At 2/13/2011 12:39 PM, you wrote: >I live in one of these rural coop areas. I bet the rates here are much lower >than the people in the city pay. The last home telephone I had(2008) ran me >around $24/mth including all taxes, etc... with no long distance. The telco >workers make twice to three times the hourly prevailing wage in this area, >but on par with what a telco worker would make in say New Jersey. I think >something is flawed in this? They are supposed to be non-profit and they >making so much money, instead of giving it back to the coop members, they >just give everyone raises and bonuses. I would like to know just how much >they get in USF in my area.
Who's your telco, where? The USF numbers are public and I have downloaded some fairly recent ones. Coops sometimes do give back their excess revenues to members; this essentially reduces the net price to something much less than urban customers pay for their own service... in effect they're also paying for the coop's service. >"> Oh, voice? Well, the real scandal of USF is that the ILEC-ETC is > > allowed to do practically anything so long as it's useful for > > voice. They can build Fiber to the Ranch, for $20,000+/home (CapEx) > > or more, or $1000/month per sub (though they propose making it harder > > to get >$250/line/mo), if it also delivers voice, *even if* they > > already have copper to the ranch *and* an unlicensed WISP. Check out > > Border to Border in Texas. So USF does fund broadband; it just does > > it indirectly, by letting them build a broadband-ready network with > > subsidy money. The ISP they run across it is then "incidental", not > > *directly* subsidized, but if the wire or fiber is already there, how > > much does more it cost to drop on broadband Internet? Thanks to this > > policy, many rural ILECs have better broadband coverage than > > unsubsidized Bells." > >This is the one that really gets under my skin. I compete against it every >day and they get BIP/BTOP funding in addition. I think they need to FORCE >every company getting funding from the government or USF to either separate >their ISP/telco activities and resell to any ISP at the same rate as their >ISP, or be FORCED to open their network for other ISP's to use at a >competitive rate. I guess you could say I would like to see it got back to >the Computer Inquiries. I sure agree on that! But then I think the Computer Inquiries should apply to all ILECs, permanently. >Nice explanation Fred. Thanks. >Scottie > >----- Original Message ----- >From: "Fred Goldstein" <fgoldst...@ionary.com> >To: "WISPA General List" <wireless@wispa.org> >Sent: Saturday, February 12, 2011 12:48 PM >Subject: [WISPA] A quick primer on USF > > > > First off, this last thread's title was offensive, so I changed > > it. The current Administration is not doing much that previous ones > > didn't do, and that's the problem. The FCC sees the spectrum as a > > source of revenue (auctions), and Congress sees the FCC as a source > > of subsidy money to rural states. > > > > USF exists because the Telecom Act requires it. USF replaced an even > > uglier system wherein rural telcos charged really really high > > switched access per minute rates to LD carriers at either end of the > > call. VoIP would have killed that anyway... so now there are > > explicit cash subsidies. > > > > Let's set aside the smaller parts of USF (Schools & Libraries, Rural > > Health Care, and Low Income) and focus on the one on the table now, > > High Cost Support. This is the one that gets the bulk of the tax > > money anyway. The statutory requirement is that rural telephone > > rates be comparable (not identical) to urban ones. So if it really > > costs $100/month to provide telephone service in East Overshoe, then > > the East Overshoe Telephone Cooperative is entitled to USF to let > > them hold down the rate. > > > > But it's a lot more complicated than that. Cost is averaged across a > > "study area", which is in general the operating territory of one > > (historic, pre-merger) telephone company in one state. So South > > Central Bell- Mississippi is one study area, and South Central Bell- > > Tennessee is another. Verizon has at least two study areas in > > California, though, one ex-Contel and one ex-GTE. CenturyTel has a > > heap of them all over the place, as does TDS. > > > > The point of averaging across a study area is that low-cost urban > > areas cross-subsidize high-cost rural ones. So Qwest in Omaha is > > supposed to subsidize Qwest in the rural parts of Nebraska. Thus the > > big recipients are the small telephone companies who do not have > > urban areas. That would be bad enough, but a small telephone company > > typically has a separate corporate structure, including IT, CS, etc., > > which supports very few subscribers. So the OpEx per subscriber can > > be really high too, because small telcos are inefficient. If TDS or > > CenturyTel buys them, they often keep the study areas separate... > > cost goes down but the money still flows! (The pending NPRM does > > however at least open the issue of merging study areas.) And the > > Bells, especially Qwest/USWest, have sold off a lot of rural > > areas. So they have lowered their average cost. This doesn't lower > > their rate, though, because they don't get USF anyway, and they are > > on price caps, not rate of return, so they keep their rates and raise > > their margins. The rural chains that buy the rural turf eventually > > (this takes a couple of years, though again the pending NPRM may > > reduce this interval, which the FCC cutely calls "The Parent Trap") > > get new subsidy flows for them. So we're screwed both ways. > > > > When TA96 passed, the FCC at the time was pro-competition (Hundt, > > Kennard) and they wanted to make USF pro-competition too. So they > > created the "Equal Support Rule". This is a tiny bit like Jeremie's > > suggested voucher system. A USF-eligible carrier is called an ETC > > (eligible telecommunications carrier). A Competitive ETC (CETC) could > > move into an area whose ILEC got USF. The CETC would then get the > > same amount *per line* as the ILEC-ETC. So if East Overshoe > > Telephone got $80/month/line, then Northern Wireless could get > > $80/month/line for selling a fixed-wireless telephone line (using > > their cellular network and a POTS-phone adapter). Northern Wireless > > (I made that name up but it alludes to a once-huge CETC) would not > > need to show its own costs, as competitors don't fit the ILEC accounting > > model. > > > > Now you'd think that this was a great idea, like a voucher, but it > > had a big problem. The ILEC-ETC is usually under Rate of Return > > regulation. So their profit margin is fixed. Most of their costs > > are fixed too. So if the CETC takes lines away, the ILEC-ETC is > > still entitled to keep the subsidy level needed to maintain their > > rate of return and the same low prices. So they keep their subsidy, > > and USF ends up paying twice! This is the FCC's justification for > > wanting to do away with competitive ETCs entirely -- they could have > > simply removed Equal Support, but they're killing CETC in toto, > > regardless of what the law actually says. A few years ago, they > > capped CETC support. If a new CETC comes into an area, their subsidy > > comes out of other CETCs, no longer equal support. The total is > > supposed to phase down to 0 over five years. > > > > BTW the biggest CETCs were cellular carriers, including Sprint, AT&T > > Mobility and its predecessors, and some Verizon Wireless > > acquisitions. VZ and I think Sprint agreed to phase out their CETC > > support as merger conditions. CLECs got a rather small share of the > > pie. WISPS need not apply, since they're not carriers, and the > > support was technically for voice. > > > > Oh, voice? Well, the real scandal of USF is that the ILEC-ETC is > > allowed to do practically anything so long as it's useful for > > voice. They can build Fiber to the Ranch, for $20,000+/home (CapEx) > > or more, or $1000/month per sub (though they propose making it harder > > to get >$250/line/mo), if it also delivers voice, *even if* they > > already have copper to the ranch *and* an unlicensed WISP. Check out > > Border to Border in Texas. So USF does fund broadband; it just does > > it indirectly, by letting them build a broadband-ready network with > > subsidy money. The ISP they run across it is then "incidental", not > > *directly* subsidized, but if the wire or fiber is already there, how > > much does more it cost to drop on broadband Internet? Thanks to this > > policy, many rural ILECs have better broadband coverage than > > unsubsidized Bells. > > > > We pay for this. USF is funded by a tax on "interstate > > telecommunications". That includes long distance calls, circuits, and > > interconnected VoIP (assumed 64.9% interstate, IIRC, but I'm typing > > this off-line on my laptop in a rural location -- I haven't paid VZW > > for tethering and for some reason it no longer works on my cell phone > > ;-] ). This is technically a "fee" rather than "tax" because it > > doesn't go to the Treasury's General Fund, but it is enforced like a > > tax (big fines if you don't pay). It goes to USAC, who runs > > USF. It's a self-adjusting tax. Every quarter, they compute a new > > rate, and it takes effect automatically. It started out around 3% > > and is now around 15.5%. > > > > The FCC's new set of proposals has a couple of major impacts. It > > continues the phase-out of CETC support. It also creates a new fund, > > "Connect America", which explicitly covers "broadband", as if that > > were a noun. (Broadband what? It's an adjective.) This will be > > distibuted by reverse auction; the ETC who asks the least to serve a > > given area gets the exclusive support. If may be the ILEC. Whether > > or not it's the ILEC, the ILEC-ETC *continues* to get their current > > support. Connect America is incremental. So the ILECs can get even more. > > > > BTW there's a separate pending proposal to create a new USF to fund > > mobile wireless -- licensed CMRS, not WISP. This may be related to > > the recently announced 98% goal, though it seem to me that Verizon > > had planned that for its LTE network anyway! BTW the Frontline > > Wireless plan that almost happened in 2007 was required to have 99.3% > > population coverage, though (speaking as one of their network > > designers) that was sort of optimistic, and a sane proposal (that > > might have happened) would have needed a lower number. > > > > -- > > Fred Goldstein k1io fgoldstein "at" ionary.com > > ionary Consulting http://www.ionary.com/ > > +1 617 795 2701 > > > > > > > > > -------------------------------------------------------------------------------- > > WISPA Wants You! Join today! > > http://signup.wispa.org/ > > > -------------------------------------------------------------------------------- > > > > WISPA Wireless List: wireless@wispa.org > > > > Subscribe/Unsubscribe: > > http://lists.wispa.org/mailman/listinfo/wireless > > > > Archives: http://lists.wispa.org/pipermail/wireless/ > > > >-------------------------------------------------------------------------------- >WISPA Wants You! Join today! >http://signup.wispa.org/ >-------------------------------------------------------------------------------- > >WISPA Wireless List: wireless@wispa.org > >Subscribe/Unsubscribe: >http://lists.wispa.org/mailman/listinfo/wireless > >Archives: http://lists.wispa.org/pipermail/wireless/ -- Fred Goldstein k1io fgoldstein "at" ionary.com ionary Consulting http://www.ionary.com/ +1 617 795 2701 -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
