2015 Average Schedule HCLS Formulas Receive Approval

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The FCC’s Wireline Competition Bureau has approved the National Exchange Carrier Association, Inc.’s (NECA) modifications to the average schedule company high-cost loop support (HCLS) formula. Small rate-of-return local exchange carriers (LECs) are allowed by the FCC’s rules to estimate their costs through the use of an “average schedule” instead of filing an annual company-specific cost study because cost studies can be extremely burdensome and expensive for the smallest LECs. These average schedule companies’ HCLS is calculated pursuant to formulas that are developed annually by NECA which are based on industry data from average schedule companies and similarly-situated “cost companies.” As in prior years, NECA’s formula first estimates current year costs by applying forecasted growth factors to recent cost per loop (CPL) data, and then uses cost allocation factors and regression analyses to produce estimated CPLs for all average schedule companies. Each CPL is then used to calculate each average schedule company’s HCLS amount. NECA’s proposed formula for 2015 projects $10.3 million in payments to carriers serving 179 average schedule study areas, a decrease of 8.0 percent from 2014 payments. The 2014 HCLS formula is expected to end up providing $11.2 million in support to carriers serving 207 average schedule study areas. The 2015 HCLS formula for average schedule companies will be in effect from January 1, 2015, through December 31, 2015.

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