1.
Outcomes and Alternatives for Universal Telecommunications Service: A Case Study of Texas Jerry Ellig Joseph Rotondi Senior Research Fellow Legal Fellow
5.
Lifeline Prices Note: “Local Rate” is a subscriber-weighted statewide average, assuming each company’s average residential rate is the midpoint in its range of residential rates.
Assume change in local rate due to subsidy = average per-line support in each support range
Local rate is subscriber-weighted average rate for the large companies, assuming each company’s average rate is the midpoint of its range of residential rates
Change in subscribership is calculated for each subsidy range, then summed
Large company business High-Cost:
# of subsidized business lines is estimated.
Estimate assumes business lines are distributed among the per-line support ranges in the same proportion as residential lines, and annual subsidy to business lines totals $65 million
Remainder of calculation mimics calculations for large company residential high-cost
Small company High-Cost:
Use data in PUC Report, Table 7
Assume change in local rate due to subsidy = average per-line support for each company
Each company’s average local rate is assumed to be the midpoint of its residential rates
Change in subscribership is calculated for each subsidy range, then summed
8.
High-Cost Effect on Subscribership (Spreadsheet inputs)
Pre-2000 system: implicit subsidies via high access charges, high long-distance rates, and toll revenue pooling
At 2005 prices and level of conversation minutes, it is mathematically impossible to set an access charge that raises anywhere near the $618 million in USF assessments collected in 2005
At 2000 prices and level of conversation minutes, an access charge of 7.15 cents/conversation minute raises $619 million. But deadweight loss would exceed revenues raised!
Main implication: The PUC was exactly right in 2000: Pre-2000 system was not sustainable
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