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The Commission will seek comment on phasing out certain legacy rate-of-return high-cost support programs; continuing the Commission’s focus on modern, incentive-based mechanisms for high-cost support; and addressing the costs associated with the Time Division Multiplexing (TDM)-to-IP transition.  Because carriers would no longer need to rely on cost data to set ratesand the Commission would no longer need that data to calculate Universal Service Fund (USF) supportthe NPRM would propose to phase out the legacy rate-of-return regulation, including jurisdictional separations and cost allocation rules. 

Specifically, the Commsion will seek comment on updating support mechanism for Commission legacy high-cost programs (Connect America Fund Broadband Loop Support (CAF BLS) and High Cost Loop Support (HCLS)), and what next steps, if any, the Commission should take with respect to the areas served by the soon to be ending Alternative Connect America Model (A-CAM) I, Revised A-CAM I, and A-CAM II programs. 

At present, the Commission’s rate-of-return legacy support mechanisms, namely CAF BLS and HCLS programs, are based on decades-old monopoly telephone assumptions that fail to reflect today’s networks, the evolving nature of communications services, and the current competitive landscape.  Awarding cost-based support on the basis of outdated technology and to only one carrier without any opportunity for competition makes these mechanisms inefficient and a hindrance to the IP transition.