2 Comments of BellSouth Corporation and BellSouth Telecommunications (filed April 12, 1996) ("BellSouth Comments") at 8; Comments of Southwestern Bell Telephone Company (filed April 12, 1996) ("SWBT Comments") at 4.
3 MCI Comments at 6.
4 Comments of Bell Atlantic (filed April 12, 1996) ("Bell Atlantic Comments") at 2-3.
5 Comments of United States Telephone Association (filed April 12, 1996) ("USTA Comments") at 13.
6 AT&T has proposed that, if mandatory rate averaging and integration require interexchange carriers ("IXCs") to provide interexchange services below cost to low-income consumers or in high-cost areas, then IXCs should be permitted to recover from the new Universal Service Fund ("NUSF") the difference between the price and the cost of such services. Given the elements that contribute to the cost of providing interexchange service, it is unlikely that a carrier would be required to provide service below cost, and even if it were, presumably the process of rate averaging would build in compensation for services provided below cost. Comments of AT&T (filed April 12, 1996) ("AT&T Comments") at 12 n.15.
7 MCI Comments at 4, n.4.
8 Comments of Ad Hoc Telecommunications Users Committee (filed April 12, 1996) ("Ad Hoc Comments") at 17-20.
9 The Joint Sponsors are NYNEX, US West, MCI, and Sprint.
10 See MCI Comments at 4. The Committee does not express an opinion on the optimal size of a "cost zone," but a LEC wire center furnishes a convenient unit of measurement that is not too large.
11 See MCI Comments at 12.
12 Interconnection between Local Exchange Carriers and Commercial Mobile Service Providers; Equal Access and Interconnection Obligations Pertaining to Commercial Mobile Radio Service Providers, CC Dkt. No. 95-185, FCC 95-505 (released Jan. 11, 1996) at [[paragraph]] 47. The Committee assumes that the Commission intended in the quoted passage to refer to "TSLRIC" rather than "LRIC." In the past, the Commission has used "LRIC" and "TSLRIC" interchangeably. Indeed, in Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Dkt. No. 96-98 (released April 19, 1996), the Commission asked commenters to define LRIC and TSLRIC, and it asked, "In what respects, if at all, does a TSLRIC analysis differ from a LRIC analysis?" Id. at [[paragraph]] 126. In the instant proceeding, the Committee urges the Commission to adopt a TSLRIC-based approach, not a methodology based on LRIC.
13 Such harm to competition could be exacerbated to the extent that the universal service support mechanism causes access charges to be set at levels that exceed access providers' long-run incremental costs of providing access; the margin would give access providers competitive advantages over competing local exchange carriers, which would not receive access charge subsidies, and interexchange carriers seeking to compete in the local market, as to which the incumbent LEC/access providers could effectuate a classic price squeeze. As the Commission recognized in Amendment of Part 36 of the Commission's Rules and Establishment of A Joint Board, 9 FCC Rcd 7404, 7412, [[paragraph]] 16 (1994), subsidy mechanisms based on access charge "could significantly affect the development and viability of competition in local telecommunications services" because they "may serve as barriers to entry by competing service providers."
14 Rulemaking on the Commission's Own Motion into Universal Service and to Comply with the Mandates of Assembly Bill 3643, (R.95-01-020) (filed Jan. 24, 1995); Investigation on the Commission's Own Motion into Universal Service and to Comply with the mandates of Assembly Bill 3643 (filed Jan. 24, 1995) (Appendix B to Comments of Pacific Telesis Group (filed April 12, 1996) at 75-76.
15 NCTA Comments at Attachment A (Susan M. Baldwin & Lee L. Selwyn, "The Cost of Universal Service: A Critical Assessment of the Benchmark Cost Model," (Economics and Technology, Inc., April, 1996)) (the "BCM Study").
16 Kenneth Gordon and William E. Taylor, "Comments on Universal Service," (National Economic Research Associates, April 12, 1996) (Attachment to BellSouth Comments (filed April 12, 1996)).
17 It is highly likely that, in general, the incumbent LECs will be net recipients of universal service funding, and new entrants will be net contributors to the fund.
18 This may not be an unrealistic assumption. In California, Pacific Bell is claiming an entitlement to funding at a level that would require a "Net Trans" "tax" of about 17%.
19 Gordon and Taylor appear to be indifferent as to whether the support level is reduced or the market price is allowed to remain below the affordability level. This indifference is consistent with their decision to ignore the source of the support, Clearly, market distortions are minimized if universal service funding is minimized, and it is not "equivalent" to have a $12 price with a $0 support level and a $15 price with a $7 support level.
20 E.g., BellSouth Comments at 8; SWBT Comments at 4.
21 SWBT Comments at 5 (footnotes omitted).
22 E.g., SWBT Comments at 5-6; AT&T Comments at 16 & note 20.
23 BellSouth Comments at 11 & nn. 16-17.
24 Comments of the National Association of Regulatory Utility Commissioners ("NARUC") (filed April 12, 1996) at 17 ("From an economic perspective, what is important is the flat structure of the charge" imposed to recover non-traffic-sensitive costs).
25 NARUC Comments at 17.