[Federal Register: February 8, 2006 (Volume 71, Number 26)]
[Notices]
[Page 6485-6486]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08fe06-97]
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FEDERAL COMMUNICATIONS COMMISSION
[CC Docket Number 96-45; DA 06-55]
Federal-State Joint Board on Universal Service, National Exchange
Carrier Association, Inc. 2006 Modification of Average Schedule
Universal Service Formulas
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: In this document, each year, the Commission must review and
approve or modify any proposed modifications to the formulas used to
calculate Part 36 high-cost loop support and local switching support
for average schedule companies.
FOR FURTHER INFORMATION CONTACT: Cara Voth, Senior Attorney, Wireline
Competition Bureau, Telecommunications Access Policy Division, (202)
418-7400, TTY (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
in CC Docket No. 96-45 released on January 12, 2006. The full text of
this document is available for public inspection during regular
business hours in the FCC Reference Center, Room CY-A257, 445 12th
Street, SW., Washington, DC 20554.
I. Introduction
1. In the Order, each year, the Commission must review and approve
or modify any proposed modifications to the formulas used to calculate
Part 36 high-cost loop support and local switching support for average
schedule companies. Historically, the National Exchange Carrier
Association, Inc. (NECA) has filed the annual average schedule company
formula modifications for both Part 36 high-cost loop support and local
switching support. Pursuant to Sec. 54.301(f) of the Commission's
rules, however, the Universal Service Administrative Company (USAC) now
submits the proposed formula for local switching support. The
Commission's rules require that these formulas simulate the
disbursements that would be received by a company that is
representative of average schedule companies.
2. On August 30, 2005, NECA filed proposed modifications to the
current high-cost loop universal service formula for average schedule
companies, requesting that they take effect on January 1, 2006, and
remain in effect through December 31, 2006. On September 30, 2005, USAC
filed proposed modifications to the current local switching support
formula for average schedule companies. On October 20, 2005, the
Wireline Competition Bureau (Bureau) issued a public notice soliciting
comments on NECA's high-cost support filing. For the reasons discussed
below, we approve USAC's modified local switching support formula and,
with respect to Part 36 high-cost support, we adopt NECA's cost per
loop (CPL) formula. As we have done previously, we direct USAC to
provide support to average schedule carriers consistent with this Order
retroactive to January 1, 2006.
II. Local Switching Support Formula
3. The local switching support formula is used to determine the
amount of support for switching costs that will be provided to average
schedule companies from the Commission's universal service high-cost
support mechanism. The current interstate local switching support
formula was approved on December 30, 2004. In its September 30, 2005,
filing, USAC proposes a formula for 2006 that, if approved, would
increase annual payments for local switching support from approximately
$83.7 million in 2005 to approximately $85.8 million in 2006, an
increase of approximately 2.5 percent. We have reviewed USAC's filing
and the supporting information in NECA's 2005 Modification of Average
Schedules and find that the method used to develop this year's proposed
formula is the same method that NECA has used to develop the formula we
approved during the last payment period. Consistent with the Bureau's
prior orders, we approve USAC's proposed 2006 average schedule local
switching support formula.
4. USAC's average schedule local switching support filing provided
only its proposed 2006 formulas. Supporting documentation for the 2006
local switching support formulas was filed eight months earlier in
NECA's 2005 Modification of Average Schedules. In average schedule
local switching support filings prior to 2005, NECA provided detailed
explanations, supporting documentation, and data. Such a consolidated
single filing of the formulas, necessary information, and data enables
us to conduct a more efficient review of local switching support
filings. Thus, beginning with the local switching support filing due in
2006, and for all subsequent filings, we require USAC to provide at
least the same level of explanative detail and data that NECA had
included previously with its average schedule local switching support
formula filings.
III. Discussion
5. Consistent with our reasoning in our 2003 Order, Federal-State
Joint Board on Universal Service in CC Docket No. 96-45, DA 02-3587,
released on December 27, 2002; 2004 Order, Federal-State Joint Board on
Universal Service in CC Docket No. 96-45, DA 03-4063, released on
December 24, 2003; and 2005 Order, Federal-State Joint Board on
Universal Service in CC Docket No. 96-45, DA 04-4070, released on
December 30, 2004, we adopt the CPL formula for purposes of calculating
average schedule company expense adjustments for 2006. In previous
average schedule formula filings, NECA conceded that the CPL formula
better estimates cost per loop, but argued that the Bureau should
instead approve NECA's EAPL formula because NECA believes it better
estimates the expense adjustments that an average schedule carrier
should receive. We again find, however, that we are not required to
adopt a formula based on its ability to predict expense adjustments per
loop, i.e., ``disbursements,'' compared to a formula's ability to
predict costs per loop. The Bureau has consistently held, and the
Commission has upheld, that the appropriate high-cost loop support
formula should reasonably approximate the cost per loop of the sample
average schedule companies and allocate funds accurately to average
schedule companies. Because the CPL formula provided by NECA in its
filing better estimates the cost per loop of sample average schedule
companies than the proposed EAPL formula, based on the current record,
the Bureau concludes, as it did in its 2003 Order, that the CPL formula
is a more appropriate means of calculating universal service high-cost
loop support for average schedule companies. Because NECA's submission
of the results derived from the CPL formula appear to be accurate and
complete, we therefore approve the CPL formula results provided in
NECA's August 30, 2005 submission.
6. Although today, based on the current record, we approve NECA's
CPL formula for 2006, which is essentially the same CPL formula filed
since 2002 adjusted for changes in the sample cost data, we are
concerned about yearly
[[Page 6486]]
increases in high-cost loop support. For the three years beginning with
2004, and ending with the estimate of high-cost loop support for 2006,
high-cost loop support provided to average schedule companies has
increased by 16.4 percent, 38.7 percent, and 41.6 percent,
respectively. NECA states that increases in support are primarily
driven by the increases in costs reported by sample average schedule
companies. Although support for 2006 is estimated to be going up by
over 41%, NECA's filing also shows that the support will be provided to
more carriers. We also note that the increase in NECA's high-cost loop
support estimate is due, in part, to NECA's implementation of loop
count reporting modifications pursuant to a 2004 Commission order. NECA
makes marginal reference to this order without specific details of the
effect on universal service fund payments resulting from its
implementation of the loop count adjustment. For future filings, we
find that NECA should clearly disclose and quantify any significant
modifications to the development of average schedule universal service
formulas in its annual average schedule universal service filings. We
require NECA to disclose when a Commission order or rule change causes
a change in aggregate universal service support to average schedule
companies by more than five percent of the previous year's universal
service support. Similarly, we require USAC to disclose when a
Commission order or rule change causes a change in aggregate local
switching universal service support to average schedule companies by
more than five percent of the previous year's support.
IV. Ordering Clauses
7. Pursuant to Sec. Sec. 0.91 and 0.291 of the Commission's rules,
47 CFR 0.91, 0.291, that the average schedule formula proposed by the
Universal Service Administrative Company on September 30, 2005, for
local switching support IS adopted, effective retroactively as of
January 1, 2006.
8. Pursuant to Sec. Sec. 0.91 and 0.291 of the Commission's rules,
47 CFR 0.91, 0.291, that the average schedule cost per loop formula
described by the National Exchange Carrier Association on August 30,
2005, for high-cost loop support is adopted, effective retroactively as
of January 1, 2006.
9. Pursuant to section 4(i) of the Communications Act of 1934, as
Amended, 47 U.S.C. 154(i), Sec. Sec. 0.91 and 0.291 of the
Commission's rules, 47 CFR 0.91, 0.291, that this order is effective
upon its release.
Federal Communications Commission.
Cathy Carpino,
Deputy Chief, Wireline Competition Bureau, Telecommunications Access
Policy Division.
[FR Doc. 06-1062 Filed 2-7-06; 8:45 am]
BILLING CODE 6712-01-P