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Wednesday, April 17, 2019

Tempest in a specially constructed teapot

USAC has sent a letter to Commissioner O'Rielly in response to his letter with questions about consortium's overbuilding existing fiber.

First, the most important question: did USAC capitalize the "R" in "E-Rate"?  No!  Philistines!  They even have the gall to shrink the big R when quoting from the Commissioner's letter (he used the big R consistently in his request, perhaps to avoid being labeled O'rielly).  USAC didn't even acknowledge that they were altering the Commissioner's letter with something like "E-[r]ate" or "E-Rate [sic]."

On the main question, USAC's response is a big nothingburger: USAC doesn't know which special construction projects are overbuilding existing networks because carriers don't share the routes of their fiber deployments with the public.  Perhaps the Commissioner will explain exactly what he means by "overbuild" and ask make a new request.  At one point, he hinted that "overbuild" might mean "installing new fiber in a county where some fiber is already installed." Even so, I can't find any way to find out whether fiber optic cable is hung on poles in a particular area.  USAC mentioned the National Broadband Map, but that's only useful for determining consumer access to Internet access at speeds of at least 25 Mbps (the FCC's benchmark for "broadband").  I can't find any tool that determines if there is any fiber installed in a geographic area.  I guess it's safe to assume that if an ISP is offering 25 Mbps to consumers, it's probably moving that traffic to fiber somewhere nearby.

And now, a little analysis that no one cares about.  The numbers don't add up for me. For example, in FY 2017, USAC says 19 applicants requested special construction as consortia.  Of those, 18 got a funding commitment, 2 were denied for cost-effectiveness, and 2 are still pending.  That's 19 applicants and 22 results.  That must mean that some poor applicants are both Committed and Denied and/or Pending. And if you look at the dollars, there is $74 million requested, $34 million Committed, $2 million Denied-for-cost-effectiveness, and $3 million Pending.  That leaves $35 million unaccounted for.  So that means that almost half the applicants are neither Committed, Denied-for-cost-effectiveness or Pending.  (I suppose most of them are Denied-for-reasons-other-than-cost-effectiveness.)  That means that at least one applicant had a result other the 3 results shown, so we've got 19 applicants and 23+ results.

While writing this, I was just watching a Funds for Learning webcast [my inability to focus on one thing at a time is no reflection on the quality of the info or presenters], and one of their slides (you can see it right around 21:00 in the recording) showed that program-wide in FY 2019, applicants planned to spend much more on lit fiber with special construction ($175 million) than on leased dark fiber ($69 million) and self-provisioned ($57 million) combined.  So some (perhaps most) of the funding shown in the USAC letter will be used to connect existing lit fiber networks to applicant locations, which means it's not overbuilding.  For context, requests for lit fiber with no special construction total $1,889.7 million.

So how much overbuilding is going on?  No one knows.  But we do know that it isn't much.

Tuesday, April 09, 2019

Special constriction

You know I'm going to read and comment on a new report out from the Benton Foundation and EducationSuperHighway called "Improving the Administration of E-Rate."

Oh dang, it's long. And no pictures.  OK, maybe just the Executive Summary.  Here's my Executive Summary Summary:
  • USAC is using a flawed cost model to delay and deny special construction applications.
  • PIA is asking confusing, opaque and flawed questions. 
  • “Cardinal change rule”  ('nuff said).
Damn, they pulled me in.  I'm reading on.

"But nothing in the FCC’s orders authorize USAC to administer its duties through a hidden process, based on non-transparent criteria...."  What?!  The entire PIA process is administered through 700 pages of hidden processes and non-transparent criteria!  Yes, the special construction approval process is kafkaesque, but it's no worse than any Cost-Effectiveness Review (CER). All the points they raise apply to all CERs, as some of us have been pointing out since the CER first appeared.

The report also says that the ever-shifting questionnaire on fiber builds is improper because USAC is making changes in the standards for approval of E-Rate applications.  That may be true, but we don't know; the standards are secret.  It may be that the questionnaire is in the PIA procedure manual that the FCC approves every year.  We'll never know, because the FCC says that the routine processing of funding applications is a law enforcement action.

I like the report's discussion of the Public Records Act (PRA) requirement that information collections be approved by OMB. " The absence of OMB approval appears to provide any E-rate applicant with a complete, statutory defense to any agency action." Oh, snap!  Except unapproved information collections are nothing new.  Remember Item 21 Attachments?  Required information collection, but not approved by OMB.  And don't forget bid evaluation worksheets.  Shouldn't Service Substitutions and SPIN Changes be on a form?

Next, the report turns to the "cardinal change rule." I agree that USAC has provided no guidance on what the rule is, but what did you expect?  They haven't even defined what an RFP is., even though they're requiring them for some applications. (Add RFPs to the list of information collections without PRA approval from OMB.)

The recommendations in the conclusion are all very good and quite reasonable.  But since the FCC believes that E-Rate applications are law enforcement actions, it wouldn't be prudent to give all that information to the suspected lawbreakers (applicants).  

Also, reducing the fear and uncertainty in the E-Rate application process will put us E-Rate consultants out of business.  In principle, that's good, but in practice ... well ... can we wait until my kids are out of college?

Monday, April 08, 2019

ESH we hardly knew ye

I've had my disagreements with EducationSuperHighway about the data they collect and how they analyze it, but on the whole, they have been a very positive influence on the E-Rate program.  And their message of "more fiber!" is an important counterpoint to Commissioner "Overbuild" O'Rielly.

So I can't say I'm happy that they're winding down.  In principal, I find it quite refreshing for an organization to say, "OK, we did what we set out to do.  Bye!"  But in this case, I have the feeling that we'll always need someone to fight a rearguard action against the special construction naysayers.

So, ESH, kudos on deciding to phase yourselves out.  Only don't.

Sunday, March 31, 2019

A shell game, only with caps

Am I the only one who is starting to feel like this?
[If you aren't familiar with the children's book Caps for Sale, I recommend it.]

The E-Rate was born with a $2.25 billion cap on it.  Then we added a cap on Category 2 spending.  Now the FCC is thinking about putting a cap on overall spending in the Universal Service Fund (USF).  Enough with the caps already!

To be precise, what we know publicly is that Chairman Pai has circulated an item suggesting that the Commission release an NPRM about "Universal Service Contribution Methodology."  Apparently, by circulating the item, he has allowed the Commissioners to vote privately on the measure instead of voting in a public meeting.

Commissioner Rosenworcel and Senator Markey (who's like godfather of the E-Rate or something) have already expressed their displeasure.  Commissioner O'Rielly has expressed his support.

To me, the best argument against this overall cap comes from Commissioner O'Rielly: "Fact: 3 of 4 USF programs already have hard spending caps & the other has a soft cap requiring Commission action if it were exceeded.  An overall cap doesn’t add new budgetary pressures than those that already exist!"

In other words, "This proposal has no effect."  If it doesn't do anything, let's not consider it.

Of course, it could have an effect, and if it does, it won't be a good one for our little patch of the USF.  I don't see the E-Rate needing a cap increase, unless they bring back voice or increase the C2 cap, but if other programs need more cap space, it would mean reducing the caps of other programs.

There is an effort underway to increase the cap over at Rural Health Care, but that program is small enough that it wouldn't significantly affect the other programs.

I think this cap is all about the Lifeline Program.  USAC has determined that 10.7 million households participate in the program, but 39 million households are eligible.  So if even half the eligible households were funded, the cost of the Lifeline Program would increase by around $1 billion.  And wouldn't you know, the Lifeline Program is the one with the "soft cap."

So instead of putting a hard cap on Lifeline, the FCC wants to put a hard cap on the whole USF.  Why be so indirect?  I mean, I can see how it looks bad to say, "We're only going to provide enough funding to serve 28% of the people eligible for the Lifeline program," but who would notice?  Currently, 72% of the people eligible for the Lifeline program haven't noticed it exists.

Don't put another cap on 3 other programs just because Lifeline isn't capped.

Thursday, March 28, 2019

Surf's up?

The FCC has approved the PIA review procedures.  That means that USAC can start approving 471s today.  Based on the PIA inquiries we've received so far, it looks like we're going to start with a "low-hanging fruit" wave of small, simple C1 applications.  That seems like a good move; let all the new PIA reviewers dip their toes in the shallow water before throwing them off the deep end.

Side rant: Since I've been so quiet over the past couple of years, I would be remiss if I did not take advantage of this opportunity to rant about the irony of the FCC issuing public approval of the secret rules by which applications are processed.  Did you know that every year the FCC approves a 700-page set of procedures for processing applications?  (Well, it was 700 pages in 2009, but I'm too lazy to file a FOIA request to find out how long it is now.)  Because the FCC says that the routine processing of funding applications from local governments is a law enforcement action.

So much secrecy.

When can we expect the first wave?  If the recent past is any guide, we should be seeing a wave in April.  Maybe even mid-April.  Of course, it's a new company handling PIA¹, so a delay wouldn't be surprising.
Here's a table of dates from past years:
FY Window close Days passed PIA approved Days passed First FCDL Total days Million Apps
2019 3/27/19 0 3/27/2019
2018 3/22/18 6 3/28/2018 23 4/20/2018 29 $501*15,033*
2017 5/11/2017 1 5/12/2017 14 5/26/2017 15 $47 4,919
2016 5/26/2016 14 6/9/2016 7 6/16/2016 21$17 2,251
2015 4/16/2015 -27 3/20/2015 62 5/21/2015 35 $151 7,100
2014 3/26/2014 -19 3/7/2014 69 5/15/2014 50 $607 14,600
2013 3/14/2013 57 5/10/2013 19 5/29/2013 76 $130 12,023
2012 3/20/2012 35 4/24/2012 77 7/10/2012 112 $646 23,800
2011 3/24/2011 75 6/7/2011 19 6/26/2011 94 $398 18,500
2010 2/11/2010 91 5/13/2010 13 5/26/2010 104 $429 18,200
2009 2/12/2009 49 4/2/2009 26 4/28/2009 75 $134 6,931
2008 2/7/2008 63 4/10/2008 21 5/1/2008 84 $352 10,000
2007 2/8/2007 4/23/2007 74 $202 21,000
2006 2/16/2006 4/26/2006 69 $184 4,880
2005 2/17/2005 6/27/2005 130 $342 7,700
2004 2/4/2004 4/27/2004 83 $43
2003 1/16/2003 5/1/2003 105 $230
2002 1/17/2002 4/24/2002 97 $233 9,300
2001 1/18/2001 7/23/2001 186 $478
2000 1/19/2000 4/14/2000 86 $253 13,000
1999 3/11/1999 7/13/1999 124 $116 6,000
1998 11/23/1998 $73 3,000
*The FY 2018 first wave was so huge, they released it on in two waves, on 4/20 and 4/21; I'm counting those as one wave.

¹ For those who didn't know, USAC is actually a pretty small company.  All of the application processing (and the Client Service Bureau) is outsourced.  The contract to handle PIA has always gone to Solix (nee NECA Services), but in January, it switched to a company called Maximus.  So far things seem OK to me, but we're just jumping into PIA season.

The squeeze

It's past time to trot out my annual table of ESL and window dates (I missed 2018 entirely).  First, my comments on the trends I see in the dates.  [The most important trend ended up buried in the middle, so I put it in bold.]
  1. The ESL release date has been sliding.  It should be July 1, but it's sliding towards December.  On the one hand, the ESL isn't changing much, so it doesn't matter much.  On the other hand, the ESL isn't changing much, so why the long review?
  2. The "60 days" column is shrinking, almost hitting the minimum in 2019.  That's bad.  The 60-day rule was put in place so that applicants would have time to look at the ESL, decide what they were going to apply for, post a Form 470, wait 28 days, select a vendor and be ready for the opening of the window.
  3. The size of the window is shrinking a little.  That wouldn't be a big deal, except that with the "60 days" number dropping, we've gone from having 241 days from the release of the ESL to the close of the window in 2017 to having only 131 days in 2019.  That means applicants have a lot less time to look at needs and budgets, put together a 470, collect bids, sign a contract and file a Form 471.  I still wouldn't say it's a tight squeeze (we only had 71 days in 2010), but it's a squeeze.
  4. The window close have moved from May, where it was for a couple of years, to late March.  It's better than the old mid-February close dates, but I'm all for closing the window in May.  Did you notice that the window closed in May for a couple of years, and the sky didn't fall?
Fund YearFCC releases ESL Days passedWindow announcedPrep daysWindow open60 days?Window closeWindow days
(ext. to 4/16/2015)
(ext. to 5/26/2016)**
** Extended to 7/21/16 for consortia and libraries
Some explanations:
"Days passed" is the number of days that passed between the release of the ESL and the announcement of the window dates.
"Prep days" is the number of days between the announcement of the window dates and the opening of the window.
"60 days" is the number of days between the release of the ESL and the opening of the window, which should be at least 60 days per the Third Report and Order
"Window days" is the number of days that the window is open.

Tuesday, March 26, 2019

Get a life

Really?!  I mean, I expect EPC to be  c r a w l i n g  on the last few days of the filing window, but c'mon, it's 9:00 pm!  Even Pacific Time, it's 6:00 pm.  Don't you people have lives? 

Or could it be that EPC is not currently burdened, but is sucking wind after a strenuous day?