VPS Refreshed Analysis on Model Accuracy
July 20, 2017
Originally filed January 5, 2016
Re: Connect America Fund, WC Docket No. 10-90
On July 13, 2015 Vantage Point Solutions filed an FCC ex parte letter examining the accuracy of the Alternative Connect America Model (A-CAM). The Vantage Point analysis compared results of the A-CAM “cost to serve” module to actual engineering data from 144 wire-center-wide fiber-to-the-premises (FTTP) projects in more than a dozen states. In almost a third of cases, the A-CAM capital expenditure (capex) results for a wire center differed by more than 30% from the engineering data for that wire center. The mean deviation was 28%.
Since that time, the Wireline Competition Bureau (WCB) has updated the model three times with improved data inputs. The model improvements include:
Report 2.0, A-CAM Version 1.1
- Released August 31, 2015
- Updated Form 477 data
Report 3.0, A-CAM Version 2.0
- Released October 8, 20153
- Updated study area boundaries
- Updated Node0 (central office) locations
- Revised regional cost adjustments
Report 4.0, A-CAM Version 2.1
- Released December 17, 2015
- Company-specific plant mix factors
- Updated Form 477 data
Vantage Point Solutions appreciates the efforts made by the WCB to improve the accuracy of the model. To assess what impact the model revisions had on the A-CAM’s ability to properly estimate the costs of FTTP deployment, Vantage Point refreshed its analysis, comparing the engineering data for the 144 wire centers to the updated results of the A-CAM 2.1 “cost to serve” module.
1. The updates had a small, but positive, impact on model accuracy
2. Major deviations are reduced, but accuracy is still a concern under A-CAM 2.1
3. Changes in model performance are inconsistent and unexplained
Conclusion: More work is needed
Vantage Point Solutions is not opposed to model-based support. As was stated in our original filing, our clients vary widely in size, location, approach toward technology, and opinions of model-based support. Many of our clients could gain substantial support under the proposed ACAM, while others will likely be better on a modified rate-of-return path. Despite the great diversity exhibited by those with whom we work, all agree on one thing, however: they want a model that is accurate.
Updates made to the model over the last few months have improved A-CAM accuracy to a limited degree. That provides hope that additional improvements could further increase the model’s predictive power. As currently configured, the A-CAM lacks the precision needed to be the foundation upon which USF reform is built. However, the FCC has an opportunity to work with technical experts and the rural industry to identify why A-CAM 2.1 continues to feature so many major deviations from actual engineering data. Such a review could be conducted at the same time as whatever unsubsidized competitor challenge process the FCC might implement.
USF reform is needed. If done properly, it can benefit hundreds of rural providers and many thousands of rural citizens across the country. We look forward to working with the FCC and others to make needed improvements to the Alternative Connect America Model.
Download the full analysis:VPS Refreshed Analysis on Model Accuracy