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Rural high-cost reform order SUMMARY
The Federal Communications Commission adopts the Rural Task Force's proposed
framework for rural high-cost reform, with certain modifications, including:
- Adopts the proposal to re-base the high-cost loop support fund for rural telephone
companies and retain an indexed cap on the fund. Re-basing the indexed fund will ensure
that rural carriers are able to continue providing supported services at affordable and
reasonably comparable rates during the transition to a more permanent high-cost support
mechanism for rural carriers.
- Adopts the proposed "rural growth factor" that allows the high-cost loop support fund to
grow based on annual changes in the Gross Domestic Product-Chained Price Index (GDP-CPI) and the total number of working loops of rural carriers.
- Adopts a modified version of the Rural Task Force's proposal as it relates to corporate
operations expenses. Revises the corporate operations expense limitation calculation so
that the dollar values in the formula are re-based and indexed by the GDP-CPI. Also
raises the minimum cap in the revised corporate operations expense limitation formula to
- Adopts a modified version of the Rural Task Force's proposed "safety net additive" so
that a carrier will receive support above the cap for its incremental expense adjustment
associated with new investment.
- Consistent with the Rural Task Force's recommendation, adopts a "safety valve" that
provides support for additional investment made in acquired exchanges.
- Declines at this time to adopt the Rural Task Force's proposal to freeze high-cost loop
support upon competitive entry in rural carrier study areas because it may have unintended
consequences, such as discouraging investment in rural America and increasing high-cost
support levels. Invites comment on possible alternative approaches in an attached Further
- Adopts the Rural Task Force's proposal for the disaggregation and targeting of high-cost
universal service support to allow carriers to elect a disaggregation path, but requires
additional regulatory oversight over subsequent changes in disaggregation plans.
- Finds that the Rural Task Force's proposed framework, with certain modifications, shall
remain in place for five years, and implementation shall begin as of July 1, 2001.
- Finds the Rural Task Force's recommended principles for access reform to be reasonable
and generally consistent with prior Commission actions to reform the access rate structure
of price cap carriers. Recognizes the importance of completing access reform for rate-of-return carriers and states intent to act expeditiously to resolve the issues raised in the