Telecommunications Accounting Seminar - FORVIS

Telecommunications Accounting Seminar

Revised A-CAM & A-CAM II Offers: Where the Industry Stands & What Do We Do Now

Our goals for today

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Look at the Offers

Location Obligations What Does It All Mean

A-CAM I / II ? Look at the Offers

? Review Revised A-CAM I & A-CAM II Offers

? Revenues & Obligations ? Deployment Milestones ? Pros & Cons

? Remaining Legacy is Still Better for Some

? Revenues Ahead ? Buildout Obligations ? Pros & Cons

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Why A-CAM in the First Place

? FCC feels a forward looking model with "Significant, Verifiable Deployment Obligations" will deploy broadband & with more accountability than Legacy Regulation does

? Model-based support is more easily monitored & regulated

? At the same time, the FCC still places reliance on a model with Suspect Assumptions & Data Sources

? 477 reporting data ? Greenfield engineering assumptions ? Census data almost a decade old & frequently does not

accurately place locations within a census block

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General Overview of A-CAM

? CostQuest model with greenfield fiber buildout

? 2010 census data & business location data sources ? Eligible census block location based on model ? Buildout obligations

? Timelines ? Speeds ? Compliance gap penalties

? Key conditions changed in successive offers

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Offer Overview for Revised A-CAM I

? $200 replaced $146.10 for fully-funded locations

? Expanded offers in most cases

? Caused some shifts from capped locations (e.g. $155) to fully-funded

? 2016's A-CAM carriers on a Glide-Path A-CAM carriers, already at $200 per location, got no additional funding or material changes to their obligations

? No changes in the total number of eligible location counts

? but Revised offer sets support through end of 2028

? But, the big change was the increase in the 25/3 Mbps deployment obligations based on density & the milestones for 25/3 Mbps deployments

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Revised A-CAM I Deployment Obligations

? 10/1 Mbps Milestones remain in place in fullyfunded census blocks, whether or not the new offer is taken

? 25/3 Mbps Obligations, due by Year 10 of the Existing A-CAM term, now begin in Year 4 of the New Offer

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Offer Overview for A-CAM II

? A-CAM II is similar to revised A-CAM I

? CostQuest model with greenfield fiber buildout ? 2010 census data & business location data sources ? Eligible census block location only

? Buildout obligations

? Timeline: 40% of eligible locations in 2022, rising 10%/year, through 2028 ? Speeds: 25/3 Mbps location for buildout Obligations ? Compliance gap penalties: No change

? A-CAM II Key differences

? Offer no longer limited to carriers with less than 90% of locations at 10/1 Mbps ? Own fiber/coax cable deployment does not exclude census blocks ? Unsubsidized competitive overbuild exception is increased to 25/3 Mbps ? NO challenges allowed ? FCC Form 477 data updated (December 2017)

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