With competition the ILEC's would have to actually take care of their customers instead of treating them like they don't have a choice. I remember the day I cut the cord from bell. It was a memorable moment.
Sent from my iPhone4 On Feb 12, 2011, at 4:28 PM, Mike Hammett <wispawirel...@ics-il.net> wrote: > It's too bad they're axing competition instead of embracing it. > > > ----- > Mike Hammett > Intelligent Computing Solutions > http://www.ics-il.com > > > > On 2/12/2011 12:48 PM, Fred Goldstein wrote: >> First off, this last thread's title was offensive, so I changed >> it. The current Administration is not doing much that previous ones >> didn't do, and that's the problem. The FCC sees the spectrum as a >> source of revenue (auctions), and Congress sees the FCC as a source >> of subsidy money to rural states. >> >> USF exists because the Telecom Act requires it. USF replaced an even >> uglier system wherein rural telcos charged really really high >> switched access per minute rates to LD carriers at either end of the >> call. VoIP would have killed that anyway... so now there are >> explicit cash subsidies. >> >> Let's set aside the smaller parts of USF (Schools& Libraries, Rural >> Health Care, and Low Income) and focus on the one on the table now, >> High Cost Support. This is the one that gets the bulk of the tax >> money anyway. The statutory requirement is that rural telephone >> rates be comparable (not identical) to urban ones. So if it really >> costs $100/month to provide telephone service in East Overshoe, then >> the East Overshoe Telephone Cooperative is entitled to USF to let >> them hold down the rate. >> >> But it's a lot more complicated than that. Cost is averaged across a >> "study area", which is in general the operating territory of one >> (historic, pre-merger) telephone company in one state. So South >> Central Bell- Mississippi is one study area, and South Central Bell- >> Tennessee is another. Verizon has at least two study areas in >> California, though, one ex-Contel and one ex-GTE. CenturyTel has a >> heap of them all over the place, as does TDS. >> >> The point of averaging across a study area is that low-cost urban >> areas cross-subsidize high-cost rural ones. So Qwest in Omaha is >> supposed to subsidize Qwest in the rural parts of Nebraska. Thus the >> big recipients are the small telephone companies who do not have >> urban areas. That would be bad enough, but a small telephone company >> typically has a separate corporate structure, including IT, CS, etc., >> which supports very few subscribers. So the OpEx per subscriber can >> be really high too, because small telcos are inefficient. If TDS or >> CenturyTel buys them, they often keep the study areas separate... >> cost goes down but the money still flows! (The pending NPRM does >> however at least open the issue of merging study areas.) And the >> Bells, especially Qwest/USWest, have sold off a lot of rural >> areas. So they have lowered their average cost. This doesn't lower >> their rate, though, because they don't get USF anyway, and they are >> on price caps, not rate of return, so they keep their rates and raise >> their margins. The rural chains that buy the rural turf eventually >> (this takes a couple of years, though again the pending NPRM may >> reduce this interval, which the FCC cutely calls "The Parent Trap") >> get new subsidy flows for them. So we're screwed both ways. >> >> When TA96 passed, the FCC at the time was pro-competition (Hundt, >> Kennard) and they wanted to make USF pro-competition too. So they >> created the "Equal Support Rule". This is a tiny bit like Jeremie's >> suggested voucher system. A USF-eligible carrier is called an ETC >> (eligible telecommunications carrier). A Competitive ETC (CETC) could >> move into an area whose ILEC got USF. The CETC would then get the >> same amount *per line* as the ILEC-ETC. So if East Overshoe >> Telephone got $80/month/line, then Northern Wireless could get >> $80/month/line for selling a fixed-wireless telephone line (using >> their cellular network and a POTS-phone adapter). Northern Wireless >> (I made that name up but it alludes to a once-huge CETC) would not >> need to show its own costs, as competitors don't fit the ILEC accounting >> model. >> >> Now you'd think that this was a great idea, like a voucher, but it >> had a big problem. The ILEC-ETC is usually under Rate of Return >> regulation. So their profit margin is fixed. Most of their costs >> are fixed too. So if the CETC takes lines away, the ILEC-ETC is >> still entitled to keep the subsidy level needed to maintain their >> rate of return and the same low prices. So they keep their subsidy, >> and USF ends up paying twice! This is the FCC's justification for >> wanting to do away with competitive ETCs entirely -- they could have >> simply removed Equal Support, but they're killing CETC in toto, >> regardless of what the law actually says. A few years ago, they >> capped CETC support. If a new CETC comes into an area, their subsidy >> comes out of other CETCs, no longer equal support. The total is >> supposed to phase down to 0 over five years. >> >> BTW the biggest CETCs were cellular carriers, including Sprint, AT&T >> Mobility and its predecessors, and some Verizon Wireless >> acquisitions. VZ and I think Sprint agreed to phase out their CETC >> support as merger conditions. CLECs got a rather small share of the >> pie. WISPS need not apply, since they're not carriers, and the >> support was technically for voice. >> >> Oh, voice? Well, the real scandal of USF is that the ILEC-ETC is >> allowed to do practically anything so long as it's useful for >> voice. They can build Fiber to the Ranch, for $20,000+/home (CapEx) >> or more, or $1000/month per sub (though they propose making it harder >> to get>$250/line/mo), if it also delivers voice, *even if* they >> already have copper to the ranch *and* an unlicensed WISP. Check out >> Border to Border in Texas. So USF does fund broadband; it just does >> it indirectly, by letting them build a broadband-ready network with >> subsidy money. The ISP they run across it is then "incidental", not >> *directly* subsidized, but if the wire or fiber is already there, how >> much does more it cost to drop on broadband Internet? Thanks to this >> policy, many rural ILECs have better broadband coverage than >> unsubsidized Bells. >> >> We pay for this. USF is funded by a tax on "interstate >> telecommunications". That includes long distance calls, circuits, and >> interconnected VoIP (assumed 64.9% interstate, IIRC, but I'm typing >> this off-line on my laptop in a rural location -- I haven't paid VZW >> for tethering and for some reason it no longer works on my cell phone >> ;-] ). This is technically a "fee" rather than "tax" because it >> doesn't go to the Treasury's General Fund, but it is enforced like a >> tax (big fines if you don't pay). It goes to USAC, who runs >> USF. It's a self-adjusting tax. Every quarter, they compute a new >> rate, and it takes effect automatically. It started out around 3% >> and is now around 15.5%. >> >> The FCC's new set of proposals has a couple of major impacts. It >> continues the phase-out of CETC support. It also creates a new fund, >> "Connect America", which explicitly covers "broadband", as if that >> were a noun. (Broadband what? It's an adjective.) This will be >> distibuted by reverse auction; the ETC who asks the least to serve a >> given area gets the exclusive support. If may be the ILEC. Whether >> or not it's the ILEC, the ILEC-ETC *continues* to get their current >> support. Connect America is incremental. So the ILECs can get even more. >> >> BTW there's a separate pending proposal to create a new USF to fund >> mobile wireless -- licensed CMRS, not WISP. This may be related to >> the recently announced 98% goal, though it seem to me that Verizon >> had planned that for its LTE network anyway! BTW the Frontline >> Wireless plan that almost happened in 2007 was required to have 99.3% >> population coverage, though (speaking as one of their network >> designers) that was sort of optimistic, and a sane proposal (that >> might have happened) would have needed a lower number. >> >> -- >> Fred Goldstein k1io fgoldstein "at" ionary.com >> ionary Consulting http://www.ionary.com/ >> +1 617 795 2701 >> >> >> >> -------------------------------------------------------------------------------- >> WISPA Wants You! Join today! >> http://signup.wispa.org/ >> -------------------------------------------------------------------------------- >> >> WISPA Wireless List: wireless@wispa.org >> >> Subscribe/Unsubscribe: >> http://lists.wispa.org/mailman/listinfo/wireless >> >> Archives: http://lists.wispa.org/pipermail/wireless/ > > > -------------------------------------------------------------------------------- > WISPA Wants You! 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