WCB Cost Model Virtual Workshop 2012 - Connect America Fund-Intercarrier Compensation Recovery Mechanism Set Aside Amount

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

In the USF/ICC Transformation Order, the Commission established an annual funding target of $4.5 billion for high-cost universal service support. Within the $4.5 billion budget, the Commission set aside up to $1.8 billion annually for a five-year period to support areas served by price cap carriers. This amount includes the support that price cap carriers receive through the Connect America Fund intercarrier compensation (CAF-ICC) recovery mechanism. The CAF-ICC recovery mechanism is an explicit support mechanism that replaces the implicit support previously received by carriers from carrier-to-carrier revenues.

Questions for Comment

1. In order to finalize the cost model and identify the census blocks that will be funded, the Bureau needs to specify the amount of funding to be allocated among census blocks through the cost model or competitive bidding.  The Bureau forecasts that over a five-year period, from 2015 to 2019, price cap carriers will draw an average of roughly $50 million per year of support from the CAF-ICC recovery mechanism.  If the Bureau were to set aside $50 million from the $1.8 billion price cap carrier budget when finalizing the model, this would mean that $1.75 billion in support would be distributed through the model or competitive bidding.  Is it reasonable to utilize a straight average when forecasting the price cap carrier draw from the CAF-ICC recovery mechanism?  Is $50 million a reasonable amount of support to set aside for the CAF-ICC recovery mechanism in price cap areas?  We encourage the price cap carriers to submit their current projections of their anticipated CAF-ICC draw over the relevant time period.  Parties that argue that a different methodology should be used should describe in detail their proposals and identify all underlying assumptions for a specific set aside amount for the CAF-ICC recovery mechanism.