - Sheath miles of plant • - Investment $ • - Expense $

  8. Comparisons to Actual • Validity varies depending on the specific investment or expense item • Model network may be different architecture from actual network • Model reflects current construction costs, actual investment includes historical costs • Model only develops cost of “local” service not total company costs

  9. Current Validation Approach • Approximately 20 companies representing rural company characteristics • - All regions of the country • - All sizes of rural companies • - Varying company types (coop, stockholder, holding company) • - Some companies with actual DLC network

  10. Current Validation Approach • Initial limit on companies studied to limit resource requirements • Review model results for various components of network costs • “What if” analysis of some inputs • Hope to identify issues, concerns, validity of results

  11. Current Validation Approach • Possible testing of certain results on wider groups of companies as data is available • Analysis of total results for all rural companies on limited number of input sets • Develop report and recommendations

  12. How can you help? • Need companies to include in test group, particularly those who have DLC loop plant • Need examples of unique situations that affect costs of rural companies • Need evaluations of FCC model done for other purposes to review

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