V. Solicitation of Comments
Based upon the relevant scope of inquiry as set forth above, we solicit comments on the following issues:96
A. Updating Program Costs
1. Should the Cost Proxy Model adopted in D.96-10-066 be updated? If so how? If not, what alternative sources of relevant data provide an efficient and expedient vehicle for developing updated costs of basic service as required for assessing the level of B-Fund requirements?
2. Should the existing high cost areas be modified using the updated Census Block Group (CBG) population data from the 2000 Census?
3. Should CBG costs be updated using Commission-adopted UNE-P based loop costs for AT&T and Verizon? If so, what are the pros and cons? Explain and justify whether, or to what extent, UNE cost data can serve as a relevant proxy for the basic retail costs of service required for assessing the appropriate level of B-Fund requirements.
4. What data sources should the Commission consider for computing the CBG costs for Frontier Communications?
5. Should the Commission reconsider use of a Cost Proxy Model for SureWest as ordered in D.05-08-004? SureWest shall provide updated status on compliance with D.05-08-004 regarding the submission of a Cost Proxy Model relevant to the assessment of B-Fund requirements.
6. Should the Commission consider the total cost or the long range incremental cost when determining the cost of provisioning basic residential telephone service for use in assessing B-Fund requirements? Explain why or why not.
7. Are there other models (e.g. revenue based models as mentioned in the FCC's NPRM or those models used by other states) that the Commission should consider? How should these models be designed?
8. To what extent should the Commission utilize cost of service data (including potentially confidential data) provided by each of the NRF ILECs as a means of updating relevant costs for assessing B-Fund requirements? Provide supporting rationale.
B. Modifying the Size of the B-Fund
1. Should the Commission continue, reduce or eliminate the B-Fund program? Why or why not? Provide supporting rationale consistent with the Commission's universal service goals set forth in SB 1276.
2. If the Commission considers reducing the size of the B-Fund program, then:
(a) Should the high cost threshold level be increased from the current statewide average cost of $20.30 to some level above statewide average cost? If so, what would be a reasonable threshold level, based on what criteria? In particular, is it reasonable to set the threshold at the FCC "safe harbor" benchmark of $34.21 per line? Why or why not?
(b) Should the Commission cap B-Fund subsidies to $85.00 per line based on the fact that less than 1% of subsidy claims exceed that amount? If not, would another cap be reasonable? Explain why or why not consistent with the Commission's universal service goals set forth in SB 1276.
3. If a cost proxy is continued to be used as a surrogate standard for affordable rates, should this cost proxy be different for different geographic areas of the state? If so, explain how such affordability levels should be measured and geographically differentiated. What level of support is "reasonable?"
4. Should the Commission require a "means test" for computing subsidies to residential customers who are in high income brackets? If so, how?
5. If a "means test" is used for limiting B-Fund subsidies from the highest income residential customers, should any adjustment to carrier subsidies occur? Explain why or why not consistent with the Commission's universal service goals set forth in SB 1276.
6. What other alternative methodologies can be efficiently applied to accomplish the goal of limiting subsidies to households?
C. Discontinue Extended Area Service Payments for Non-B-Fund Program Events
1. Should the Commission consider discontinuing Extended Area Service payments to SureWest, from the B-Fund, as ordered in D.00-11-039? Why or why not? If so, what alternatives should be considered to meet the Commission's universal service goals?
D. Revenue Neutrality and Utility Reimbursement
1. Is the Commission obligated to apply the principle of "revenue neutrality" if and when it makes changes to B-Fund subsidy levels? If so, why, and if not, why not?
2. If the Commission allows carriers the freedom to price basic residential services, would revenue neutrality need to continue? If so, why or why not?
3. If the Commission determines that revenue neutrality is appropriate to B-Fund changes, should revenue neutrality apply equally to incumbent and competitive carriers participating in the B-Fund?
4. If the Commission determines that revenue neutrality is appropriate to B-Fund changes, how should it account for revenue differences related to rates that have changed for competitive reasons since they were adjusted when the B-Fund was established?
E. Auction Mechanism
1. What are the relevant issues involved in adopting an auction mechanism to deal with the designation of a new COLR as well as for establishing support levels for exiting carriers? How should an auction be designed and how frequently should such an auction be held?
2. What level of disaggregating should be used in such an auction mechanism? How many carriers should be eligible in a given area and how should support be allocated if more than one carrier is eligible? Comments are also solicited regarding the issues raised in the Telecommunications Division Workshop Report on an auction mechanism, as referenced in footnote 94 above.
F. Program Implementation Issues
1. How can the B-Fund program implementation be made more efficient?
2. Discuss reporting requirements or any other issues associated with an automated claims review program.
G. General Issues
1. Is the B-Fund program meeting its goal of promoting universal service?
2. Is the B-Fund program achieving its goal of reducing rate disparity in residential basic rates between rural and urban areas while at the same time encouraging competition?
3. Are current Commission policies conducive to driving down B-Fund costs in high cost areas by encouraging the deployment of alternative new technologies?
4. Is $85.00 per line as a subsidy cap a meaningful incentive for provisioning of alternate technologies like wireless and satellite in high cost fund areas? If not, are there alternative ways to achieve a similar result?
5. What steps should the Commission consider to reduce barriers to entry to encourage wireless providers to offer basic residential services in sparsely populated areas?
6. Should the Commission reconsider the definition of basic residential service and include enhanced services like broadband, etc? If so, should the ILECs be required to provide confidential data on their respective costs in providing such service?
7. Please provide any other proposals to reduce the size of the fund while still meeting the goals of the program in the face of market and regulatory changes.
96 To the extent questions identified for comment in the preceding text are not explicitly set forth below, parties are still expected to address those questions in their filed comments.
