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FCC 98-279 [ Text | WordPerfect ]

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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

Report No. CC 98-36 COMMON CARRIER ACTION October 22, 1998

Commission Adopts Model Platform For Use in Determining Universal Service Support for High Cost Areas

(CC Docket Nos. 96-45 and 97-160)

Today the Commission took the next step towards ensuring the accessibility of affordable telecommunications services to all Americans while opening telecommunications markets to competition. The Commission adopted the framework for estimating the costs incurred by certain telephone companies for providing services to consumers in rural, insular, and other high cost areas. Combined with specific variables, or "inputs," that will be determined later, this framework will provide cost information that can be used as part of the calculation of the amount of universal service support that non-rural carriers may receive for serving high cost areas. The amount of support available to carriers, however, ultimately depends upon other factors, including the model input values under consideration and upon Commission action on forthcoming recommendations from the Federal-State Joint Board on Universal Service. Today's decision is a key component of the Commission's implementation of new universal service support mechanisms for non-rural carriers that serve high cost areas, scheduled to take effect on July 1, 1999.

In the Telecommunications Act of 1996, Congress directed the Commission and states to establish explicit universal service support mechanisms that will be sustainable in a competitive environment. In May 1997, the Commission adopted a plan for implementing reform of the existing system of universal service support for high cost areas. In that order, the Commission adopted the recommendation of the Federal-State Joint Board on Universal Service that an eligible carrier's level of universal service support should be based upon the forward-looking economic cost (as opposed to historic cost) of constructing and operating the network facilities and functions used to provide the services eligible for federal support.

The Commission's process to adopt a mechanism to estimate forward-looking economic cost is proceeding in two stages. In the first stage, the Commission is adopting a framework, or model platform, which accounts for elements that are essentially fixed, such as network design, network engineering, and soil and terrain. In the second stage, the Commission will select the inputs for the model, such as the costs of network components. Today's decision represents the first of these two stages.

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The model platform adopted today, which is the product of intensive cooperation and input from the Joint Board, the industry, and other interested parties, combines the best elements from each of the two industry-sponsored models, along with innovations developed by Commission staff. This platform will allow the Commission to estimate the cost of building a telephone network to serve subscribers at their actual geographic locations. The model is capable of being adjusted to reflect any evolution in the definition of supported services, and it is compatible with rural Americans' ability to use the Internet and other advanced telecommunications and information services. As such, the model platform will serve as a solid foundation for further decisions that will determine the amount of universal service support to be provided to non-rural eligible telecommunications carriers.

The Commission has referred to the Joint Board questions related to how non-rural carriers' high cost support should be determined once forward-looking costs have been estimated. The Joint Board is expected to deliver a recommendation on these issues, including how much universal service support should be borne by the federal support mechanisms, by November 23, 1998. Once the Commission has acted on these recommendations, and model input values have been selected, non-rural carriers' revised support levels can be determined.

Action by the Commission October 22, 1998, by Fifth Report and Order (FCC 98-279). Chairman Kennard, Commissioners Ness, Powell and Tristani, with Commissioner Furchtgott-Roth approving in part, dissenting in part and issuing a statement.


News media contact: Rochelle Cohen at (202) 418-0253.

Common Carrier Bureau contact: Chuck Keller at (202) 418-7380.

TTY: (202) 418-2555.