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NECA files 2017 average schedule formula changes

By Shan Lin, Senior Manager – Average Schedule Development

On December 22, NECA filed the 2017 Modification of Average Schedules. These formulas are reviewed by the FCC and will become effective July 2017 subject to an FCC Order expected in June 2017. **

Proposed formula changes for July 2017

The 2017 proposed formula changes would increase overall settlement rates by about 0.74 percent at constant demand. With average projected change in demand, the overall settlement change is a decrease of about 1.3 percent. The effects of the formula changes on individual companies will vary, depending on company demand trends and characteristics. 

Breaking down the changes by category, there are: 

  • increases in the common line formula, attributable to a positive growth in cable & wire investment and an increased account allocation to common line category; and 

  • decreases in special access DSL (voice-data) and Non-DSL formulas, attributable to a negative growth in central office equipment investment and a decreased allocation to special access. 

Descriptions of the formulas, an updated settlement analysis work paper and a forecasting tool to analyze the effect of demand changes in conjunction with the formula changes are available on the  Average Schedule Support page of our website, under Worksheets, Tools and Forms. The forecasting tool allows companies to compare the settlement effects of existing and proposed formulas and also contains some additional forecasting features for future years. 

Approved interim modifications for first half 2017

On November 30, we filed interim modifications to the 2016 average schedule formulas to reflect the FCC's new limit on operating expenses and the Connect America Fund Broadband Loop Support  mechanism to recover broadband-only loop costs pursuant to the March 30, 2016 Rate-of-Return Reform Order. These formulas have been approved by the FCC and are effective from January 1, 2017, through June 30, 2017.

The interim modifications filing introduced a consumer broadband-only loop settlement formula necessary to accomplish the shift of data-only loop revenue requirement from the special access category to the CBOL category. The new CBOL settlement formula consists of the previous data-only line cost increment formula and the data-only component of the current DSL basic formula net of second mile transport costs. This formula is also adjusted down by a factor reflecting the limits on corporate operations expenses and operating expenses.

This filing also introduced a broadband-only second mile formula to compensate for the cost of second mile transport associated with the provision of broadband-only lines, which belongs in special access.  

The overall effect on average schedule settlements from the interim formula changes was minimal, less than a 0.01 percent increase.

Average schedule high cost loop universal service formula approved

In addition to the settlement formula filing each December, we file modifications to the average schedule universal service formula every August. On November 9, the FCC approved the universal service high cost loop support formula modifications we filed on August 25, 2016. The new formulas became effective on January 1, 2017, and will remain in effect through December 31, 2017. We notified members of this new formula and its effects last August. For further analysis, worksheets containing the new universal service formulas can be found on the  Average Schedule Support page of our website, under Worksheets, Tools and Forms.

 

**As required by the FCC's Part 69 rules, NECA develops average schedule formulas designed to simulate the disbursements received by cost companies with characteristics similar to the average schedule population. Each December we file modifications of average schedules. Assuming FCC approval, formula modifications become effective on July 1 and reflect changes in company cost characteristics, demand, FCC rules, network technology and related operations. 

Filed under January 2017, Tagged with Average schedules


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