The FCC’s Love Triangle with Census Maps and the Illusion of Efficiency (AKA: Analyzing Competitive Overlap/Disaggregation of Costs in Competitive Areas) 

Purpose The purpose of this presentation is to review the competition related impacts of the order and explore some of the ways we can analyze competitive overlap with existing publically available data

Agenda Review of Competition Related Order Impacts BS CAF BLS Prohibition for areas with qualifying competition Challenge process Preliminary Competitive Block Analysis Ideas Temporary Relief From Listening to Zach Disaggregation Conversation Phase In

Competition - Order Overview “...prohibit rate-of-return carriers from receiving CAF BLS in areas that are served by a qualifying unsubsidized competitor...” “…adopt a challenge process to determine which areas are served by unsubsidized competitors…” “…adopt several options to disaggregate support in areas determined to be served by qualifying competitors “…adopt a phased reduction in disaggregated support for competitive areas…”

BS CAF BLS Prohibition for Areas With Qualifying Competition “The Commission has long been committed to eliminating inefficiencies and instances in which ‘universal service provides more support than necessary to achieve our goals.” “…a census block will be deemed to be “served by a qualifying competitor” for this purpose if the competitor holds itself out to the public as offering “qualifying voice and broadband service” to at least 85 percent of the residential locations in a given census block.” Devil’s in the details (how do we determine 85% coverage of locations, when even the FCC admits a reliable count of locations does not exist?)

BS CAF BLS Prohibition for Areas With Qualifying Competition Wireline Competition Bureau to release a list (update process every 7 years) …”competitors will be required to certify that they are offering service to at least 85 percent of the locations in the census block, and must provide evidence sufficient to show the specific geographic area in which they are offering service…” “The Bureau will rely on Form 477 broadband deployment data to make the preliminary determination of which census blocks are served by providers offering broadband service.260”

BS CAF BLS Prohibition for Areas With Qualifying Competition What does QUALIFYING mean a facilities-based provider of residential fixed voice service, as well as fixed broadband Voice E911, CALEA, among other things Must be able to port numbers speeds of at least 10/1 Mbps (they reject the 25/3 idea) latency suitable for real-time applications (100 ms) Usage capacity that is reasonably comparable to comparable offerings in urban areas (150Mb) Rates that are reasonably comparable to rates for comparable offerings in urban areas.

Challenge process The challenge process is supposed to be based on “lessons learned” from CAF Phase II Challenge process and the 100% overlap process. We can get some ideas about how to prepare to challenge based on those previous challenges The FCC will release an initial list of possible competitive overlay, competitor must certify 85%, then a challenge can take place In general, a successful challenge will be one that proves the competitor does not meet the qualifying conditions (voice, speed, latency, price, usage, number port) or that service is not actually offered in that area at all Will be repeated every seven years

Challenge process Some Ideas for challenges Competitors own online availability tool does not show coverage Detailed historical port records showing competitor has not (and likely cannot) port numbers Engineering study showing a fixed wireless signal cannot possibly reach 85% of the block No marketing material proving service is actually available Customer Survey/testimony Ok, so how do we get a jump start and prepare for this challenge process if we have competition….

Preliminary Competitive Overlap Analysis Ideas ACAM census block level analysis (a case study). Let’s look at some data available in the ACAM to determine competition to identify blocks. Once we know that we can zoom all the way in to individual houses on a map Pros and Cons ACAM standard is a single location, not 85%, so ACAM competition may be overstated FTTP blocks being included in “Wired Served” column creates room for error and significant work to identify wired competition We can’t tell who the competitor is, only that the model removes the block for competition It is a good way to verify that the FCC considers the block at least partially competitive based on 477 data (Voice, and other qualifications

Preliminary Competitive Overlap Analysis Ideas Public 477 data (a case study). Let’s look at the June 2015 477 deployment data Pros and Cons The data is state-wide, and the files are enormous 477 Deployment data isn’t enough (even with tech types). We can’t tell if the FCC thinks there is voice Company name, tech type, and speed will be essential for early challenge preparation

Preliminary Competitive Overlap Analysis Ideas Using both the ACAM to identify blocks that have at least one competitive location and the 477 to identify who the competitor is (along with the speed and technology) works best The effort may not have value for companies that think competitors are unlikely to certify 85% coverage. This only adds value for companies that are certain they will have competition problems.

Gah! Enough. Let Us Find More Coffee

Disaggregation Conversation Three Methods Density as proposed by NTCA/USTelecom Square miles and the “reduction ratio” Adjusted ACAM Support model Let’s review the Original NTCA ex parte filings and a few examples As always the Devil is in the details

Phase In Review Once we’ve disaggregated the cost, the impact is phased in 2-year transition for reductions < 25% 5-year transition for reduction > 25% The order is riddled with imprecision. There will be VERY important questions on the cost reduction Of particular interest will be increased SLCS (FNPRM) and adjusting data only BLS costs back to special access it may not be supported, but the order doesn’t say it you can’t develop rates in these areas

Questions? Zach Cochran Senior Client Manager zcochran@alexicon.net (719)531-6342