ACA's reply comments focused exclusively on the cost model as applied to price cap phone companies and not to USF support provided to rate-of-return phone companies. ACA has long supported continuing previous high-cost funding levels for rate-of-return phone companies during a deliberate transition period.
In its comments, ACA rejected a cost model proposed by price cap carriers that advocated a greenfield approach. Adjusting inputs and assumptions used in the cost model submitted by the ABC Coalition, ACA determined that a greenfield model would provide excessive support -- more than twice as much support per location as a brownfield build -- resulting in far fewer unserved and high-cost locations reached by broadband Internet facilities, dealing a blow to a national objective set by FCC Chairman Genachowski.
ACA noted that the overriding objective here is to ensure that as many high-cost locations as possible have access to broadband service. ACA's analysis demonstrated that a brownfield model most accurately reflects the activities LECs will realistically undertake to meet the FCC's performance obligations of 4 Mbps downstream and 1 Mbps upstream.
"Adoption of a greenfield model would produce inefficient outcomes, providing excessive support per location, and would result in fewer locations receiving broadband service. Development of an accurate and realistic cost model is essential for distributing support efficiently to achieve the FCC's aims," Polka said.
ACA pointed out that the ABC Coalition agreed that most price cap carriers will use CAF money to build fiber to DSL access multiplexer (DSLAM) facilities, but the two groups disagreed on whether the FCC should repay on a greenfield or brownfield cost model. The greenfield cost model is four times more generous to price cap CAF recipients because it assumes that miles of copper facilities connecting DLAMs to homes and offices will be replaced. Because price cap carriers have no intention of ripping out their copper plant - the most expensive component in their network - FCC reliance on a greenfield cost model would excessively overfund price cap carriers.
ACA endorsed an FCC data collection effort to pinpoint the most accurate level of support needed for a brownfield build, and it applauded an FCC proposal to hold workshops, if necessary, to estimate the quality of price cap carriers' copper plant.
Lastly, ACA reiterated its view that no CAF support whatsoever should be provided in areas where unsubsidized providers, such as ACA Members, are offering broadband service.
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