EATEL “Shocked” to Find Support Reduced 2,360% More than in First QRA Model
Now that rural telecommunications providers have had a little more than a week to grapple with the impacts of the FCC’s “new and improved” quantile regression analysis model (QRA 2.0), it’s time for someone to take the plunge and file an ex parte letter questioning the results of the new model. Southern Louisiana’s East Ascension Telephone Company (EATEL) is that company: EATEL found something shocking when it analyzed the impact of QRA 2.0 on its high-cost support levels. According to EATEL’s letter, “In the previous version of QRA, EATEL recognized that its annualized federal USF appeared to be reduced by $540,968…In the new version of QRA, EATEL’s management was shocked to discover that the company would be impacted inexplicably and disproportionately through an annualized federal USF reduction of $12,766,889.”
EATEL continues, “The magnitude of the change, especially in light of EATEL’s efficient operations, is difficult to understand. Based on the new QRA, EATEL’s annualized federal USF receipts will be reduced by a figure that is 2,360% higher than was computed under the previous QRA.” EATEL cannot figure out why its support is plummeting by 2,360%, and the company asks the FCC to explain. As the amount of clipped support for all companies equals about $65m, EATEL is naturally perplexed about why it is seemingly responsible for 19.6% of the total fund-wide support reduction. EATEL believes the reduction “is so dramatic that there must be some mistake in either the underlying data or the functionality of the new QRA, especially in light of EATEL’s diligence in providing efficient services.” EATEL therefore requests the FCC share detailed information about the study area boundary maps, the number of road miles and crossings, census blocks, soil data, and other data used in the QRA 2.0 independent variables.
EATEL, a 27,000-line family-owned company, recently completed its purchase of BV Investment Partners’ Vision Communications in one of the very few RLEC deals of late. In its letter, EATEL explains that it “has worked conscientiously for many years to provide efficient and effective advanced telecommunications solutions to a region still recovering from the effects of Hurricane Katrina, Hurricane Gustav and the problems resulting from the British Petroleum oil still in the Gulf of Mexico.” EATEL is actively expanding broadband service in its own service territory and its newly-acquired Vision territory.
Perhaps the FCC made a mistake in QRA 2.0 with regards to EATEL; it will be interesting to find out for sure. In the Benchmarks Order released last week (which contains the new QRA model), the FCC said it would be accommodating for RLECs who believe study area boundaries used in the model are incorrect, and that RLECs can file special waivers to get the information corrected. It appears as though EATEL could be on its way to filing a waiver, but first needs some basic guidance and explanations from the FCC. EATEL notes that it “respects the FCC’s efforts to be responsive to certain problems in the previous version of the QRA model and methodology,” but the shocking results of QRA 2.0 warrant a logical explanation as soon as possible.
In the coming weeks, we should see more companies coming forward with their concerns about QRA 2.0.