Rural ILECS used to have an 11.25% rate of return on the undepreciated value of telephone plant in service (TPIS) plus they were also allowed to recover most of their expenses. So you add your ROR with your allowable expenses to generate your “revenue requirement”.
Revenue shortfalls (if you did not hit your revenue require from customer revenue) are made up from two funds that are generated by users. USAC (USF revenue adjustment fee) NECA (inter exchange carrier access fees). The USF was created when the bell system was broken up and long distance rates took a nose dive. It was created to replace the long distance revenue that was lost when competitors were allowed to compete for long distance. Arguably, where you used to charge 20 cents per minute to call the next town over, now you charge 5 cents and get some USF to replace the lost revenue. So, that said, no tax dollars were ever used and are not used. It is all fees generated by users of the PSTN. Don’t want to contribute, don’t use the PSTN. Use ham radio or unregulated ISPs or smoke signals. But if you use the PSTN you also have to contribute to Universal Service. Meaning telephone (now broadband) to every last sage brush and hunting cabin in the nation. It was a doctrine adopted by the US Government many years ago. One of the few examples of socialism working. Used to be the revenue requirement came largely from the access fees that the LD carriers paid to use the ILECs last miles. But they all got hyper competitive and stopped time and distance charges in favor of geographic rate averaging. Then they all started doing flat rate LD like 15 cents per minute anywhere in the nation. Then they all started doing all you can eat plans. That killed a wonderful arbitrage opportunity we had for a number of years in the rural areas. The FCC has killed a bunch of the allowable recovery GL accounts and they have the ROR percentage declining every year for the next few years. Still profitable but not nearly the good deal of times past. From: Lewis Bergman Sent: Saturday, August 18, 2018 11:07 AM To: AnimalFarm Microwave Users Group Subject: Re: [AFMUG] More muni network woes I don't get it. If it wasn't customer revenue, where did the guaranteed rate of return come from? Tax dollars? On Sat, Aug 18, 2018, 11:04 AM <[email protected]> wrote: $66M 1200 miles of fiber $55K/mile 2500 customers $26.4K/subscriber I wish I was the contractor. This was a RUS financed deal. I actually spent more on an RUS financed deal once. Only 20 subscribers were involved but my spend was more almost 10 times this amount (per subscriber). But that was a regulated rate of return, so we were guaranteed to make money. This Lake Connections deal was not rate of return. So the customer revenue has to carry the debt. From: Lewis Bergman Sent: Saturday, August 18, 2018 7:00 AM To: AnimalFarm Microwave Users Group Subject: [AFMUG] More muni network woes https://insidetowers.com/cell-tower-news-taxpayers-hook-25m-broadband-network/?utm_source=Inside+Towers+List&utm_campaign=659341a69f-EMAIL_CAMPAIGN_2018_08_09_02_57&utm_medium=email&utm_term=0_af16c4fc22-659341a69f-91496749 ------------------------------------------------------------------------------ -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com -------------------------------------------------------------------------------- -- AF mailing list [email protected] http://af.afmug.com/mailman/listinfo/af_af.afmug.com
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