High Cost

Understanding Disaggregation

Process Overview

The disaggregation process is a function in the High Cost Program of the Universal Service Fund (USF). Disaggregation calculates the support provided to competitive carriers based on the disaggregation plan selected by the corresponding incumbent local exchange carrier (ILEC).

The disaggregation process targets High Cost support for a carrier at a level below the study area (for example, at the wire center level). Prior to the implementation of the disaggregation process, High Cost support was averaged across all lines served by a carrier in a study area. Thus, the per-line basis for High Cost support was the same throughout a study area.

However, the costs of serving customers may vary among locations within a study area. Through the disaggregation process, the High Cost support supplied to a competitor is calculated to reflect the support per loop that the ILEC receives for a particular disaggregated area, instead of the whole study area. Section 54.315 of the Federal Communications Commission (FCC) rules describes disaggregation of support by rural ILECs.

In the Rural Task Force (RTF) Order (FCC 01-157, released May 23, 2001), all rural ILECs were required to select one of three available disaggregation paths and to notify USAC of their selections. The path selected by an ILEC affects the support provided to competitive carriers.

In the RTF Order, the FCC concluded that High Cost support should be disaggregated and targeted below the study area level for rural carriers to achieve a balance between rural carriers' needs for flexibility and the FCC's goal of encouraging competitive entry. The FCC adopted a plan specifying three paths for the disaggregation and targeting of high cost universal service support proposed by the Rural Task Force. Search the disaggregation checklist to see if incumbent carriers filed disaggregation plans for your state. Use the disaggregation map search to find disaggregation maps for an incumbent carrier.

In establishing the Interstate Common Line Support component, the disaggregation requirement was extended to all incumbent rate-of-return carriers.  All incumbent rural carriers and all incumbent rate-of-return carriers were required to select a disaggregation path and submit the required information to USAC by May 15, 2002. The disaggregation plans are valid for four years from the date approved by a state commission unless the state commission requires modification to a disaggregation plan.

The chosen disaggregation path applies to a rural carrier's High Cost Loop support, Safety Net Additive support, Long Term Support (now merged into ICLS), Local Switching Support, and Interstate Common Line Support, which was implemented July 1, 2002.

Carriers have three paths to choose from for disaggregating and targeting High Cost support:

Path One: Carriers opting not to disaggregate and target support
Path 1 is intended to address those instances in which a carrier determines that, given the demographics, cost characteristics, and location of its service territory, and the lack of a realistic prospect of competition, disaggregation is not economically rational. See Section 54.315(b) of the FCC's rules for more detailed requirements for carriers selecting Path 1.

Path Two: Carriers seeking prior regulatory approval of disaggregation plans
Path 2 provides the most flexibility in the development of a disaggregation plan. A carrier may elect any level of disaggregation and targeting but the plan requires regulatory approval to ensure that the methodology implemented is competitively neutral. The carrier must file its disaggregation plan with its state commission, and the plan must be approved by that commission. If not subject to state jurisdiction, a carrier may submit its plan and obtain approval directly from the FCC. Path 2 disaggregation is discussed in Section 54.315(c) of the FCC's rules.

Path Three: Carriers self-certifying disaggregation plans
Path 3 provides for disaggregation and targeting of support but, because there is no regulatory approval involved, a carrier's options are somewhat more limited than under Path 2. The FCC concluded that permitting carriers to self-certify their disaggregation and targeting plans to the state would reduce the administrative burden on carriers and states, and would facilitate the rapid implementation of disaggregation and targeting plans. Section 54.315(d) outlines the details for Path 3 disaggregation plans.

Competitive ETCs and Disaggregation
Competitive ETCs are bound by the disaggregation path selected by the rural incumbent carrier in whose territory they serve. Competitive ETCs, therefore, are not required to select a disaggregation path and are not subject to the associated reporting requirements.

Any competitive carrier that competes with a rural ILEC and requests USF support must submit data at the same level as the ILEC and consistent with the disaggregation plan of the ILEC. 

Implementation of Disaggregation Plans
The adoption of the disaggregation rules by the FCC required a large-scale effort by USAC to review and extract zone information and pricing data from ILEC disaggregation plans. In order to make this information available to ETCs, USAC posted all maps and disaggregation path selections to its website and provided all disaggregation plans to competitors via electronic mail, hard copy, and opportunities to view at USAC facilities.


Last modified on 1/11/2008