NTCA Proposes Alternative Cost Calculation for Broadband Build-out

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By Brandon Ross

Oct. 10 — NTCA-The Rural Broadband Association proposed to the FCC an alternative calculation of costs-to-compensation that would mitigate the financial blow to companies that build-out broadband services to higher-cost communities as the commission seeks to make compensation available to as many companies as possible.

In a filing made public Oct. 10, NTCA, an association that represents rural broadband providers, said it met with Federal Communications Commission staff for commissioners Jessica Rosenworcel and Michael O'Rielly to discuss ways to limit the reduction in the amount of money relatively higher cost companies that build out broadband networks for higher-cost areas (like rural communities) would receive if proposed FCC changes were adopted.

In a recent further notice of proposed rulemaking, the FCC proposed a “near-term” adjustment to HCLS (High Cost Loop Support) distributions that would “freeze” the National Average Cost Per Loop, the Oct. 9 NTCA filing said.

The FCC had proposed to reduce the amount of money higher-cost companies would receive, so the commission could afford to freeze the average cost-per-loop, effectively keeping the minimum qualifying level a company would need to spend per-entity-reached the same. The minimum qualifying amount spent was rising steadily over the years, edging out more and more broadband providers from compensation over time.

“NTCA proposed an alternative to this calculation that, while still achieving the Commission's desired effect of spreading reductions in support proportionally among all carriers and addressing concerns about carriers "falling off the cliff" in terms of HCLS receipts, would also mitigate the harms to relatively higher-cost companies associated with potentially substantial losses.”

By the Numbers

The NTCA filing shows a chart that demonstrates examples of the cost and compensation broadband providers receive now, under current rules; what they would receive under the FCC's proposed rules; and what they would receive under the proposed calculations by NTCA.

Under the FCC's proposed rules, a provider with relatively low cost could see more than a massive 12-times increase to their compensation from roughly $16,100 (currently) to roughly $209,500, whereas a relatively high-cost provider would see their compensation reduced from roughly $1,122,560 (currently) to roughly $1,060,000, according to the chart in NTCA's filing.

“We think that our proposal strikes the right balance between high-cost companies of all kinds,” Michael Romano, senior vice president of policy for NTCA told Bloomberg BNA Oct. 10.

Under NTCA's proposed calculations, lower cost providers would still see an increase to their compensation from roughly $16,100 to roughly $100,000, but relatively high-cost providers wouldn't see their compensation reduced nearly as drastically, going from roughly $1,122,560 to roughly $1,090,000, according the chart.

To contact the reporter on this story: Brandon Ross in Washington at bross@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

The filing by NTCA is available here: http://op.bna.com/der.nsf/r?Open=tbay-9prsgq.