USF Reform Big Topic At TTA Annual Meeting

Posted: July 1, 2016

Universal Service reform in Tennessee has created a few winners, several losers and a whole lot of question marks, according to Manny Staurulakis of JSI.

“It’s going to be really difficult for companies to decide whether A-Cam (new support in the reform) or Legacy support will benefit them,” he said during his session at TTA’s annual meeting in June. “More companies are hurt by A-Cam, but some are helped quite a bit.”

Overall, in Tennessee, JSI believes 7 of the 18 ILEC TTA members would be “winners” with a total of $4 million in new support. Eleven of the 18 members would be losers under the new support with $28 million of support lost.

The good news is that telcos will be able to decide whether to try the new support model or keep the old one. Due to the projects, Staurulakis believes most companies will stay on the existing support model.

Two major factors in determining the so-called winners and losers are the buildout requirements laid out in the new A-Cam model and the differences between the way A-Cam and Legacy support mechanisms prohibit support in census blocks where competitors are present. The current system does not require additional network expansion or improvements for support, whereas the A-Cam model requires more buildout.

Also, under A-Cam, one location served by an unsubsidized competitor is enough to make the entire census block ineligible for USF support. Under the Legacy rules, the block is only ineligible if the unsubsidized competitor offers service to 85 percent of residential locations.

A company will have to look closely at its buildout plans and where its competitors are in order to determine which form of support to choose.

Unfortunately for many telcos, both JSI and NTCA have said the reform does very little to support selling broadband without phone service as many had hoped.

As a whole, states in the Southeast tended to take a hit in support under the new model,  while midwestern states fared much better, Staurulakis said. No one has yet to determine the intricacies of the model enough to know why some states fared significantly better than others, he added.