SUMMARY OF MAJOR
ETI RUNS OF THE BCM

Summary of Major ETI Runs of the BCM

1(a) We changed the per-line switch cost to $167. Other than setting the common processor costs at zero this run involved no changes to the BCM's assumptions, and thus the results isolate the effect of reducing the BCM's overstated switch costs.

1(b) As a sensitivity analysis, we revised the switch cost data to reflect an effective cost of $134 per line.

2(a) We changed the fill factor for the feeder and distribution plant to 95% for all household densities, and changed the structure multipliers by a relatively high amount.

2(b) We changed the fill factor for the feeder and distribution plant to 95% for all household densities, and changed the structure multipliers by a moderate amount.

2(c) We changed the fill factor for the feeder and distribution plant to 95% for all household densities, and used the BCM's default structure multipliers.

3. We conducted a sensitivity analysis of the digital loop equipment costs. Specifically, we reduced the SLC cost to $250, the SLC discount to 40%, the AFC cost to $500, and the AFC discount to 25%. For this run, we used the BCM's default fill factor of 80% for the SLC and AFC. We made no other changes to the BCM.

4. We analyzed the effects of implementing the following corrections simultaneously:

* Per-line switch cost of $167.

* Fill factor of 95% for the distribution and feeder plant in all density zones.

* Moderate adjustment to the BCM's structure multiplier to reflect effect of increasing the fill factor to 95%.

* BCM default costs for the SLC and AFC.

* Fill factor of 95% for the SLC and AFC.

* BCM's default crossover of 12,000 feet for fiber.

5. This run includes all of the changes identified for Run No. 5 and an adjustment for the subscribership level. We divided the average cost per line by 0.960 (the subscribership rate in Washington) to reflect the fact that universal service objectives require the accessibility by all households to affordable basic local exchange service, but not all households subscribe (i.e., those that do not subscribe to service necessarily are not making any payment for telephone service, yet the network is configured to be ready to serve them).

Runs No. 5 and No. 6 represent "partially corrected" results because they do not adjust for many of the flaws in the model. See Chapter 10.

6. This analysis entails two runs that analyze the implications of increasing the household count to reflect the presence of businesses. As is discussed in more detail in Chapter 6, the low fill factors that are incorporated in the BCM likely reflect the volatility associated with providing telecommunications services other than first line, basic residence local exchange service, e.g., business lines and additional residence lines. However, although the BCM reflects the volatility of business lines, among other things, through the Joint Sponsor's assumption of low fill factors, the business lines themselves are not reflected in the BCM. Thus the BCM is internally inconsistent. We tested the implications of leaving the BCM's low fill factors intact, but increasing the lines served in the model by a gross-up factor of 1.44[1] in order to make the BCM more consistent internally.

6(a) High volatility, low fill: Specifically, for each CBG we multiplied the number of households served by 1.44 before the model "sizes" the outside plant. In this sensitivity analysis we used the switch cost of $134, and the BCM's default fill factors, and made no other changes to the model.

6(b) Low volatility, high fill: We compared the results of the previous "high volatility, low fill" run with the "low-volatility" assumptions, i.e., 95% fill, the highest of the adjustments to the structure costs, and a switch cost of $134.

[1]This figure of 1.44 is the ratio of all lines in the state of Washington to the number of households in the state of Washington. The number of residential lines is 2,062,385. FCC Statistics of Common Carriers, 1994-1995, Table 2.5. The number of households with second lines is 7.2%. **cite. The subscribership rate in Washington State is 96%. **cite. Therefore, using these same data yields a computed number of households of 2,004,028 (i.e., [2,062,385 divided by 1.072] divided by 0.96). The total number of lines (including second lines, business lines, and public access lines is 2,881,344. Statistics of Common Carriers, 1994-1995, Table 2.5. Thus, the ratio of the total number of lines to the number of households is 1.44.