Download Bob Loube

NASUCA
2012 mid-year meeting
[email protected]
The Importance of the Wireline
Network
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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
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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