FCC ponders FTTN versus FTTH for Link America Fund

The CAF is a large part of the FCC’s effort to revamp the Universal Service Fund and intercarrier compensation system to promote broadband deployment in unserved areas of the United States and maintain voice and broadband services in high-cost areas that might otherwise be abandoned by carriers. The FCC has allotted $1.8 billion annually for a period of five years to meet its CAF goals, via “a combination of a forward-looking cost model and competitive bidding,” in the words of the FCC’s Report and Order on the subject. The cost model will help the Commission estimate how much support would be needed to serve areas where costs are above a specified benchmark, but below a second “extremely high-cost” benchmark.

The FCC now is looking for comments on the development of that cost model. The comments are due July 9, 2012, with replies due July 23.

Areas for which the FCC would like comments include:

• Whether the model should assume a greenfield or brownfield build.
• Should it assume an FTTH approach or one based on DSL, including, potentially FTTN?
• What terminal value should be assigned to the modeled network – book value, economic value, or zero value?
• Whether the model should estimate the total costs of serving the entire service area so that shared costs may be distributed between areas that are eligible and ineligible for support or estimate only the standalone costs of areas eligible for support.
• How shared network costs should be distributed to the census-block (or smaller) area.
• Should the model calculate support for areas to which broadband has already been deployed or only for unserved areas?
• The benchmarks to be used to identify areas with costs that are too low or too high (and therefore subject to support under the Remote Areas Fund) to receive CAF Phase II support.

In addition, the FCC also seeks comments on data sources relating to geography and carrier plant, as well as on models submitted by the ABC Coalition (based on DSL and covering the entire nation via greenfield builds) and Alaska Communications Systems Group (which focuses strictly on Alaska).

The FCC emphasizes that the FTTH vs. DSL/FTTN decision for the cost model will not drive which architectures it will support with CAF II funds. Carriers receiving such funds can spend it on any architecture that meets the CAF II service goals, the Commission states. But it would seem that how well any funding matches buildout requirements will depend at least in part on whether the model is based on the carrier’s preferred architecture.