The expectation by price cap LECs that the Connect America...

ACA’s approach to the Phase II cost model -- limiting recovery for investments made prior to adoption of the CAF -- as “legally indefensible.” Price cap LECs’ expectation for recovery for prior investments is unreasonable because those investments served locations never supported by the high-cost USF fund, ACA said. Many of those investments in the voice network were likely made years ago, and may be fully depreciated, it said. “There is no economic rationale for providing recovery anew for already depreciated assets.” On USF-supported investments in networks where price cap LECs also deployed broadband capabilities, “the price cap LECs were under no regulatory obligation to use pre-CAF high-cost support for this additional purpose,” and they should have “no expectation of receiving guaranteed government support,” ACA said. “The price cap LECs have failed to demonstrate they are deserving of any capital recovery of legacy copper plant investment under the Phase II regime.” Ross Lieberman, ACA vice president of government affairs, told us the price cap proposal was “not really grounded in reality."