Bloody Wednesday
Well, for a while there I thought it was going to be nothing but denials. The FCC released 9 appeals decisions today, and I read 5 denials before I came to an appeal granted. Final score: 6 denied (covering 15 applicants), 3 granted (covering 3 applicants).
Most of it was fairly run of the mill:
don't post a Form 470, you're denied; when the Eligible Services list says dark fiber is ineligible, it means
dark fiber is ineligible.
Some decisions that at least clarified things:
- Eagle Hill: Dormitories are not eligible locations, even if some instruction takes place there.
- Eagle Hill: Head Start is not eligible unless state law says it's elementary education.
- Keyport: Prior to 2005, the FCC didn't have document retention requirements, so applicants "had no obligation to produce documentation that it would not normally maintain for other purchases, particularly where the state law did not require Keyport to seek competitive bids."
No time for a detailed reading: it's BEAR season.
Mel’s palantir
OK, so I’m done with a full day of
USAC training, and I’m ashamed to admit it was kind of fun. Kind of.
SPOILER ALERT: If you’re going to attend one of the trainings, there will be fewer surprises if you read further. And without surprises, it is harder to remain conscious through some of the sessions.
I found the nuts & bolts sessions somewhat informative, though I heard “case by case” too often. For a long time, I bought the argument that USAC can approve more funding if they have more wiggle room by not locking down the rules. But now I’d rather have more specific rules. Because it’s a drag for applicants when they can’t get funding because of some rule that they can see, but the bigger bummer is having funding denied because of some unknown rule or procedure. Even worse is having funding granted, then taken back, and that almost always happens because the rules are unclear. (Oh, wait, no,
the rules are clear, but applicants disregard them.)
The most interesting session, as usual, was Mel Blackwell’s, mostly because he gets to make predictions.
The only prediction that had a guaranteed timeline was that the Round 4 audits will not until the filing window is closed. I asked in a different session if the Announcement Letters (which start the clock for supplying documents) will come out before the end of the window, and the answer was “no comment.” So I guess we can assume that Round 4 will start right after the window, with some Announcement Letters coming out before the end of the window.
Perhaps even better news (which came from Mel, but during the “Audit Response” session) is that the Round 4 audits will not be attestation audits. Mel promised that the audits will be less painful, and more proportional to the amount of funding involved.
Mel also talked about shortening the window. He had a great graph showing that almost all 471s are filed in the last 7 days. So why keep a 50-day window? I’m OK with that if they want to start the window in mid-March and end it in May. But if we’re talking moving the end of the window earlier,
I’m against that.
Mel also talked about the upgrade in USAC’s computer systems. He promised several improvements, but said we’ll see “a few for 2010, more for 2011.” Among the improvements he said he expected:
- Online Item 21 Attachments will be available to service providers.
- Applicants will have a “copy my app” tool, allowing us to copy and revise previous year’s 471, instead of having to start from scratch.
- Online applications will do more data validation, making it harder for us to make mistakes.
- USAC will set up a data portal to improve our access to USAC data.
Mel’s last big prediction: The denial threshold for 2009 will be below 80%, “in the 70% area.” I think he’s wrong, but I think just having him say it creates downward pressure on the denial threshold. Yesterday I heard another E-Rate veteran predict that we’ll never see 80% again, and I’d have to say that I think that’s more likely. (For the jargon-impaired, the “denial threshold” is the discount level below which Priority 2 funding will not be available.)
The fog of eligibility
Here's the ugly side of eligible services. For the first time I can remember, the FCC has
denied an appeal where the applicant thought that a piece of software was eligible, honestly told PIA exactly what they were requesting, got approved, then were denied after invoicing USAC. As the
appeal asks, "How can it be deemed ineligible...1 year after it was initially funded?"
This is a great example of a problem that needs to be fixed. The applicant believed that a software product qualified as a multi-point conferencing unit (MCU) for videoconferencing, which was eligible. The service provider also believed it was eligible. So did the PIA reviewer, so the application was approved. So the software was installed, and the service provider billed USAC. But lately, USAC has been using the invoicing process as another opportunity to assess eligibility, and it was decided that the software was ineligible, reduced the funding commitment, and refused to pay the invoice.
I'm not saying the software in question is eligible, because I don't have all the info. It may be a "software MCU" with a few extra features (which might be considered "ancillary use"), or it might be management software that expands the capability of an MCU, but isn't an MCU itself.
Eligible or ineligible isn't the point. The point is that the applicant and service provider apparently thought the product was eligible, and the PIA reviewer agreed. It just seems unfair that USAC can come back after the project is done and change their decision on eligibility.
"Approval" should mean something. PIA is scary enough for applicants, but if the result of PIA is only a conditional approval contingent on later approval by other reviewers, applicants can never rest easy.
I have heard the advice, "don't push the envelope on eligibility and you won't run into trouble." OK, but I have to say that even for me (and I consider myself an eligibility expert), there is no envelope, only a dark plain with swirling patches of fog. You can tell when you're deep in the fog, but you can't tell where the edge of the fog is. Even if you pick a clear spot and stand there, the fog may swirl over you.
Webex palantir?
The FCC is doing a workshop on the National Broadband Plan, and the future of the E-Rate is on the agenda. So I know where I'll be this Thursday (August 20th) at 1:00 p.m. (Eastern time).
Here's part of the info I got from
NCTET:
The event will be broadcast live via WebEx, Second Life, and web-based video feed, and interested participants will be able to submit questions to the panelists via WebEx, Second Life, and Twitter. The Education team is also soliciting ideas for the Plan via Ideascale at http://usbroadband4ed.ideascale.com/. Information about the Workshop (including video and Twitter feed info) can be found at http://broadband.gov/ws_education.html (WebEx video feed is confirmed, FCC is working on a Quicktime feed as well, which will be posted closer to the event date). Participants interested in attending in person can register online at http://broadband.gov/workshops/registration.htm?wsid=13, and participants interested in attending via WebEx can register online at https://fccevents.webex.com/fccevents/onstage/g.php?p=0&t=mHere's the agenda:
- Broadband and educational outcomes
- Opportunities and benefits of broadband in education
- Future use of broadband in education
- The future of the e-rate
- Most promising broadband related applications and devices for education
- Digital literacy
The waive stops here
Ever since the Bishop Perry Order, it sometimes feels like "what will it take for the FCC to actually deny an appeal?" The answer from
yesterday's appeal decision: "Be involved in fraud and your appeal will be denied."
Actually, the FCC has
denied other appeals, where it could be demonstrated that the competitive bidding process was not open and fair. That seems to be where they draw the line on granting mulligans on honest mistakes. So it's no surprise that they denied this appeal, where people have been convicted for their behavior in this competitive bidding process.
I just hope the FCC doesn't see such cases as evidence that the Form 470 process is effective. The people involved in this case didn't get caught because of the Form 470 process. The Form 470 does not inhibit the dishonest, it only complicates purchasing for the honest, driving up prices and adding complexity to the process.
My staycation
USAC just announced (on the Service Provider Conference Call) that the big data system switchover that's
been in the wind for years is actually going to happen at the end of August. The plan is that some time in late August, all the systems will shut down for 2.5 weeks. The static pages will be available, but not any of the search tools, application tools, Submit a Question, etc.
So my kids will be seeing more of me in late August.
Pretty good timing. Application review and 486es are mostly done, the application window won't open for several weeks, the BEAR deadline is much later.
And Mel Blackwell mentioned that one of the upgrades planned is a new application process where you can take last year's application, edit it and submit it. That was on my 2006
Christmas wish list, so if I were better at PhotoShop, I think I'd have a picture of Mel in a Santa hat here.
Cash rolling in
Well, it's official:
the FCC is rolling over $1 billion in unused funds. Interestingly, they're rolling $900 million into the current (2009-2010) funding year, and saving $100 million for the 2010-2011 funding year. I've speculated in the past that the unusually large rollover this year is a one-time bump caused by some accounting changes at USAC, and next year we'lll be back to the more typical level ($600 billion or so). Apparently, the FCC wants to spread the wealth a little bit.
So what will be the denial threshold for 2009-2010? I'm too swamped to really do any real analysis, but let's take a quick look:
With a $900 million carryover, the total funding available is $3.15 billion.
Priority One requests are about $2 billion.
Priority Two requests from 90% applicants are $800 million.
Priority Two requests from 80-89% applicants are $1 billion.
Let's assume USAC denies 15% of the funding requests received. (I think I read that E-Rate Central had figured out that the post-Bishop Perry rate was around there).
In that case, we'd need $2.4 billion to cover P1 and the 90-percenters. We'd need $3.2 billion to have an 80% denial threshold. If we assume that funding requests in the 80%-90% band are evenly distributed, the denial threshold will be 82%. Me, I think USAC is serious about helping more people get approved, so the actual denial threshold will be 84%. We'll know in a year or so.
Anyone care to start a pool?
Notice how my analysis doesn't mention the 2-in-5 rule? That's because
the 2-in-5 rule doesn't work. (What, you thought I would mention the denial threshold without beating my favorite dead horse? How long have you been reading this blog?)
