[Federal Register Volume 62, Number 239 (Friday, December 12, 1997)]
[Proposed Rules]
[Pages 65389-65392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31117]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45 and 97-160; DA 97-2372]


Universal Service

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; guidance for design and submission of proposed 
models.

-----------------------------------------------------------------------

SUMMARY: The Common Carrier Bureau (Bureau) provided guidance to 
proponents of forward-looking cost models in the universal service 
proceeding on issues related to customer location and outside plant 
design. The Bureau provided this guidance to improve the models that 
the Commission will consider to select a mechanism for determining non-
rural carriers' forward-looking cost to provide the supported services. 
This guidance is intended to encourage model proponents to alter their 
models to conform them to the guidance provided in this Public Notice. 
Models conforming to the guidance provided in this Public Notice are 
more likely to be considered favorably in this proceeding.


[[Page 65390]]


DATES: Proponents of a model should file their submission on or before 
December 12, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, NW., 
Washington, DC 20052. See supplementary information for further 
instructions.

FOR FURTHER INFORMATION CONTACT: Chuck Keller, Common Carrier Bureau, 
Accounting and Audits Division, Universal Service Branch, (202) 418-
7400, or via E-mail to ``[email protected]''.

SUPPLEMENTARY INFORMATION:

    Released: November 13, 1997.

    In the Universal Service Order released May 8, 1997, the 
Commission, acting on the recommendation of the Federal-State Joint 
Board, concluded that non-rural carriers providing supported services 
to rural, insular, and high cost areas (collectively referred to as 
high cost areas) should receive universal service support based on the 
forward-looking cost of providing the supported services. (See Federal-
State Joint Board on Universal Service (Joint Board), CC Docket No. 96-
45, Report and Order, FCC 97-157 (62 FR 32862, June 1997) (Order)). The 
Commission determined that it could not select a mechanism for 
computing forward-looking costs because none of the mechanisms that had 
been submitted for consideration was sufficiently developed at that 
time. The Commission stated that it would continue to review two cost 
models, the Hatfield Model and the Benchmark Cost Proxy Model (the 
BCPM). The Commission stated that it would select a forward-looking 
economic cost mechanism with platform design features and input values 
by August 1998.
    In a Further Notice of Proposed Rulemaking in this proceeding 
(FNPRM), the Commission established a multi-step approach to refining 
and selecting a mechanism for determining a non-rural carrier's 
forward-looking economic cost of providing supported services to high 
cost areas. (See Federal-State Joint Board on Universal Service, 
Forward-Looking Mechanism for High Cost Support for Non-Rural LECLs, CC 
Docket Nos. 96-45 and 97-160, Further Notice of Proposed Rulemaking, 
FCC 97-256 (62 FR 42457, August 1997)(FNPRM)). The Commission specified 
that the Common Carrier Bureau (Bureau) would ``issue orders and public 
notices on a regular basis explaining its analysis of the model 
submissions and industry comments and to select particular design 
features.'' The Commission further stated its expectation that ``such 
guidance from the Bureau will provide the proponents with necessary 
direction to refine their models.''
    In meetings with proponents of the BCPM and the Hatfield model and 
other interested parties, the Bureau staff has encouraged the continued 
evolution and refinement of the models. This Public Notice offers 
guidance to proponents of models regarding the customer location and 
outside plant platform design issues raised in the FNPRM. In the Order, 
the Commission stated its ``anticipat[ion] that by the end of the year 
[it] will choose a specific model'' as the platform for a federal 
mechanism. In order to choose a ``specific model,'' however, the 
Commission must evaluate and compare completed versions of the models. 
The Bureau therefore requests that parties seeking consideration of 
their model as the platform for a federal mechanism submit their models 
within four weeks after the release of this Public Notice. Models that 
conform to the guidance in this Public Notice are likely to be 
considered more favorably in this proceeding.
    The Commission stated in the FNPRM that it may select a model 
submitted to the Commission by a proponent, or it may select a hybrid 
model incorporating the best features of proposed models and design 
components developed by the Commission staff or other parties. On 
October 31, 1997, staff members of the Common Carrier Bureau proposed 
an alternate approach to customer location and outside plant design 
issues in the form of a Hybrid Cost Proxy Model (HCPM). The HCPM is in 
many respects a hybrid of the BCPM and the Hatfield model, although it 
also contains features that differ from both the BCPM and the Hatfield 
model. The Bureau anticipates that the Commission will consider the 
HCPM as an alternative to the customer location and outside plant 
design modules in the BCPM and the Hatfield model. The Bureau observes, 
however, that the FNPRM leaves open the possibility that the Commission 
may consider other models or other components of models in selecting 
the best mechanism for determining non-rural carriers' forward looking 
cost for providing the supported services.

I. Customer Location

A. Geocode Data

    The FNPRM requested comment on the use of data that associate the 
location of each customer with latitudinal and longitudinal coordinates 
(geocode data) in a forward-looking economic cost mechanism. Many 
commenters agree that geocode data, which provide the actual geographic 
location of customers, are preferable to algorithms intended to 
estimate customer locations based on Census data or other information 
regarding the number of customers in a given geographic area. Because 
assumptions about the location of customers have a large impact on loop 
length calculations, the use of more accurate customer location data is 
consistent with the criterion specified in the Order that ``a model's 
average loop length should reflect the incumbent carrier's actual 
average loop length.'' Some commenters, however, question the 
feasibility of using geocode data in the federal mechanism because of 
the lack of reliable data in rural areas and the burden of developing 
such data. The Bureau recommends that models be capable of accepting 
and using geocode data to the extent that such data are available and 
reliable.

B. Wire Center Boundaries

    In their evaluation of previous versions of cost models submitted 
to the Commission, State members of the Joint Board have noted that 
inaccurately mapping customers to a wire center may result in 
inaccurate line counts and impede the determination of the most 
efficient engineering practices for serving that wire center. Through 
the model development process, the BCPM and the Hatfield model have 
been refined so that both models determine wire center boundaries 
based, at least in part, on a database provided by Business Location 
Research (BLR). The BCPM has improved the accuracy of the BLR data it 
uses by using wire center boundary data based on Census Blocks (CBs), 
rather than the larger Census Block Groups (CBGs). The Hatfield model 
also uses BLR data at the Census Block-level, although its proponents 
have stated that they intend to use the Census Block Group data in 
isolated instances where those data appear to be more accurate. This 
refinement decreases the discrepancies between the two industry-
proposed models. Consistent with the criterion specified in the Order 
that ``[w]ire center line counts should equal actual ILEC wire center 
line counts'' however, the Bureau recommends that models be capable of 
accepting wire center boundary data in standard Geographic Information 
System (GIS) format from any source that the Commission finds may 
estimate those boundaries more accurately.

[[Page 65391]]

II. Outside Plant Design

A. Documentation of Assumptions

    The Order requires that cost models employ the ``least-cost, most-
efficient and reasonable technology for providing the supported 
services that is currently being deployed,'' and that all engineering 
assumptions be reasonable. Furthermore, the Order also requires the 
models' algorithms, data, and assumptions to be open and verifiable. 
These criteria suggest that outside plant design should be considered 
both from an engineering perspective, to ensure that the network 
provides the type and quality of service specified in the Order, and 
from an economic perspective, to ensure that the network design 
minimizes cost and maximizes efficiency. Moreover, the requirement that 
assumptions be open and verifiable ensures that the Commission can 
confirm that the other criteria have been met. To the extent that 
models' algorithms do not explicitly explore different loop 
architectures in varying situations and select the least-cost 
alternative for that particular situation, the Bureau recommends that 
model proponents provide detailed documentation that explains and 
justifies any assumptions and engineering rules of thumb that their 
models employ. This documentation should demonstrate how these 
assumptions and rules of thumb meet the Order's requirement that a 
model employ the least-cost, most-efficient, and reasonable technology.
    One assumption for which model proponents should provide 
documentation is a model's algorithm for deploying digital loop carrier 
(DLC) devices. For example, the basic outside plant design structures 
presently employed in the BCPM and the Hatfield model involve running 
optical fiber feeder cables from the central office to a point within 
designated serving areas and serving the customers within each serving 
area with copper distribution cables from a DLC device within the 
serving area. Because DLC devices are expensive, costs per customer can 
be minimized by connecting larger numbers of customers to each device, 
subject to the DLC's capacity limitations and the limits on the length 
of the copper cable between the DLC and the customer premises. The BCPM 
and the Hatfield model currently determine which customers are located 
in a given serving area using either grids (BCPM) or clusters 
(Hatfield). Both approaches must account for the fact that, 
particularly in rural areas, some customers are located relatively far 
from other customers, and therefore are difficult to associate with any 
single serving area. Presently, the Hatfield model serves 
geographically isolated customers with the nearest DLC, while the BCPM 
will place a separate DLC in grids with only a small number of 
customers. The Bureau recommends that proponents of a model demonstrate 
how their approaches to deploying DLC devices employ the least-cost, 
most-efficient, and reasonable technology, as required by the 
Commission's Order.
    Another algorithm that is relevant to whether a model has employed 
the least-cost, most-efficient, and reasonable technology is a model's 
algorithm for feeder routes. Earlier versions of the BCPM and the 
Hatfield model extended four fiber feeder cables, at 90 degree angles 
from each other, from each central office in all cases. More recent 
iterations of these models have eliminated feeder cables to quadrants 
with no population and adjusted feeder route angles directing feeder 
cables to areas of population concentration. Although these approaches 
seem to represent improvements in the designs of these industry-
proposed models, the Bureau recommends that each proponent of a model 
demonstrate how their feeder routing algorithms meet the criterion of 
being the least-cost, most-efficient, and reasonable technology 
currently being deployed.
    In addition to the examples of DLC placement and feeder routing, 
the Bureau recommends that model proponents demonstrate how every 
aspect of their outside plant design approach is consistent with the 
least-cost criterion, while maintaining the network standards 
established in the Order.

B. Advanced Services

    The Commission specified in the Order that the loop design in a 
forward-looking mechanism ``should not impede the provision of advanced 
services.'' For example, the Commission determined that loading coils 
may impede advanced services such as high-speed data transmission and 
therefore disallowed their use in a model. The Bureau recommends that 
model proponents explain their assumptions about network configurations 
and capacity, and explain why such assumptions are reasonable and 
consistent with common configurations and capabilities of networks of 
non-rural carriers. For example, model proponents should demonstrate 
how their models permit standard customer premises equipment (CPE) 
available to consumers today, such as 28.8 kbps or 56 kbps modems, to 
perform at speeds at least as fast as the same CPE can perform on the 
typical existing network of a non-rural carrier.
    The Commission also concluded that the definition of supported 
services should ``advance with technology'' and will be re-examined in 
light of ``changes in technology, network capacity, consumer demand, 
and service deployment.'' The Bureau therefore recommends that models 
incorporate sufficient flexibility in their loop design algorithms so 
that the platform of the selected model does not have to be rebuilt in 
the event that the Commission revises the definition of universal 
service.

C. Wireless Threshold

    In the FNPRM, the Commission sought comment on whether a model 
should assume that, if the loop investment for a single customer 
exceeds a certain threshold, an efficient carrier would substitute 
wireless service for wireline service. The Commission's directive that 
a cost model use the ``least-cost, most-efficient, and reasonable 
technology'' suggests that a model should be able to use information 
about the costs of wireless service if the Commission concludes that 
such data are available and reliable. Because the Commission also 
determined that support calculations should be based on a geographic 
area that is the size of a wire center or smaller, and the geographic 
area for estimating costs may not be larger than the support area, the 
Bureau recommends that models be capable of accommodating as inputs 
wireless cost thresholds at the level of the wire center or a smaller 
geographic unit.

D. Fiber-Copper Cross-Over Point

    The fiber-copper cross-over point determines where the network will 
employ optical fiber cable rather than copper cable in its feeder 
plant. The Commission specified in the Order that a model ``must 
include the capability to examine and modify the critical assumptions 
and engineering principles * * * includ[ing] * * * fiber-copper cross-
over points.'' While the BCPM assumes that the maximum copper loop 
length may be 12,000 feet and the Hatfield model assumes that the 
maximum copper loop length may be 18,000 feet, the Commission noted in 
the FNPRM that neither proponent has documented that its assumption is 
the least-cost alternative. In order for the Commission to better 
understand the cost differences associated with each of these 
assumptions, the Bureau recommends that proponents of models provide 
comparative outputs for each of the following five states, using both 
the

[[Page 65392]]

12,000 foot standard and the 18,000 foot standard: Florida, Georgia, 
Maryland, Missouri, and Montana.

E. Proprietary or Confidential Information

    In light of the Commission's requirement in the Order that ``all 
underlying data, formulae, computations, and software associated with 
the model must be available to interested parties for review and 
comment,'' the Bureau recommends that each model proponent submit 
detailed descriptions of all information or software alleged to be 
confidential, proprietary, or otherwise unavailable to the public that 
is used either in the model or in a preprocessing module. The 
descriptions should include estimates of the costs and procedures that 
may be associated with making the information or software available to 
the Commission and to the administrator of the universal service 
support mechanisms.

III. Follow-Up Requirements

    The Commission established criteria for its forward-looking 
economic cost mechanism in the Order. The Bureau recommends that model 
proponents ensure that their modules for determining the location of 
customers and estimating outside plant investment comply with all of 
the criteria set out in the Order, in addition to the recommendations 
in this Public Notice.
    The Bureau recognizes that proponents of models may need to make 
certain changes to their models to bring them into conformity with the 
guidance provided in this public notice. Within four weeks from the 
release date of this public notice, any proponents of models should 
submit their models for consideration by the Commission. To facilitate 
that process and the Commission's review, models should be accompanied 
by a cover letter providing: (1) A list of the items discussed above 
with which their model already is in conformity and a description of 
how their model is in conformity with those items, and; (2) a listing 
of the items with which their model is not yet in conformity. The 
Bureau anticipates that the models submitted at that time will be 
evaluated by the Commission in selecting the platform for the federal 
mechanism.

IV. Procedural Matters

    Within four weeks of the release date of this Public Notice, 
proponents of a model should file an original and three (3) copies of 
their submission, referencing CC Dockets Nos. 96-45 and 97-160, with 
the Office of the Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Room 222, Washington, DC 20554. Proponents should also 
provide four (4) copies of their submission to Chuck Keller of the 
Universal Service Branch, 2100 M Street, N.W., Room 8918, Washington, 
D.C. 20554.

Federal Communications Commission.
Timothy A. Peterson,
Deputy Division Chief, Common Carrier Bureau.
[FR Doc. 97-31117 Filed 12-11-97; 8:45 am]
BILLING CODE 6712-01-P