[Federal Register Volume 78, Number 244 (Thursday, December 19, 2013)]
[Proposed Rules]
[Pages 76791-76795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30144]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 10-90; DA 13-2304]
Availability of Version 4.0 of the Connect America Fund Phase II
Cost Model; Adopting Current Default Inputs in Final Version of Model
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Wireline Competition Bureau announces
that version four of the Connect America Cost Model (CAM v4.0) will be
available shortly. The Bureau seeks comment on whether the Bureau
should adopt this version of CAM and the default inputs for purposes of
calculating cost in price cap areas for implementing Connect America
Phase II.
DATES: Comments are due on or before January 7, 2014.
ADDRESSES: Interested parties may file comments on or before January 7,
2014. All pleadings are to reference WC Docket No. 10-90. Comments may
be filed using the Commission's Electronic Comment Filing System (ECFS)
or by filing paper copies, by any of the following methods:
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
People with Disabilities: To request materials in
accessible formats for people with disabilities (Braille, large print,
electronic files, audio format), send an email to [email protected] or
call the Consumer & Governmental Affairs Bureau at (202) 418-0530
(voice), (202) 418-0432 (tty).
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Katie King, Wireline Competition
Bureau at (202) 418-7491 or TTY (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Wireline
Competition Bureau's document in WC Docket No. 10-90; DA 13-2304,
released December 2, 2013. The complete text of this document is
available for inspection and copying during normal business hours in
the FCC Reference Information Center, Portals II, 445 12th Street SW.,
Room CY-A257, Washington, DC 20554. The document may also be purchased
from the Commission's duplicating contractor, Best Copy and Printing,
Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554,
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898,
or via Internet at http://www.bcpiweb.com.
1. The Wireline Competition Bureau (Bureau) announces that version
four of the Connect America Cost Model (CAM v4.0), which incorporates a
number of modifications, including additional adjustments to address
the unique circumstances and operating conditions in the non-contiguous
areas of the United States, will be available shortly. The Bureau seeks
comment on whether they should adopt this version of CAM and the
default inputs for purposes of calculating costs in price cap areas for
implementing Connect America Phase II.
2. Overview of Changes in CAM v4.0. As described in more detail
below, CAM v4.0 includes a number of modifications to address the
unique circumstances and operating conditions in the non-contiguous
areas of the United States. In particular, CAM v4.0 calculates the cost
of submarine cables used for middle mile connections between intra-
state points in non-contiguous areas. It also updates the plant mix
values for the non-contiguous carriers, and assumes that buried plant
is placed in conduit in non-contiguous areas to provide additional
protection from harsh weather. This version modifies the prior
methodology used for determining input values for terrain in non-
contiguous areas, and it treats Alaska Communications Systems (ACS) as
a small carrier for purposes of calculating its operating expenses. It
also uses state-specific values for certain capital expense inputs for
Virgin Islands Telephone Corporation d/b/a Innovative Telephone
(Vitelco). CAM v4.0 incorporates several modifications to
CostQuestLandLine (CQLL) and CostQuestMiddleMile (CQMM), the
proprietary applications that CAM relies on to develop the network
topology for the CAM. In CQLL, the national demand location data and
the terrain data were updated, and the clustering code was modified.
CQMM was modified to route middle-mile connections along roads,
consistent with the treatment of last mile plant in prior versions. CAM
v4.0 includes inputs for submarine cable and other costs specific to
non-contiguous areas, and it also adjusts the default input for the
cost of money to 8.5 percent. CAM v4.0 also incorporates updated
broadband coverage data.
3. Middle Mile Submarine Routes in Non-Contiguous Areas. CAM v4.0
includes the capability to model the cost of submarine cable used for
middle mile connections in non-contiguous areas. Previous versions of
the model did not distinguish between terrestrial routes and the
submarine portions of middle mile routes in determining middle mile
investment in the non-contiguous areas of the United States. The model
was modified to identify middle mile routes requiring an undersea
connection, including those connecting the islands in Hawaii, Puerto
Rico, the U.S. Virgin Islands, and the Northern Mariana Islands, and to
connect Anchorage to Juneau and the Kenai Peninsula. The Capital
Expenditures (Capex) workbook was modified to include submarine cable
costs and the cost for two beach manholes on each intrastate middle
mile submarine route. This submarine cable is part of the middle-mile
network in each area; it connects central offices just like wholly
land-based middle-mile cable does. Each beach manhole is connected to a
nearby central office that provides multiplexing, routing and co-
location. The Bureau assumes that there is no need for duplicative
facilities to provide multiplexing, routing or co-location between
central offices and therefore do not assume a full landing station at
each submarine landing site. To the extent that parties disagree with
that assumption, they should provide a detailed analysis in support of
their position.
4. The table below shows middle mile route distances for
terrestrial and submarine routes in non-contiguous areas.
[[Page 76792]]
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Cabling Total MM Land MM Submarine MM
distance Beach manholes distance distance distance % Submarine
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AK...................................................... 63,620,956 74 63,620,956 54,717,162 8,903,794 14.0
HI...................................................... 4,657,509 10 4,657,509 3,622,974 1,034,536 22.2
MP...................................................... 591,597 4 591,597 186,097 405,500 68.5
PR...................................................... 3,299,014 4 3,299,014 3,134,003 165,010 5.0
VI...................................................... 442,389 4 442,389 172,750 269,639 61.0
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5. Plant Mix. CAM v4.0 includes state-specific plant mix values for
the price cap carriers serving the non-contiguous United States: ACS,
Puerto Rico Telephone Company (PRTC), Hawaiian Telcom, Inc. (HTI),
Vitelco, and the Micronesian Telecommunications Corporation d/b/a IT&E
(MTC). The plant mix values for price cap carriers serving the
contiguous United States were largely based on values that reflect an
inventory of existing plant mix. Several of the non-contiguous carriers
have suggested that the model should use ``forward-looking'' plant mix
values for their areas that are significantly different than their
current plant mix values and the national average plant mix values in
CAM v3.2.
6. Rather than use current values or the proposed forward-looking
values submitted by these carriers, CAM v4.0 incorporates a hybrid
approach that recognizes that there may be good reasons in non-
contiguous areas to reduce the amount of aerial plant in the future,
but that an efficient carrier would likely replace aerial plant with a
mixture of buried and underground plant. CAM v4.0 recognizes that
buried and underground plant both provide the benefits of below-ground
plant, and that an efficient carrier would choose to bury plant rather
than build underground plant where technically and legally permitted,
as underground plant is typically three to five times more costly than
buried plant. CAM v4.0 therefore assumes the amount of underground
plant would not exceed a carrier's current amount of underground plant;
to the extent the carrier-submitted proposed values for underground
plant are higher than current values, the excess is moved into buried
plant. The table below illustrates a hypothetical example of this
approach.
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Aerial Buried Underground
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Current values.................................................. 60 10 30
Forward-looking values.......................................... 10 30 60
Hybrid.......................................................... 10 60 30
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7. By utilizing a greater amount of buried plant than current
buried plant, the hybrid approach reflects the fact that there may be
some locations where it is more efficient to decrease the amount of
aerial plant in favor of buried plant. The Bureau does recognize,
however, that there may be some instances when deploying underground
plant may be technically or legally required. To the extent any party
contends that the approach to plant mix taken in CAM v4.0 does not
adequately reflect a forward-looking network, they should supply data
that demonstrates what percentage of plant in the state must
specifically be placed underground, as opposed to buried, due to local
ordinances or for technical reasons.
8. Buried Plant in Conduit. In response to comments submitted by
some carriers serving non-contiguous areas, CAM v4.0 also was modified
to allow buried plant to be placed in conduit systems. Traditionally,
underground plant is placed within conduit for added support and
protection and with access points via manholes, while buried plant is
placed directly into the ground, without any conduit. Some non-
contiguous carriers have suggested that the model should include an
additional approach to plant deployment that would combine aspects of
both traditional underground and buried plant. Such an approach
combines buried plant techniques with conduit for added protection. The
logic modification contained in CAM 4.0 allows for these ``buried in
conduit'' systems and is used for buried plant in the non-contiguous
United States.
9. Terrain. The methodology for determining whether a census block
group is identified as having hard rock was modified for the non-
contiguous areas of the United States. Several carriers serving the
non-contiguous areas, ACS, PRTC, and HTI, requested that the model
treat 100 percent of their terrain as ``hard rock,'' the most expensive
terrain in which to place plant. This approach would significantly
over-estimate the actual amount of hard rock in these areas.
10. CAM v4.0 modifies the approach for determining whether a census
block group is considered to consist of hard rock in non-contiguous
areas. Terrain factors for the entire country were developed for each
census block group using data from the Natural Resources Conservations
Service (NRCS) STATSGO data, where available. The rock hardness used in
the contiguous United States for a given census block group is
whichever type of rock is listed most frequently for the list of
STATSGO map units in the census block group, regardless of the
geographic area of those map units. The revised methodology now
considers the entire census block group in non-contiguous areas, where
terrain data are available, to be hard rock if at least fifty percent
of the area is identified as hard rock.
11. ACS Treated as Small Carrier. CAM v4.0 shifts ACS from the
``medium'' carrier category, which encompasses carriers that serve
between 100,000 and 1 million access lines, to the ``small'' carrier
category, for carriers that serve fewer than 100,000 access lines.
Given the other changes made in CAM v4.0, we tentatively believe that
it would be reasonable to treat ACS as a ``small'' carrier rather than
a ``medium'' carrier category for the purposes of calculating its
operating expense (opex) in the CAM v4.0.
12. Vitelco Capex Inputs. CAM v4.0 also includes state-specific
values for certain inputs in the Capex workbook for the Virgin Islands.
Vitelco submitted several proposed modifications to the Capex workbook.
CAM v4.0 includes the modifications to the material costs, but not to
the labor costs. The Bureau tentatively believes it would be reasonable
to assume that certain materials would be more expensive in the Virgin
Islands, but they are not convinced that labor costs should be adjusted
upward as proposed by Vitelco.
[[Page 76793]]
13. Other Changes Proposed by Non-Contiguous Carriers. CAM v4.0
does not include all the changes submitted into the record by carriers
serving the non-contiguous United States. In analyzing the impact of
the requested changes and assessing the reasonableness of the modelled
costs, we compared the costs calculated in CAM v4.0 with the embedded
costs reported by the carriers. To the extent parties believe that
additional modifications should be made to CAM v4.0 prior to adopting
the cost model, they should provide a detailed analysis in support of
their position and specify which inputs should be adjusted upwards or
downwards.
14. CQLL Demand Locations. CAM v4.0 also incorporates modifications
designed to ensure that the growth in demand locations for a given
county are appropriately placed in areas with other residential
locations. This modification does not alter the demand data sources,
but modifies the methodology for random placement of housing units to
prevent anomalous and potentially misleading results. Specifically,
beginning with CAM v3.0, the overall increase or decrease of
residential housing units in a specific county in 2011, as compared to
the 2010 census counts, was randomly dispersed to census blocks based
on the amount of livable roads in each census block of the county. This
process may have resulted in residential housing units being assigned
to census blocks for which 2010 census records showed no residential
locations. CAM v4.0 uses both 2010 census block information and 2011
GeoResults geocoded residential data to identify census blocks that
have no residential locations and removes housing units that previously
had been placed in these census blocks to reflect 2011 county growth.
Instead, CAM v4.0 randomly places those housing units into census
blocks that already contain residential locations. This random
placement follows the same methods used beginning in v3.0, but improves
on these methods by removing roads in census blocks without residential
locations to prevent their use as possible targets for random
placement. This modification impacts only about 0.1 percent of all
residential demand locations, but results in a net increase in demand
of approximately 3,500 Node4 locations, which had been previously
excluded due to their assignment to census blocks that had no roads or
fell outside of defined service areas.
15. CQLL Terrain Data. The CQLL terrain database was modified to
correct an inversion in some rows impacting the rock hardness and soil
texture values.
16. CQLL Clustering Code and Node3 Creator. The CQLL clustering
code was modified to improve feeder path branching in areas with
multiple roads. The code for the feeder allocation formulas was updated
consistent with changes described in CAM v3.2 release notes that
previously were addressed via an update to CQLL output. The
calculations for accumulating feeder fibers of Gigabit passive optical
network (GPON) splitters and special access services were modified. The
fiber service terminal (i.e., pedestal) cost values used to determine
the placement of Node3s (i.e., pedestals) was modified to use the
installed value of a fiber service terminal; the previous value
understated the cost.
17. CQMM Updates. CQMM was modified to use road distance in
calculating terrestrial middle mile route distances, in most instances,
and includes the capability to model the cost of submarine cable used
for middle mile connections in non-contiguous areas. CQMM calculates
connections between nodes using a minimum spanning tree approach. For
CAM v3.2, and earlier versions of the model, distance was calculated
using airline distance multiplied by 1.2 (i.e., an estimated conversion
factor of airline to road distance). For CAM v4.0, distance is
calculated using either airline distance or road distance. In the non-
contiguous areas of the United States, middle mile distances that
include submarine routes are calculated using airline distance (x1.2).
In the contiguous United States and for middle mile distances in non-
contiguous areas of the United States that do not contain submarine
routes, most distances are calculated using road distance. Where the
ratio of road distance to airline distance is greater than 3.04, which
represents the 99th percentile of the road distance to airline distance
ratios for all routes used in CQMM, the distance is the airline
distance multiplied by 3.04. Each route with any submarine cable is
assigned two beach manholes. Submarine investment is not shared with
other utilities, and is not impacted by the regional cost adjustment.
18. CQMM also was modified so that a regional tandem will no longer
be able to serve a central office of a different state when states are
in the same Local Access and Transport Area (LATA). For example,
Minnesota and North Dakota share a LATA. With the modification, North
Dakota central offices are served only by regional tandems in North
Dakota. In addition, CQMM was modified to remove duplicate key values
that could lead to an infinite processing loop, to remove three
duplicative regional tandem locations, and to trigger repeater
investment based on route distance between nodes rather than total
route distance.
19. Cost of Money. In prior versions of the model, the default
input values reflected a 9 percent cost of money. The previously
released model outputs for CAM v3.2 used the model's default input
values, but allowed Commission staff and interested parties to see how
support amounts varied using both an 8 percent and 9 percent cost of
money. CAM v4.0 reflects an 8.5 percent cost of money.
20. CAM Broadband Coverage. CAM v4.0 incorporates updated broadband
coverage to reflect State Broadband Initiative (SBI) Round 7 data.
Consistent with the process for updating broadband coverage in prior
versions of the CAM, the new coverage table removes from the SBI data
Cable and Fixed Wireless providers receiving subsidies, as well as
those not providing voice services as reported on FCC Form 477.
21. CAM Capex. CAM v4.0 includes in the undersea tab of the Capex
workbook inputs for submarine cable and beach manholes on intrastate
middle mile submarine cable routes in non-contiguous areas of the
United States, described above. The cable investment is based on the
same input used for undersea cabling; each beach manhole investment is
estimated at $1 million; and submarine costs are calculated using the
underground fiber Annual Charge Factor.
22. CAM v4.0 also includes logic to support a ``buried in conduit''
method of plant placement, which allows buried plant to be placed in
conduit systems. The Plant Mix Buried Conduit workbook was added, and
the percentage of buried in conduit placements is an input in that
workbook. Buried excavation costs are used. A toggle allows the user to
exclude manholes (the current default) or to specify access points via
size one manholes. Another toggle selects the type of conduit used for
the buried trench; duct without inner-duct is the default.
23. In addition, CAM v4.0 includes modifications to the buried and
underground formulas' use of the Structure Sharing table (in the Plant
Sharing Tables tab) and to the Engineering Rules to allow control over
sizing for manholes in rural, suburban, and rural areas.
24. State Specific Capex. A State Specific Capex table and toggle
were added to provide an input source for situations in which a state-
specific
[[Page 76794]]
capex input is required. When the State Specific Capex toggle is set to
yes, the state-specific capex information will be taken from the State
Specific Capex workbook. That is, the state specified in the State
Specific Capex workbook will become the active capex values, for the
specified state only, in the input collection.
25. CAM Processing Logic. When running a single state solution set,
CAM previously identified the service areas to process based on the
fifth and sixth characters of the service area code, but excluded those
census blocks served in neighboring states. CAM v4.0 was modified to
retain all census blocks, including neighboring states, associated with
service areas in which the fifth and sixth characters of the service
area code match the state that is processed. This change aligns the
state definition between single and multi-state solution sets, where
states are defined as collections of service areas; there is no impact
on investment calculations.
26. Access to CAM v4.0. Parties should follow the same procedures
to access CAM v4.0 as announced for previous versions. In particular,
parties may access CAM v4.0 at http://www.fcc.gov/encyclopedia/caf-phase-ii-models or https://cacm.usac.org. Additionally, authorized
users who have signed the relevant attachments to the protective order
will have access to a system evaluator package that provides a test
environment populated with a sample database, allowing users to view
database structures, observe the processing steps of CAM for a subset
of the country, and see changes in the database. In addition,
authorized uses will receive a digital rights management protected PDC
format file (a form of secure PDF) containing the processing source
code for CQLL and CQMM.
27. Updated Documentation. In conjunction with the release of CAM
v4.0, the Bureau will shortly be posting updated methodology
documentation for CAM v4.0, which provides more detail on the current
model architecture, processing steps, and data sources. Additionally,
the Bureau will be making available the input tables used in the CAM.
The methodology documentation and the input tables will be available at
http://www.fcc.gov/encyclopedia/price-cap-resources.
28. Illustrative Results. The Bureau also will shortly be releasing
a new set of illustrative model outputs for CAM v4.0. The Bureau
emphasizes, however, that it has not yet finalized the funding
thresholds, and therefore these illustrative results do not represent
final support amounts.
I. Procedural Matters
A. Initial Regulatory Flexibility Act Analysis
29. The Non-Contiguous Areas PN, 78 FR 12006, February 21, 2013,
included an Initial Regulatory Flexibility Analysis (IRFA) pursuant to
5 U.S.C. 603, exploring the possible significant economic impact on
small entities of the policies and rules proposed therein. The
Commission invites parties to file comments on the IRFA in light of
this additional document.
B. Paperwork Reduction Act
30. This document does not contain proposed information
collection(s) subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. In addition, therefore, it does not contain any new
or modified information collection burden for small business concerns
with fewer than 25 employees, pursuant to the Small Business Paperwork
Relief Act of 2002, Public Law 107-198.
C. Filing Requirements
31. Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, interested parties may file comments on or before the date
indicated on the first page of this document. Comments are to reference
WC Docket No. 10-90 and DA 13-2304, and may be filed by paper or by
using the Commission's Electronic Comment Filing System (ECFS).
[ssquf] Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
[ssquf] Paper Filers: Parties who choose to file by paper must file
an original and one copy of each filing. Filings can be sent by hand or
messenger delivery, by commercial overnight courier, or by first-class
or overnight U.S. Postal Service mail. All filings must be addressed to
the Commission's Secretary, Office of the Secretary, Federal
Communications Commission.
[ssquf] All hand-delivered or messenger-delivered paper filings for
the Commission's Secretary must be delivered to FCC Headquarters at 445
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes and boxes must be disposed of
before entering the building.
[ssquf] Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
[ssquf] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street SW., Washington, DC 20554.
32. In addition, we request that one copy of each pleading be sent
to each of the following:
(1) Katie King, Telecommunications Access Policy Division, Wireline
Competition Bureau, 445 12th Street SW., Room 5-B544, Washington, DC
20554; email: [email protected];
(2) Charles Tyler, Telecommunications Access Policy Division,
Wireline Competition Bureau, 445 12th Street SW., Room 5-A452,
Washington, DC 20554; email: [email protected].
33. People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
34. The proceeding this Notice initiates shall be treated as a
``permit-but-disclose'' proceeding in accordance with the Commission's
ex parte rules. Persons making ex parte presentations must file a copy
of any written presentation or a memorandum summarizing any oral
presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentation must (1) list all persons attending or
otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule Sec. 1.1206(b). In proceedings governed
by rule Sec. 1.49(f) or for which the Commission has made available a
method of electronic filing, written ex parte presentations and
memoranda summarizing oral ex parte
[[Page 76795]]
presentations, and all attachments thereto, must be filed through the
electronic comment filing system available for that proceeding, and
must be filed in their native format (e.g., .doc, .xml, .ppt,
searchable .pdf). Participants in this proceeding should familiarize
themselves with the Commission's ex parte rules.
Federal Communications Commission.
Linda Oliver,
Deputy Chief, Telecommunications Access Policy Division, Wireline
Competition Bureau.
[FR Doc. 2013-30144 Filed 12-18-13; 8:45 am]
BILLING CODE 6712-01-P