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Sunday, December 16, 2007

Slippery slope

Nothing is more insufferable than a curmudgeon who's been proven right. So you might want to skip this post, because one of my most curmudgeonly concerns is being born out.

As I pointed out in my original post on the Katrina relief and my post on the request to extend the relief, I don't think the E-Rate program is a good tool for disaster relief. And now the FCC is being asked to go further down the slippery slope of disaster relief.

There is a new appeal with a heart-rending tornado story, requesting the kind of aid received by schools damaged by Katrina. This community was hit as hard as many of the Katrina communities. How can the FCC deny them help? And if they do help this community, how will they deny other schools destroyed by other natural disasters? USAC will need a FEMA liaison.

It's hard-hearted, but I just don't see why funds for disaster relief should come from my phone bill.

Friday, December 14, 2007

I've got your LOA right here

So the FCC has remanded another batch of appeals. The subject this time: LOAs. I only found three sentences that applied to all applicants. From paragraph 11: "we direct USAC to reach out to consortia when there are ministerial errors on their LOAs." And from the footnote to that sentence: "For example, Minnesota OET submitted an LOA initially that did not provide enough detail regarding the services for which the consortium leader was authorized to apply.... USAC could have allowed the applicant to remedy that ministerial error, rather than denying the application."

My reading of those sentences is that if an applicant has an LOA that does not include one of the five required elements, that can be corrected after the submission of the 471. Good news for the program, and consistent with Bishop Perry and his issue.

Of course, I'm not going to miss out on my opportunity for a rant. What is the purpose of the LOA? In a consortium, who is the billed entity? The consortium. The consortium is the only entity that can apply for E-Rate funding. To me, if you agree to purchase services through a consortium, it is clear that you want the consortium to seek E-Rate funding, with or without an LOA. (Aside: in this decision, the FCC said that a consortium agreement that included the five elements required for an LOA could be counted as an LOA. And the FCC said that an LOA which lacks any of the five elements can be corrected after the fact. So doesn't that mean that USAC should accept any consortium agreement as an LOA and allow the applicant to "correct" it after the fact by adding the five elements that were missing?)

The only time that I can see that an LOA serves any purpose is when a consortium is purchasing Priority Two equipment for consortium members' locations. That burns one of the members' years for the "2-in-5 rule." But since LOAs do not have to make clear that consequence, it is a poor vehicle for that purpose. And as I've said in the past, the 2-in-5 rule should be rescinded.

So consortium LOAs are yet another example of unnecessary complexity.

I'm all for LOAs for consultants (unless the written agreement between the consultant and the applicant includes the five elements). But consortium LOAs should go.

Monday, December 10, 2007

It's official: 2-in-5 Rule has failed. Again.

USAC has just announced that in the next wave of funding, they will begin to deny all 80% Priority Two requests. Applicants at 81% and 82% are still on the bubble.

I'm surprised it didn't get down into the seventies, and since I'm a pessimist, I think most people are surprised. Even Mel Blackwell was prognosticating a much lower denial threshold back during the September trainings.

Take a look at the graph. Notice the trend? And it gets even worse when you consider that this year, we had a huge unjust rollover, larger than the 2003 rollover that drove the discount level to 70% (and would have driven it lower if the FCC hadn't blindsided USAC with the rollover after everyone below 70% had already been denied).

There are lots of viewpoints on the fairest way to distribute Priority Two funding, but one thing is certain: the FCC's "2-in-5 Rule" has failed utterly in the goal stated in the Third Report and Order: "funds will be made available to more eligible schools and libraries on a regular basis." The 2-in-5 Rule creates many problems, and fails to solve any problems, so it's time to throw it over the side.

Wednesday, December 05, 2007

Get your popcorn!

Just in time to qualify for the Oscars, the SLD has released videos of the fall training. Alas, at first glance it appears that only the presentations made it, without the skits in between. Next year, I'm bringing a video camera -- hello, YouTube!

Actually, it looks like the Panhandle Area Education Consortium (PAEC) is hosting the video, but the SLD has a link to it off their site, so they're official enough. The SLD used to put these videos up every year, but it seems to me I haven't seen them in a while. So thank you, PAEC.

The production and cinematography aren't going to win any Oscars, but the subject is so intriguing that I'm giving the videos two thumbs up without even watching them.

Friday, November 30, 2007

No signature/no date

USAC is now requiring only one signature and one date for contracts, if that is allowed under state law. When introducing the new rule in this year's training, John Noran started by saying that if state law allows a contract with no signatures, you still have to have a document with a signature and date. I remember thinking, "Is someone really going to try to claim a contract with no dates?"

The answer is yes. There's an appeal at the FCC right now claiming an oral contract. It's an interesting assertion: if state law says I have a contract, who is USAC or the FCC to say I don't?

The FCC has certainly broadened the scope of documents that are allowed to serve as contracts, but I find it hard to believe that they will allow a contract that leaves no auditable trail.

But let's take a step back. Why are contracts required before filing the 471? In general, the terms of the contract are significantly altered by the time the equipment is actually installed, since much of the equipment gets outmoded over the 18 months or so between contract and installation. Why not just accept a quote from a vendor? The 471 itself is enough of a paper trail of which vendor was selected.

If the funding were paid at the time of the signature of the contract, then certainly one would be required. But the actual payments aren't made until services are delivered.

I suppose you could say that forcing applicants to sign contracts discourages applicants from filing for funding willy-nilly, but I haven't seen any cases of that. The allocation of Priority Two funding is badly broken, but not because the contracting requirements aren't stringent enough. The contracting requirements don't restrain irresponsible applicants.

What's the downside of forcing applicants to have a signed contract? Well, for starters, it's illegal for most applicants to sign a contract six months before the start of the fiscal year in which the equipment will ostensibly be delivered (and in most cases 18 months before the start of the fiscal year in which the equipment will actually be installed).

The time has come for the FCC to move from "one-signature/one-date" to "no contract."

Tuesday, November 27, 2007

Rollover overdue

If the FCC is going to roll funds from past years into the fund for 2008-2009, it's past time to do so. Rolling over funds after the application window is unfair to applicants. The FCC should make rollover decisions before the window opens.

Even better, use extra funds to pre-fund Priority Two for the following year. Under my scheme, the FCC would just bank any leftover funds until the opening of the 2009-2010 filing window next year. At that point, they make an educated guess as to where the denial threshold will be, and set it at that level. Then pay Priority Two requests to all applicants down to that level using the rollover (and some of the 09-10 funds if their estimate was off).

Imagine if Priority Two funding were not a crapshoot. It could happen if the FCC were willing to take a bold step.

2-in-5 is 0-for-3

I've said it before and I'll say it again, the 2-in-5 Rule must go. For those who don't know, the 2-in-5 Rule is an FCC rule created in 2003 in the Third Report and Order, which says that you can only purchase equipment with E-Rate funding twice every five years. The idea was to reduce the amount that 90% schools were spending, in order to give other schools a chance.

As I've said before, the rule adds complexity, is unfair to small applicants, and creates waste. And now we have further evidence that it fails utterly in its purported purpose. In the Third Report and Order, the FCC said, "We find that, by limiting the frequency in which applicants may receive Priority Two discounts, funds will be made available to more eligible schools and libraries on a regular basis." They could not have been more wrong.

This week's E-Rate Central News says that it's likely that all applicants below 80% will be denied Internal Connections funding this week. And that's with the unjust rollover of $650 million increasing the size of the fund by 30%. The 2-in-5 Rule is not making funding "available to more eligible schools and libraries." And it is definitely not making funding available "on a regular basis." Still, only 90% schools can count on funding. The schools that the rule was supposed to benefit now have to juggle the 2-in-5 Rule with guesses about the discount level in making technology decisions, instead of making decisions based on educational goals.

The 2-in-5 Rule has been in effect for 3 years, and it has not had any demonstrable effect on the availability of funding for schools below 90%. How much longer do we have to wait before we declare the rule a failure?

The 2-in-5 Rule must go! Now!

Wednesday, November 21, 2007

Big changes in the neighbor's house

I took a quick look at the "Recommended Decision" concerning the USF High Cost Program that was posted on the FCC Web site today. It is a set of recommendations to the FCC from the Federal-State Joint Board on Universal Service.

I'm just not an expert on the High Cost program, so I just skimmed the decision to see how it affected the program.

First, I'm not sure what the document is. Is it a request for comments? A notification of a pending decision? An Order? So I don't know if it's all going to happen.

I noticed two things that affect the E-Rate program, and both in good ways.

First, the decision calls for a cap on the High Cost Program. This program has been ballooning, so the idea is to cap it at $4.5 billion. I don't know if that's good or bad for the High Cost program, but it's definitely good for the E-Rate program. The USF charge on our phone bills has been increasing, and that makes it more likely that someone in Congress will try to slash the whole program. With High Cost capped, the USF should be more stable, which will help keep it off radar screens.

Second, the decision expands the definition of supported services to include broadband Internet access. Since Internet access is already eligible in the E-Rate program, it won't have a big effect on E-Rate rules, but I'm hoping it will lead to lower costs for Internet access for applicants in high-cost areas, which will mean more money for everyone else.

So it's kind of like your neighbor fixing up the plumbing and electrical in their house. It doesn't really help you right off, but it's a good thing.

Saturday, November 17, 2007

The best of times, the worst of times

First, the good news: the latest News Brief states that any FRNs which were on BEARs that had been Submitted by applicants, but not Certified by service providers, would be automatically given invoice deadline extensions until January. Bravo! As long as it doesn't become habit-forming....

Now, the bad news: there seems to be a general tightening of the requirements for approval of Invoice Deadline Extension Requests (IDERs). My impression in the past was that you could get almost any IDER approved. Based on some appeals to the FCC that I've seen recently, the party is over. The guidelines still seem pretty charitable, but you have to have a good reason. And on the latest Service Provider Conference Call, Mick Kraft mentioned that if you wait more than 120 days after the last date to invoice, that may result in denial. That seems pretty reasonable to me, since that's 240 days after the last day to receive service, which ought to be enough time to pry the billing information out of even the most stubborn business office.

While we're on the subject of invoicing, I must give kudos to the folks at USAC Invoicing. Based on the stats we heard on the conference call, it doesn't seem like the surge in BEARs before the deadline created much of a backlog.

In my dreams

Once again, my subconcious is telling me to get a life. Last night's dream was that the FCC had finally released the huge policy order that we've been awaiting for a couple of years.

Sorry to report, it was one of those dreams where you're reaching for something, but can't quite get it, so all I got to see was the cover page. Which means I can't tell you what changes are coming.

Monday, November 12, 2007

DRT on steroids?

I'm thinking that the steroids scandal is about to spread to the Data Request Tool. This venerable tool has been around for years, and all of a sudden, it's as sprightly as a young colt.

Seriously, it seems faster now. Much faster. I don't have any comparison data, but the difference is clear. It is just lovely to see that "Download Data File" button appear so quickly.

I'm guessing it had something to do with the DRT downtime last week (which had me in withdrawal) and the new "tsv" extension on the files to be downloaded.

So, thanks to whomever is responsible for the improvement.

Now for the very small and unreasonably cranky complaint. I'm sure that .tsv is a real file extension used by some programs, but it is not in the Microsoft lexicon, so none of their programs know how to import it. It doesn't make too much difference in Excel, but the import wizard in Access won't let you import a .tsv file. Of course, the old .tmp extension wouldn't import, either, so my automated tools are already set up to rename the file with a .txt extension.

Thursday, November 08, 2007

USAC humor?

I think this is the first time I've actually laughed because of the USAC home page. Certainly some announcements in the past have elicited a sardonic snort, but this is the first time I can recall having an honest-to-goodness laugh.

They've got a banner on the page with a countdown to the close of the filing window. Maybe they've had this in previous years, and it's certainly a great practical idea. What cracked me up today is that the countdown includes seconds. Somehow, that level of specificity just struck my funny bone this morning.

So kudos to whoever put the countdown on the page. Very useful, with just a little bit of whimsy thrown in. There just isn't enough whimsy in the world.

Friday, November 02, 2007

HATS has a foot?

USAC's latest News Brief shoots the HATS program in the foot. Under the "Helping Applicants To Succeed (HATS) Program Update" section, the first thing they do is list the goals of the Extended Outreach Site Visit (EOSV) program. I don't have time to read paragraphs, so I skipped right to the bullet points, naturally thinking I was reading about the HATS program. So when I got to the 4th point, my eyes popped. Then I went back and read the text and realized that they were talking about EOSV. Of course, I only realized that because I know "site visits" is a phrase tightly tied to EOSV in the USAC lexicon.

So here's what a typical applicant is going to read from that section: "Helping Applicants To Succeed (HATS) blah blah blah support blah blah education blah blah best practices blah blah compliance reeer [rewind noise] COMPLIANCE. Oh man, a new type of audit." Done reading.

The #1 problem for the HATS program is that it looks like an audit: the same company that does the EOSV (which is an audit, whatever else it is), comes out and looks at your past funding requests. USAC should be going all out to dissociate HATS from EOSV (and PIA and all the other types of audits). The two should not be mentioned in the same News Brief.

The other thing USAC needs to do is say flat out: "HATS personnel do not send any information about an applicant back to USAC." That should be the policy. A general report about the reasons that applicants fail would be good, but no information about individual applicants should reach USAC. As it stands now, if a rule violation is discovered during a HATS visit, USAC can't just ignore it. So an applicant that is already bloodied by PIA could get kicked while its down.

During the USAC training this year, we were asked to talk up the HATS program. Sorry, no can do. All I need is for me to advise some school to take a HATS visit, and some mistake they've made gets back to USAC and they get a COMAD, and my name is mud.

Wednesday, October 31, 2007

Better late than no-waiver

Another batch of remands today. Kind of boring: 13 cases of applicants cancelling funding requests without meaning to. (OK, so some of the applicants are claiming that they never did cancel the request and it was all USAC's fault. Whatever.) Only two things struck me about the order.

First, while I doubt that this order will be used as a precedent in many cases, if it is, it will probably be referred to as the Jingoli Order. Not as good as Bishop Perry or Academia Discipulos, but it has a nice Jersey ring to it.

Second, while at least one of the appeals (Nemaha) was filed over 4 years ago, one was received as recently as May. It gives me hope that some of the appeals I have languishing over at the FCC will get a response this year.

Tuesday, October 30, 2007

Online BEAR: thumbs up!

Well, I feel like we've run a pretty good test of the Online BEAR, and it gets thumbs up around here. It's a solid Web app, probably USAC's best.

Things I like:
  1. A surprising number of service providers were ready to use the system.
  2. I can use the browser Back button.
  3. The list of invoices is great, and having the invoice numbers be hyperlinks is good.
  4. Having the name of the certifiers be a link providing contact info is sublime.
  5. You can right-click on a link and pop it open in a new window, cut and paste back and forth, etc., and the thing doesn't break.
Things I don't like:
  1. The validation subroutine should be robust enough to strip out commas, dollar signs, spaces, etc.
  2. You can't cancel an invoice once you've submitted it.
  3. You can't amend an invoice once you've submitted it.
  4. Service providers can't amend an invoice before approving it.
  5. The notification emails are useless. All notifications should include FRN, BEN and SPIN at the very least. It would be nice to have applicant and service provider name, as well as the amount. It would also be nice if the "View BEAR Form" link at the bottom of the email actually worked. [I've heard that some people see the login screen when they click that link, but I just get redirected back to the SLD main page. Why log in? Is a completed BEAR some kind of secret? As I griped in items 3 and 4, no one can change the form once it's submitted. Shouldn't John Q. Public be able to see it at that point?

Numbers 3 and 4 should be on the list of features for the next upgrade. As it stands now, I end up cancelling a lot of invoices because the service provider doesn't agree with my numbers. They should be able to send me a note saying, "Cut the pre-discount by $5," then I change and resubmit. Even better, the SP should be able to change the pre-discount amount, certify, and bounce it back to me to re-certify.

But let's hope that before the next upgrade, this silly SP certification of BEARs goes away.

Bells and whistles I'd like to see:

  1. After I log in and choose to start a new form, the first thing I see should be a list of FRNs which I might invoice. The list would show funding year, FRN, SPIN, service provider name, and funding available. I'd just type a pre-discount amount next to one of the FRNs, click a button, and poof, I get a form with everything filled in except the form identifier.
  2. On the existing form, when the discount percentage pops in, so should the funding remaining in that FRN.

Monday, October 29, 2007

All in good time

It's official: this year's filing window will open on Nov. 7th and close on Feb. 7th. The USAC board approved a January 24th closing, but thank goodness, the closing has been returned to early February.

93 days! I think that's the longest window ever. Poor Mel (Blackwell): he wants a shorter window, and we're going the opposite direction. Of course, what Mel really wants is an earlier closing. In this case, I hope he doesn't get what he wants.

I, on the other hand, want a later closing for two reasons. The first is that forcing people to sign contracts for technology purchases at least six months before the purchase is made just isn't cost-effective. And forcing people to sign contracts and certify "secured" funding so far in advance of budget approvals puts applicants in an untenable position.

The second reason is based on one of the laws (well, one of my laws, anyway) of organization: a process will expand to fill the time allotted to it. So if the window closes at the end of April, the PIA process will shrink in order to process all those apps in two months. If the window closes in late December, the PIA process will expand to fill the extra weeks. So now let's have a show of hands: who wants an expanded PIA process? All right, I see a few hands up in the back, must be GAO or OIG observers. But I don't think even Catriona Ayer, the head of PIA, really wants to see the process go any further into the minutiae of funding requests.

Just imagine if PIA only had two months. I'll bet credits to navy beans that if your request was for Telecommunications Services, and less than $3,000 (which is about the median for the program), PIA review would consist of a spell-check. And you know what? The program wouldn't be any worse off: telecom is too highly regulated to be easily abused, and there's no point in trying to skim a percentage off $3,000. It's almost not worth it to do all the E-Rate paperwork for $3,000.

So the later the window closes, the more PIA will be forced to focus its effort on the areas that really deserve scrutiny, and leave in peace the 80% of applicants who just want a little help paying their measly phone bill.

Sunday, October 28, 2007

Bring you Macs

Last week's News Brief had a little tidbit that surprised me: the System Requirements for USAC's online forms includes Mac OS 9. Last I knew, USAC didn't support Macs. What a welcome change. The online forms just keep getting better. Except, ironically, the "Submit a Question" application. I still get an error about half the time I use that dog.

And all the tips for completing forms were useful, too. One editing suggestion: they should have added spaces to the list of things to avoid when entering costs. Here's my tale of woe. When you copy and paste an Excel cell, depending on the formatting of the cell, the number sometimes goes in with spaces before and after the number. In the online BEAR, if you paste such a number into the Pre-Discount total field, then hit the "Tab" key, the discount amount calculates correctly. But then when you finish the rest of the form and hit the Submit button, you get an error message saying that the pre-discount amount has to be a number. And since you can't see spaces, the number looks just fine. I confess to saying unkind things about Mr. Kraft and the Solix development team until I figured that one out. But now I just delete the spaces and all is well.

Saturday, October 27, 2007

This weekend?!

USAC has announced that in order to be ready for the opening of the 2008-2009 window a week from Wednesday, they will be performing maintenance on their systems this weekend. You've got to be kidding.

First of all, the announcement came out on Friday. I have a general beef with USAC taking its systems down with little or no warning. Did you know, for instance, that the Data Retrieval Tool is frequently unavailable from 9:00 to 11:00 p.m.? (It maybe every night; I haven't tested it.) I realize that the downtime does not affect normal users, and that it is a sad comment on my life that I am even aware of the outages. But putting aside whether the E-Rate has taken over too much of my life, my complaint is that when you're going to have a system outage, you give users notice. In the case of one-time, non-emergency outages like those planned this weekend, a week's notice would be fair, two weeks would be better. (OK, I know the FCC barely gave USAC any notice of the window opening, but the timing is hardly a shock.) In the case of routine outages like the DRT being out most nights, that information should be published on the USAC Web site somewhere.

Second, the timing is foolhardy. The announcement says, "any interruptions should be of minimal duration." In the IT profession, we call such statements "famous last words." Of course interruptions should be minimal, the same way that my kids should do as I say. But IT systems can be as unruly as my children. In any change to a system as complex as the USAC IT infrastructure, there will be unexpected results. I actually think that USAC has a pretty good record when they make system upgrades, but that means that the glitches are minor and quickly repaired, not that upgrades go off without a hitch.

In general, I have to question the choice of a weekend to do upgrades. If I (or any other sad individual unable to leave the E-Rate alone for a whole weekend) find a problem, my only option for reporting it is to use the incredibly lame "Submit a Question" (SAQ) application on the Web site. First problem: SAQ is finicky in the best of times, and if there's a system problem, it may become collateral damage. Second problem: if all goes well, my complaint goes into a Client Service Bureau (CSB) mailbox, where it will languish until Monday morning. My perception is that Solix (who seems to doing the systems work) does not have a big team of QA people testing the Web site after every change, so many glitches are discovered by users. That's OK with me, but only if the users have a way to report the glitches immediately.

So with two major deadlines coming up on Monday, I don't think this weekend is the optimal time to make system changes.

Monday, October 22, 2007

USAC creates more waivers

It's not on the USAC site yet, but a reliable source tells me that USAC has decided that the filing window will open November 7, 2007 and close January 24, 2008. Bad move. That early end date is a bad idea in the big picture, but especially bad for this year.

Big picture: If the FCC wants applicants to certify on the Form 471 that they have "secured funding" to pay the applicant share of costs, then the deadline for the 471 should be in late April or early May, when many applicants secure funding for the following funding year. (Some applicants don't secure funding until after July 1, but I don't know how to help them.) The earlier you move in the year, the earlier you move in the budget formulation process, the more meaningless that certification becomes.

For this year: USAC has been saying at the trainings that the window would close in early February. By closing it in the third week of January, they're going to cause a lot of people to file late. And you know those people are going to request a waiver from the FCC, and they're going to get it, only they won't get it until well into the funding year and it creates extra paperwork for everyone.

I hope the FCC is prepared for the wave of appeals coming.

Saturday, October 20, 2007

Gentlemen, start your engines!

The Eligible Services List (ESL) for the 2008-2009 funding year has been released. I'll have comments on the list I'm sure, but probably not until after BEAR season ends. There don't seem to be any big surprises.

The big news with the actual release of the ESL is not eligibility, but timing. For the second straight year, the list was released on Oct. 19th. That's too late. When the FCC started the current ESL process (public comment and FCC approval of the list), they set a rule that the list must come out 60 days before the opening of the window. They have never even come close. This year, we got 19 days.

The 60-day waiting period is a good idea. A change in the ESL can make a change in an applicant's purchasing plans. That change may require an amendment to the technology plan, which has to done before filing the Form 470, which should be done 28 days before the opening of the window. With only 19 days, you can't even get a 471 filed at the start of the window unless you filed a 470 before knowing what would be eligible.

True, there is plenty of time within the filing window to file the 470 and then the 471, but that's not behavior that the FCC should be encouraging. Mel Blackwell has said that he'd like to shorten the filing window, since we all file in the last 2 weeks of the window, anyway. In order to make that change, applicants have to get used to filing the 470 before the window opens. The FCC is making that very difficult.

In the notice announcing the release of the ESL, the FCC authorized USAC to open the window on November 7th. Why? Didn't Mel Blackwell stand up and say that the window would start in mid-November and end in early February? Why open the window so early? I think there will be much wailing and gnashing of teeth if the window closes before, say, February 8th. That would give us a 93-day window. Mel said he wants to shorten the window, and we get this.

The FCC should have opened the window on November 26th. A shortened window would be best achieved in increments: cut it to 74 days this year, then 60 days next year, and so on. But part of the key is actually having the ESL come out 60 days before the window opens. Gradually, applicants will get used to filing the 470 before the opening of the window.

Plus, of course, the FCC would be modeling good behavior by meeting deadlines, instead of waiving its own rules every single year.

Tuesday, October 16, 2007

Where, oh where, has our ESL gone?

Where, oh where, can it be?

It's a pointless exercise, but a bit of a tradition on this blog, so let's start the annual Eligible Services List (ESL) watch. For those of you who don't know, the FCC released USAC's proposed ESL on July 27, allowed comments until August 17, and is now reviewing those comments.

By the FCC's own rules, the ESL must be published 60 days before the opening of the 80-day application window. That's a reasonable (though not generous) amount of time for applicants to determine which services are eligible, post a 471, and wait 28 days for responses.

Let's do some math: If the ESL came out today, the window could open no earlier than December 15, which would make the end of the 80-day window March 4.

But every year since the FCC created the 60-day rule, they have waived it. And the 80-day filing window is just tradition, I think: I don't think I've seen it enshrined in any FCC rulings. Since Mel Blackwell (head of USAC's Schools & Libraries Division) stood up at the training this year and said that the window would open mid-November and close in early February, I'm betting that the FCC will release the ESL in the next couple of weeks, waive the 60 days down to 25 days, and give us a window a little shorter than 80 days.

Want to join in the fun? Here's your opportunity to make your own guess on the dates.

Wednesday, October 10, 2007

Today's diversion

The National Telecommunications Cooperative Association (NTCA), an association of rural telecom providers, has made The Sweet Sounds of the Universal-Service Fund: Phone on the Range, a short advocacy video with singing cowboy marionettes. Apparently it's been around for a year, but I just found it. It could be the next Numa Numa song.

I especially like the school kid using a laptop on horseback; thank goodness that mobile Internet access has been made eligible, otherwise that poor student would be Internet-less while punchin' dawgies.

Thursday, October 04, 2007

Dwindling competition

Funds for Learning every now and then releases a paper on some aspect of the E-Rate, and they're usually worth a look. I especially like them because they're short, with lots of graphs and tables, which is how I like my info.

They've just released a new report on the dwindling number of service providers in the E-Rate program. It's very short and has some interesting figures. The main gist is that the number of service providers in the E-Rate program has dropped every year since the program's inception. That's bad, because it might indicate decreasing competition. And the E-Rate application process already inhibits competition more than it should.

Of course, it got me thinking (one of my difficulties in life is that everything gets me thinking). I wondered what the numbers look like broken out among Categories of Service, so I did a quick analysis. Here's what I noticed.

By 2003, more than half the Internal Connections (IC) service providers (SPs) had left. (It's hard to get a clear picture since then from the quick analysis I did, because Basic Maintenance (BMIC) split off in 2005.) The E-Rate program is frustrating for service providers, because the funding is unpredictable. Also, the overhead associated with E-Rate funding is hard for IC SPs, since many of them only have one or two E-Rate projects, as opposed to a telecom, which has an entire E-Rate office. Every year, I'm contacted by a few gung-ho IC bidders, who think that the E-Rate is a gold mine. Within a year or two, almost all of them have given up on the E-Rate.

The number of Telecommunications Services (TS) providers plummeted 25% in the first two years, and has basically been steady ever since. I notice that the Eligible Services List for 1999 did not make clear that TS could only be delivered by common carriers, while the ESL for 2000 did make that clear. Does that explain why the number of SPs dropped so suddenly?

Since 2003, the number of SPs has held steady for TS and Internet Access (IA). The numbers for IC/BMIC are a little less clear (again the 2005 split created some double counting), but the total effect seems to be a drop in SPs.

Here are the starkest numbers to me. For 1998, there were twice as many SPs in TS as in IA, and twice as many IC as TS. For 2007, the number of SPs for TS, IA and IC (including BMIC) look about even.

I'd like to compare the numbers for funded FRNs, and take a closer look at the "churn" that Funds for Learning mentioned (looking at the number of SPs leaving the program and the number of new ones coming in), and remove the double-counting caused by the IC/BMIC split, but unless someone's going to pay me to do it, I'd better get back to work.

Tech plan debacle

As I mentioned in my previous post, I took a look at the report for the E-Rate that the FCC Inspector General did as part of an analysis of audit results. The IG singled out the number of failures due to tech planning. I hope that will make the FCC rethink its rules on tech planning. I have two alternatives for fixing the problem.

Alternative #1: Scrap the tech planning requirement. Mandatory tech planning is like mandatory sensitivity training; the people who need it are just going through the motions. Most of these tech plans are dusted off every 3 years, renewed, then put back on the shelf. We can argue about the merits of a long-term plan vs. a flexible response to changing needs and costs, and maybe schools would benefit from more planning, but it's certain that if a tech plan is done only to satisfy outsiders, it's useless.

Alternative #2: USAC should run an online tech plan tool. The tool should create a much clearer idea of what the tech plan should be, and automate creation and maintenance of the plan. I know the PA Dept. of Ed has done this with their eTechPlanner, and Kellogg & Sovereign created an online tech plan creator for their clients (and has made it available to others). A tech plan tool from USAC could go further in forcing applicants to report progress on completing the plan and to update the plan. Also, if USAC were running the tool, if an applicant tried to file a Form 470 for a period or category of service that was not covered by the tech plan, the applicant could get a warning.

I know that many people would be reluctant to turn the tech plan into basically another form to be filled out, but here's my attitude: USAC and the FCC have certain requirements when it comes to tech plans (incidentally, the IG report points out that those requirements clashed when it comes to tech planning). A well-designed form clearly lays out expectations, and makes it more difficult to inadvertently fail to meet requirements. Turning the tech plan into a form wouldn't create new rules or add complexity, it would bring the existing rules and complexity out into the open.

Which program is "troubled"?

The FCC's Inspector General has released an analysis of audits of the Universal Service Fund. The first thing that jumped out at me was the only statistic in the press release.

"The audits resulted in the following erroneous payments rates: Contributors payments - 5.5%, Low Income - 9.5%; Schools and Libraries - 12.9%; High Cost Fund - 16.6%; and Rural Health Care - 20.6%."

So while the E-Rate has been made the poster child for USF waste, fraud and abuse, it actually has fewer erroneous payments than High Cost or Rural Health Care.

I wish I had some spare time to compare the number of rules involved in each program, because it seems to me that the E-Rate rules are much more complex than any of the other programs; we know that USAC spends a lot more administering it.

I also took a look at the report for the E-Rate. My favorite part: the IG made a list of reasons for non-compliance, and included "Imprecise FCC Rule/s," "Contradictory FCC Rule/s" and "Overly Complex FCC Rules." How many cases of non-compliance were attributed to those reasons? Zero, zero and zero. I think if the IG took a survey of applicants about reasons for non-compliance, imprecise and overly complex rules would be reasons #1 and #2.

The other thing that jumped out at me (and apparently IG, too) was the number of failures due to tech planning. I hope that will make the FCC rethink its rules on tech planning. More on that in my next post.

Monday, October 01, 2007

How minimis can you get?

Another Bi-Annual Audit Recovery Report has been released. It's pretty much a yawner. Of the $1.6 billion in funding audited, only $81 million requires recovery. That means when someone is audited, which is often the result of USAC suspicions, improperly disbursed funds are found only about 5% of the time. Of that total, $25.5 million is being appealed, so maybe the percentage is actually lower. And that 5% includes applicants who didn't necessarily do anything wrong, but can't prove they did the right thing. Seems like a pretty clean program to me.

But the thing that jumped out at me: USAC is going after an applicant for $329. There may be other applicants being pursued for similar amounts, but this applicant happened to be the only one in its category, so it jumps out.

In the Fifth Report and Order, the FCC said, "We also conclude that a de minimis exception is in the public interest and direct USAC generally not to seek recovery when the administrative cost is greater than the recovery amount." So USAC set the threshold at less than $329?! If USAC can really collect on audit findings for $329, considering all the appeals, letters, etc., I want to hire them to go after my deadbeat clients.

By the way, there is a de minimis standard in the Universal Service Fund. The de minimis standard for phone companies who contribute to the fund is $10,000. Granted, it's an apples to oranges comparison, but how can an apple be $329 when an orange is $10,000?

Sunday, September 30, 2007

Oh, happy day!

I got a little piece of sunshine in the mail yesterday: a pink envelope from USAC. True, it was a remailing of a 486 that had been returned due to an address error, but it gives me some small hope that colorful envelopes are not going the way of the dodo.

Thursday, September 27, 2007

The side with the most suits

Let's hope the side with the most suits win in this one. While the FCC brought five people to a recent "ex parte meeting" (think "private audience"), which I think is more than usual, but SECA (the State E-Rate Coordinators Assoc.) brought a whopping 28. What issues brought people from all over to the FCC? And what do I think of them.
  1. It seems that SECA asked to have the Form 471 online application go live before the filing window opens. Not a good idea in my mind. I'd rather give USAC all the time we can to add new features to the online form. Mel Blackwell mentioned that they want the online 471 to pre-populate as many fields as possible. If they would be able to have a "duplicate last year's 471" button, I'd be willing to wait until January.
  2. Clarification of when FCC rulings apply to all applicants, and when they apply only to the appellants. Yes! Actually, it is usually pretty clear, but it took forever for USAC to acknowledge that the FCC was saying that two dates are not necessary on a contract. More clarity is always better.
  3. SECA reiterated the request in their ESL comments that USAC let applicants slide on whether they put the right Category of Service on the Form 470. I don't see how the FCC can go along with this one. If I don't check on the 470 that I want Telecom Services, how are potential telecom bidders supposed to find me? On the other hand, the Form 470 is all but useless as a tool to promote competition anyway, so why be a stickler?
  4. "Procedural clarification of status of Comprehensive Reform NPRM." I hope that the 28 people at the meeting will let the rest of us know if the FCC said anything of note about this. [I know some of you SECA members read this blog; how about posting a comment? You can remain anonymous.] This thing is like the Sword of Damocles. Conscientious applicants are starting to file 470s, and a month from now, the FCC could say that 470s are no longer required for FRNs under $3,000 (see paragraph 40 of the NPRM). That's most of the FRNs in the program.
  5. SECA requested that the amount of rollover funds be announced before the start of the funding year. I'm all for that. It's not as good as my scheme to use rollover funds to set the denial threshold at the start of the filing window, but it's a big improvement over the current chaos.

Way to go, SECA! But if you know, please tell us if the other shoe from the Comprehensive Reform is going to drop for the 2008-2009 funding year.

Tuesday, September 18, 2007

New Form 486 online

For those of you that haven't heard, the new online Form 486 is available.

I took it for a little spin this afternoon, and I like it. I got a couple of errors, but that's not unusual for me; I must have some security setting somewhere that doesn't agree with the USAC's applications, because I get an error most of the time when I use the "Submit a Question" system, and occasionally get them when I use other tools.

The bottom line: I was able to submit and certify a Form 486 pretty quickly. Much more quickly than the old fill-in PDF or the Interview.

A feature I'd like to see in version 2.0: automatically pre-populate Item 7, so I don't have to type in anything. If Item 7 listed all the FRNs for the applicant, with a start date of July 1, 90% of applicants would just click "Next" and be done. For the few that need to take out an FRN or change a date, that would be much quicker than adding an FRN.

(By the way, at the USAC training last week, Mel Blackwell said that he wants more pre-population in all the application tools. Bravo!)

One big problem: The "Display" button will only display forms that were submitted using the new tool. So there is still no way to display a 486 that was entered in the past. That's got to be fixed, preferably in version 1.1.

But all in all, kudos to the USAC IT folks on another tool well done.


The unkillable "two-signature/two-date" rule (2s/2d) is finally really dead. I couldn't see how it could survive the Adams County Order, but it had survived many other attempts to kill it.

Many of us had been whining for years that it is common for a contract to have two signatures, but only one date. However, USAC had taken the position that the Fifth Report and Order required that all contracts have two dates. The Adams County Order cleared that up.

But USAC has gone further than anyone expected. Now contracts only need one signature, if that is allowable under state law. So we're down to 1s/1d.

New letters

As always, the Q&A sessions at the USAC training last week in DC were too short. Here is the most burning question that I did not get to ask at the recent USAC training: What color will the envelopes be?

I've been on this issue for a while. I just want the envelopes to match the paper.

Apparently, letters from USAC will soon be printed on both sides of the paper (and 3-hole-punched), then folded in half and put in 6x9 envelopes instead of the 9x12 envelopes. I'm not looking forward to the 2-sided letters, since my copier doesn't do 2-sided copies, but I think it's worth it to save some trees. It's also going to cut USAC's costs, which is all good.

But would it cost so much to make the envelopes brightly colored?

Monday, September 17, 2007

FCC meets the heavy hitters

On Sept. 13th, the FCC got a visit from AT&T, Verizon, Embarq, Sprint and Qwest. I can't keep up with all the mergers and splits among telcos, but I'm sure that covers most of the phones in the country.

So they came bearing a bunch of ideas for reforming the E-Rate. I was prepared to hate the ideas, as I have in the past, but I kind of like them. Here's my scorecard:

E-Rate accounts
Description: Instead of having applicants (or service providers) invoice USAC, once funding is approved, it goes into an account that applicants can use to pay bills.
My Assessment: It's outside the box, which I like, but the idea's no good. It's a cash flow nightmare: USAC would have to pay a huge amount up front, and some applicants would have to return funding at the end of the year (which they wouldn't do, so USAC would have to chase down that money).

Short-circuit BEAR payment loop
: Send BEAR reimbursement checks to applicants, instead of ricocheting all checks off the service providers.
My Assessment: Yes, yes, yes.

Require separate 471s
: Require that Priority 2 funding requests be on a separate 471 from Priority 1 requests.
My Assessment: This suggestion isn't bad, and was made for all the right reasons, but I hate new requirements. And the whole problem would go away if PIA would just get comfy with "As Yet Unfunded."

Form 471C
: Create a separate Form 471 for the continuation of multi-year contracts, kind of like the 1040-EZ.
My Assessment: I'm on the fence about this one. Multi-year contracts are a little tough, but a whole new form? I'd rather see smart pre-population of the 471: you click a button on the online form, and all your FRNs from the previous year pop in, and any multi-year contracts you submitted come in nicely.

Close 470 window early
: Make 12/31 the deadline for submitting the 470.
My Assessment: No. The idea is to give applicants more time after the 470 to file the 471, but let's get real: most applicants need one day to file the 471, and it will be the last day they're allowed to file. And if you take a step back, one of the big-picture problems with this program is that it forces applicants to make technology decisions 6-18 months before the technology will be implemented. Let's not make that any worse by pushing deadlines further away from the implementation date.

Early ESL
Description: Release the Eligible Services List by June 1 every year.
My Assessment: If I could turn my E-Rate dreams into lucid dreams, this would be one of the first.

The final score: 2-3-1. But there were two lovely proposals, and none that I hated.

Follow the money

I took a glance at the contribution factor proposal for Q4 2007. The only part I found interested was the table on page 2, which breaks down costs for each program. I can see why there's so much excitement about the High Cost program. Back in '96, the E-Rate and High Cost were about the same, I think. Now it looks like High Cost is more than twice as big as E-Rate. Granted, the E-Rate cap, which does not adjust for inflation, means the program is being cut a bit every year, but still....

I dumped the numbers in a spreadsheet because I was interested in what percentage admin costs were of the total for each program. E-Rate comes in around 3%, which I think is quite reasonable.

Here's something that sticks in my craw a little: the admin costs for E-Rate and Rural Health Care (RHC) are about 10 times the cost for High-Cost and Low-Income. What do E-Rate and RHC have in common? The funding goes to someone other than a telco. One message you could take from that is: we trust telcos, but we don't trust schools, libraries and hospitals.

Of course, if I look at where waste, fraud and abuse is being found in the E-Rate program, I can't think of any cases involving telcos.

Thursday, September 13, 2007

Training day

So here I am in DC at the first training. Some impressions from the first day:

So I was checking out my idea that no one says "SLD" any more, only USAC. I think I only heard "SLD" once: when Scott Barash was talking about the history of the program. Mel Blackwell said "Schools & Libraries Corporation" a couple of times when talking about old times.

I hadn't heard Scott Barash speak since he became head of USAC, so I was pleased to hear him refer to applicants and service providers as "our customers." He also said: "We value your input.... We're listening." I know, just because he says it doesn't make it so, but when the leadership of an organization says something, it has an effect. So it was good to hear Mel Blackwell (whom I would call the head of the SLD, but no one says "SLD" any more, so I'm kind of stuck) say, "We're trying to be more friendly and tell you more of what to do."

Mr. Blackwell also said he'd like to get appeals "down to zero," and pointed out that appeals are going down. Not to be a spoilsport, but at least part of that is because there's no point in appealing to USAC any more: just go straight to the FCC. And there will be some upward pressure now that we can include new info in appeals. Long term, though, the number of appeals will go down, because they've finally listened to me, and are going to send out "you're about to be denied, here's why, and here's what to do about it" letters.

Mel also said that he wanted to shorten the window, though not this year. What he really wants to do is move up the 471 deadline, so that they can get a better jump on processing applications. Wrong. Move up the deadline, and applicants will howl. On the other hand, announce that applications will be processed on a "first-in, first-out" basis, and applicants will start filing earlier. It's all about incentives.

If you were hoping for an update on rule changes, you'll have to wait for tomorrow at least.

Wednesday, September 12, 2007


I was just looking at the PowerPoint slides from an ex parte discussion that Embarq made at the FCC. It's all about the E-Rate, so of course I have opinions I'd like to share. Here are the main topics I teased out of it.

Embarq makes the case that in order to get funding from the E-Rate, VoIP vendors should have to follow telecom regulations. Well, yeah, except that VoIP is currently under Internet Access. I'm all for making VoIP a "basic" Telecom Service (and said so in my ESL comments this year), but until that happens....

Embarq wants to tighten up the certifications required of service providers. I'm OK with all their suggestions except the last one: they suggest that all service providers be required to file a Form 473 (the SPAC, which service providers file annually) before taking part in bidding. That might be reasonable if bidding took place close to the start of service, but since bidding has to start at least 6 months before service can start, it seems odd to force service providers to file an annual certification half a year before the annum.

This one I like. Basically the idea is to have more information displayed about service provicers on the USAC Web site.

I don't work for service providers, so I don't know what effect these suggestions would have.

Competitive Bidding Impropriety:
Embarq made a good suggestion and a bad suggestion. The good suggestion: consultants should have to certify that they are not affiliated with any service providers. The bad suggestion: No school district employee or board member should be allowed to serve on the board of any service provider in that state. Just look at the WiscNet travesty, where a bunch of school districts had people on the board of a cooperative that provided Internet access, and got COMADed.

Internet Access Usage:
I'm on Embarq's side here. The slide doesn't say so, but I suspect that they are aiming at applicants who set up a WAN, then hook that WAN to the Internet, and call it all Internet Access. It's not, even under current rules, but the rules need to be clearer on that.

Tuesday, September 11, 2007

A slice of PIA

The business section of our local paper made prominent mention of BearingPoint's stock tanking over 10% in one day to a new all-time low. I took a quick look, and it seems to have lost a third of its value over the last month and a half.

I don't spend too much time trying to read the tea leaves on Wall Street, but it got me wondering: How much BearingPoint stock would I have to buy to create enough of a conflict of interest that BearingPoint wouldn't be able to conduct site visits with my clients?

Which got me thinking, why stop there? Solix (née NECA Services) apparently recently changed its rules so that ownership of stock is no longer restricted to NECA members, so I gotta get me a piece of PIA. But it seems to be closely held, and I don't know any telecom CFOs I can ask for a piece of the action. But I'll keep my eye out for an opportunity.

Monday, September 10, 2007

Training pre-assessment

The SLD has released the slides for the trainings that start this week. My pre-assessment of the training.

The Good:
Sessions devoted to tech planning and competitive bidding. Both of these are areas where applicants often lose funding. Of course, a lot of that is due to bad rules (e.g., the "2-signature/2-date" rule, which was of course never really a rule, but which nevertheless torpedoed millions in funding; or the "sufficient resources" rule, which requires applicants to certify that they have secured funding 3-6 months before their budget is secure).

The Bad:
PowerPoint-as-handout. It's a pet peeve of mine for two reasons:
  1. Slides with enough info to be of any use as a handout induce the presenter to read. I don't want to spend an hour listening to someone read.
  2. Slides cannot contain enough information.When Slide 7 of the Competitive Bidding stack says, "Make sure that you have a Letter of Agency" (LOA), that doesn't tell me in which circumstances I need one, or what it needs to look like. However, since the slides have not been approved by the FCC, there may be statements that are not in alignment with the FCC's thinking, like, for instance, USAC's apparent belief that an LOA is required any time a consultant works on an application, not just when s/he is a contact or signatory on the form. So maybe it's just as well that the handouts don't try to actually spell out the rules.
The Ugly:
Only one hour to cover Eligible Services (which includes Item 21 Attachments and Service Substitutions). 63 slides in 60 minutes. I'd better arrive Friday morning highly caffeinated.

Friday, September 07, 2007

SLD, we hardly knew ye

I've almost entirely stopped using "SLD"; now I use "USAC." It hasn't been anything conscious, and maybe it's been going on for a while, but I just noticed it this week. I'm thinking USAC has stopped using "SLD," but I can't think of a way to check that in under 5 minutes, so it will have to remain a hypothesis. Or maybe I'm spending more time with the invoicing people, who are not, I think, part of SLD.

Or maybe I just like "USAC" more because it sounds like an insult.

Thursday, September 06, 2007

Pretty pictures

Funds for Learning has released a cool new report. Basically, they took performance measures in the FCC's new Report and Order and ran the numbers. My kind of report: almost all pictures. It was interesting to see things like the mean time for PIA to process an application, but only one graph made me say, "Wow!"

On page 12, they show the mean and median amounts for FRNs. Two things jumped out at me:
  1. The median is low. The median has stayed steady at around $3,000, which means that half of all FRNs are requesting less than $3,000 of funding for the year. Now it seems to me that it would be reasonable for the FCC to say, "You know what? FRNs that are less than $2,500 just aren't worth the time it takes PIA to review them. From now on, they'll get PIA Lite." (Yeah, I know, you'd have to have some rule to keep applicants from breaking all their large FRNs into teeny ones.) Instantly, PIA workload would plummet.
  2. The mean is so much higher than the median. Thinking about it, I shouldn't be surprised: the sky is the limit on funding requests. I did a quick check, and for 2007 there were 418 FRNs requesting more than $1 million, and 18 over $10 million. That will drag up your average.

Some other interesting tidbits from the list of monster FRNs (most of these are not approved yet):

  1. The single largest FRN: Dallas, for $57 million.
  2. LA had 5 FRNs over $10 million.
  3. NYC had the largest non-Internal Connections FRN: $25 million for NYC's phone bill.
  4. Largest Internet Access FRN? The statewide network in TN, of Tennessee Order fame.
  5. Largest Basic Maintenance FRN? NYC, for $6 million
  6. Who's really hoping for the Katrina relief to be extended? Jefferson Parish, which stands to have their Internal Connections FRN jump by over $1 million if the FCC decides to give Katrina victims a 90% discount for FY 2007.

Discount madness

Man, USAC needs to do some training on how to calculate your discount. I just saw an appeal by yet another school district extrapolating their NSLP (USDA National School Lunch Program)numbers based on the percentage of NSLP forms returned.

For those of you who don't know, USAC rules allow applicants to send out an income survey, and if you get half of them back, you can make a projection based on the percentage of low-income students in the returned surveys. So if half the kids return the survey, and 75% of them are low-income, then you can say that 75% of the students in the school are low-income. Nice!

But you can't use the NSLP application as a survey and make a projection based on it, and I think this is like the 3rd appeal I've seen where some district did just that.

Why can't you use the NSLP form? Here's an analogy: Let's say you sent a survey home to parents, asking if their child was a boy or a girl, and said that you would give $250 to anyone who returned the survey if their child was a girl, but $0 if it was a boy. Of course 90% of the responses you got would say "girl"; the parents of boys just wouldn't respond

The NSLP form is like that: Low-income families who return the form, you get about $250 worth of free lunches (and maybe free breakfast, too). Families that are not low-income get bupkus. So of course the district doesn't get a random sample. They get almost all the low-income families responding, and almost none of the non-low-income families. It's a non-random sample.

I think the USAC Web site needs to state outright: "You can't use NSLP applications as a survey instrument." And put it in a NewsBrief, too.

Saturday, September 01, 2007

Cloak and dagger

Here's an appeal that burns my butt: a school district files two 470s, picks the wrong one for one of its FRNs, and gets denied.

This district lost funding because PIA clings to secrecy, whether it's warranted or not. The PIA reviewer did ask the district to confirm the establishing 470. (Those of us who do this for a living know that if you are asked to confirm anything, you're about to lose funding.) The unsuspecting applicant made the same mistake twice, and confirmed the wrong 470. Denied.

How should this have happened? The PIA reviewer should have said, "Your establishing 470 doesn't have this service listed. Either give me another 470 number or you'll lose funding." It would have saved everyone a lot of time, effort and heartburn, because you know the FCC is going to remand this one.

Why the secrecy? What could the applicant have done, knowing that the 470 was wrong? I cannot imagine a way for the applicant to use that information to defraud the program.

You want to know what great customer service would have been in this case? The PIA reviewer has access to the 470s filed by that applicant. S/he could have looked it up and said, "It looks like you picked the wrong 470 for this FRN. Did you mean to pick this other one? If you switch now, everything will be fine. If you don't switch, you'll lose funding."

Why do I hear John Lennon singing "Imagine" in my head?

The secrecy is creating a lot of waste. OK, I can see why PIA doesn't want to release, say, the algorithm it uses to select applicants for Selective Review; people would take steps to avoid being selected by the algorithm. (Of course, if you built a solid algorithm, it would serve as a deterrent to waste, fraud and abuse; people would avoid Selective Review by not being greedy, having service providers "help" file the 470, etc.) But it is just ludicrous that PIA reviewers don't say anything to applicants other than canned requests for information.

Thursday, August 30, 2007

It's about time

Remember back in June 2005, the FCC released a broad Notice of Proposed Rulemaking (NPRM), requesting general comment on the way the Universal Service program was run? Well, a short two years later, we have a Report and Order covering administrative matters, with the promise of a policy order to come.

First beef: Why didn't they call it the Sixth Report and Order? Now we're going to have to call it the "August 2007 Report and Order" or something. OK, the other 3 programs haven't had a Fifth Report and Order, but at least it would have a name.

Much of the document seems to be concerned with bringing the other 3 USF programs in line with regulations already applied to the E-Rate program. But on my first read, I see a few changes for applicants:
  1. Expect some changes in the forms, as USAC will be collecting some new performance measures of the program's success. One interesting measure is that USAC will have to collect information on what technology applicants are using to connect to the Internet.
  2. The FCC declined to adopt processing standards for USAC, but will be measuring processing times. So maybe we'll see standards in a couple of years.
  3. The FCC has mandated that USAC reach out to "a sample of the economically disadvantaged schools and libraries that choose not to participate in the E-rate program. The Administrator should determine why these schools and libraries choose not to participate and assist them, if necessary, in the beginning of theapplication process." HATS on steroids.

The big question is, when will we see the promised policy order? I'm hoping before the end of the federal fiscal year on Sept. 30. On the other hand, if it took them over 2 years to come up with this order, which says almost nothing new, we may be waiting decades for substantive change.

Wednesday, August 29, 2007

What's your favorite flavor?

A star-crossed Tech Director from CA went to an ice cream store (for fear of lawyers, I'll just say it's probably the largest chain in the U.S.), looked down at his napkin and saw this.

First the E-Rate invades my dreams, and now I'm afraid to go out for ice cream.

But it's got me thinking: what kind of ice cream flavors might be inspired by the E-Rate? I mean, Rocky Road would be appropriate, but I'm thinking of custom flavors like:
Filing Window Crunch
Service Substitution Fudge
Eligible-Services-List-Late-Again Ripple
Applying-for-E-Rate-is-Not-a Sherbet
Nutty Rules
Raisin' Requirements
Internal Controls Cone (of Silence)
FRN Split
These-Rules-Are-Making-My-Head Swirl
You-Get-an-Extra-Day-Because-the-Window-Ends-on-a Sundae

I was trying to work out a name taking advantage of "caramel" ending in "Mel," but I just couldn't come up with anything.

Friday, August 24, 2007

Time for a new job

Here's a sign that I spend too much of my time on this program: last night I dreamed that I was on the phone with a PIA reviewer. The good news is that while 4 years ago, all calls with PIA were nightmares, this dream was not scary (though I wouldn't call it pleasant).

Wednesday, August 22, 2007

Site visits creepier

The audit creep continues in the Extended Outreach Site Visit (EOSV) program. Originally billed as a way to collect feedback and success stories, with a little regulatory compliance tacked on, now they are becoming just on-site audits (focusing on Priority 2), with a little feedback tacked on.

The paperwork requirements for these visits just keeps growing and now they're adding document requirements that shouldn't be requirements.

The latest follow-up letter I got demands a "maintenance log." The only mention of such logs that I could find on either the USAC or FCC site is on the EOSV page of the USAC Web site, where it says they want logs "if available." USAC's Document Retention Checklist doesn't mention anything about logs. But the follow-up letter I received implies that the logs are required. How intimidating for an applicant who is not familiar with the rules. On the plus side, the letter does have a reference to the Fifth Report and Order, where the FCC's rules on document retention can be found.

Apparently USAC is scaling back on EOSVs (from 1,000/year to 350, and maybe to 100 soon). It can't come soon enough.

Friday, August 17, 2007

No comment

Since I have only opinions, not facts, I won't be submitting a comment for the about the latest Request for Comment from the FCC, about the request by Louisiana and Mississippi to extend the special Katrina relief rules. The states have asked that all affected schools be kept at 90% for 2007 for Priority 2, and that the funding be expanded to cover all Prio 2 purchases, not just those necessary to return schools to pre-Katrina levels.

OK, I can definitely see how schools would still be rebuilding, so it does make sense to extend the rules. But I'm opposed and here's why:
  1. Expanding the "relief" to include any equipment a school cares to purchase because the school was damaged is going beyond even the original scope.
  2. The E-Rate is not the right vehicle for relief. I just don't see the connection between interstate telecommunications and hurricanes.
  3. Giving anyone a 90% discount is a bad idea: it causes waste, fraud and abuse. Giving a 90% discount to a broken school, a school scrambling to get back on its feet, a school where administrators are strained to the limit, is just asking for it.
  4. For 2007? Now's the time to grant relief for 2008-2009. That way there will be some predictability for applicants.
  5. If the FCC really wants to do this, they should take some of the rollover funds (the original estimate was $132 million) and set it aside for Katrina relief, and let damaged schools apply for 70% funding of internal connections until 2009-2010, or until the money runs out, whichever comes first.

But I find it hard to tell the FCC that I think the people affected by Katrina don't deserve special consideration, so I'm keeping my comments here.

Tuesday, August 14, 2007

Secrecy rules

Another appeal caught my eye today. Basically, an applicant is appealing the retroactive denial of almost a million dollars of funding that was approved and disbursed in 1999.

The appeal leads off with a reasonable request for the records that led to the denial of funding. Since lawyers wrote it, they call it "discovery." And the poor lawyer who wrote the appeal seems to really believe that it is a reasonable request that will be granted once a reasonable person reads it.

Not in the E-Rate program. As the FCC made clear in the Inter-Tel and Harrington-Lueker decisions, PIA review records are secret. That's right, if an applicant is denied for funding, and requests the records used to make that determination, USAC and the FCC will stonewall.

So not only is the 700-page rule book for PIA reviewers secret, but so is the material they collect during their review.

It's an astonishing level of secrecy for a program that involves transfer of funding from one government entity to (almost entirely) other government entities.

I don't buy the arguments that investigatory techniques, like the exact benchmarks that trigger a Selective Review, should be kept secret. Publicize them. Tell applicants: "If you do the following, you will get a Selective Review." "If you spend more than $X.XX per student on a data network, you will get a Cost Effectiveness Review." And so on. Applicants will stop doing those things.

Because by keeping them secret, USAC and the FCC are denying many more funding requests from honest applicants who made an error than from dishonest actors.

What really gets me is that the FCC keeps the information secret by hiding behind regulations created to keep "law enforcement" practices secret, so that criminals wouldn't be able to stay a step ahead of law enforcement. I'll bet you didn't know that when Solix, a for-profit private company sub-contracted by USAC (a non-profit private company), reviews your application, you are actually involved in a law enforcement proceeding. First of all, how can the government outsource law enforcement? And second, why is a routine application for funding considered a law enforcement action?

Monday, August 13, 2007

Danger, Will Robinson!

I've been perusing all the comments that people have posted about the Eligible Services List, and I agree with most of what I've seen so far, but I saw one that made me think: "Be careful what you ask for."

The State E-Rate Coordinators' Association (SECA) started with a good premise: applicants should not be punished for accidentally putting the T-1 to their ISP under Internet Access on the 470, or listing the Internet access on their phone bill under Telecommunications Services. And then what do applicants do about Blackberry service? It's a problem.

But I think the solution that SECA suggested opens a large can of worms. Vicious, man-eating worms.

They proposed that PIA shouldn't just look at whether the 470 had the right Category of Service, but should instead look to see if the actual service is listed on the 470, regardless of what Category of Service it was listed in. No, no, no.

I do not want PIA reviewers trying to match up individual items on the 470 with my Item 21 Attachments for 3 reasons.

First, it would take a lot of time. Since there is no standardization of terminology on either the 470 or the Item 21, PIA reviewers would have to waste a lot of time trying to figure out what goes with what. More PIA time on each app means longer waits for FCDLs, and more money for admin overhead.

Second, PIA reviewers would make mistakes. Who could blame a reviewer if s/he sees "trunk line" on the 470, but "ISDN PRI" on the Item 21, and doesn't realize they're the same thing.

Third, PIA would be forced to do make some ad hoc rules about what is allowed on the 470. If I put "data connections for 4 buildings" on the 470, and on the 471 I put "4 T-1 lines" or "leased fiber WAN" or even "purchase of fiber optic cable for 4 buildings on one campus," that's OK, as long as the Categories of Service match up. Would it be OK under the SECA proposal? I don't know. And I don't like going into the application process with even more unknown rules.

I agree that PIA's use of Category of Service to match 470s to 471s is far from perfect, but it beats SECA's suggestion by a mile.

Thursday, August 09, 2007

Good news and more good news

Any of you who've been reading right along now that I love to ponder the E-Rate program and imagine how it should be. But man, after a day of meetings with a bunch of E-Rate wonks and some USAC staff, I'm ready for a day of filing 486es (the most mindless, most pointless, and easiest part of the E-Rate process).

Many points of E-Rate arcana were discussed, and I thought the meeting was useful and interesting, but there were two things that really jumped out at me.

First, Mel Blackwell (for those who don't know, the Big Enchilada at SLD and the man responsible for some positive changes there) said that from now on, applicants can include new information in appeals. That's great news. I can't find where the FCC changed this rule, but I don't spend as much time looking at FCC rulings as the folks at USAC do.

Catriona Ayers (the head of PIA) said that from now on, if applicants are going to be denied, PIA will send a letter listing the reasons for denial, and applicants will have 15 days to fix it. It's a dream come true, and the only way that USAC and the FCC could hope to staunch the growing flood of appeals. I don't see where the FCC requires this exact practice in all cases, but it's certainly clear from the series of orders that came out on May 8 (see the list here) that the FCC wanted applications handled this way.

I actually got one of these letters, but I thought it was just an isolated procedure. In the case of the letter I got, though, I found a lack in "specificity," which is mentioned in the May 8th orders.

The net effect? USAC's hands are untied, and they'll be able to give applicants a second and third chance to get it right, which should mean fewer appeals. Eventually.

In the meantime, the application process just gets friendlier and friendlier.

Tuesday, August 07, 2007

CER secret police

Be warned, this is going to be a rant.

I've decided the Cost Effectiveness Review (CER) is the most heinous of all the audit/review/investigation procedures in the E-Rate program. Even worse than the "let's-use-the-invoice-approval-process-to-take-another-look-at-the-funding-commitment-decision-we-made-a-year-ago" review.

Why the worst? Well, let's see: 1) you're guilty until proven innocent, 2) you don't know the charges against you, and 3) in the end you won't know why you were denied. It's like something out of Kafka.

The first problem is one that is common to the entire E-Rate program, but is exacerbated by the complete secrecy of the CER. The burden of proof is always on the applicant. USAC doesn't have to prove that a request is ineligible, the applicant has to prove it is eligible. That's OK when the applicant knows the rules (or at least most of the rules).

But in this case, no one outside USAC/Solix knows any of the rules. We don't know whether reviewers are looking at the total cost, unit cost, cost/student, cost/classroom, ports/student, phones/student, phones/classroom or some combination of factors. How can I prove a request is "cost effective" if the definition of "cost effective" is completely secret?

If there are standards, no one in the applicant/service provider community knows what they are. Since the FCC has declined to set public standards, my guess is that there are no standards. Instead, I'll bet a little group (or one person?) in Solix (the subcontractor that USAC pays to process applications) looks at some requests and says, "No way! That's out of hand!" and starts a CER. So the only chance of beating a CER is to convince that secret little group of subcontractors that they were wrong, and it's not out of hand. Without speaking to that group, or getting more than oblique hints as to what they thought was out of hand.

Or, you can appeal to the FCC, which is what CER victims are doing.

I'm hoping that there are enough CER appeals in the hopper to make it worth the FCC's while to issue one of their blanket orders on CERs before September. My hope is that the FCC will continue their "second chance" philosophy and force USAC to tell applicants exactly what they have to do to make their request "cost effective" (cut the number of ports, buy a smaller phone system, bring the cost down to $110/student, whatever).

Because this CER nonsense has to stop.

Glass half full

This could be the start of something big. For years now, I've been telling everyone who would listen, up to and including Mel Blackwell, that the best way to cut down on appeals is to send applicants a letter saying in plain language: "We've decided to deny your funding. Here's why, and here's what you can do to prevent denial." And I've insisted that the first sentence should say, "you're going to be denied."

Yesterday, I got a letter that almost does it. I have a client that just failed a Cost Effectiveness Review (I would be interested to see the stats on how many applicants get a CER, and what percentage of them are denied, because I think it's really high). And I got an email that starts: "Based on the documentation that you have provided, the entire FRN ???????? and, the entire FRN ????????? will be denied." Excellent!

But then it falls apart. The second and third parts of the letter "Here's why" and "here's what you can do" are so vague as to be useless. I don't know why the contract was deemed cost-ineffective, or what information might change the reviewers' minds.

The problem, of course, is that the Cost Effectiveness Review process is completely secret. To actually tell us the reasoning behind the denial would be to lift the veil of secrecy. So instead of telling us, "the ports/classroom ratio is too high," or "the dollars/student ratio is too high," or whatever, the letter just refers us to the eligible services page on the USAC Web site. Puh-lease. I've read that page many times, and I think everything that was requested is eligible.

But still, merely getting the letter is a positive development.

Friday, August 03, 2007

Glass half empty

I've been very happy with the way that the approval process has been going: the PIA reviews got going early, and have kept moving at a good pace, the vast majority of my clients have made it through the process, and even some Priority 2 applications have been approved.

Then a number jumped out at me from today's SLD News Brief: $926 million in funding approved. With the extra cash which the FCC unfairly rolled over into this year, that's less than one third of the fund.

I remember going to a USAC board meeting where they almost hit a target of 80% of all apps processed by June 30. At the time, I remember thinking that the target should be 100%, but now 80% seems to good to be true. I thought this year was going well, but I can see that the glass was half empty. Well, actually, five-sixths empty, since only $458 million (less than one sixth of the fund) had been approved by the start of the funding year.

Mel Blackwell needs to stand up and say that all Telecom Services, Internet Access or Basic Maintenance FRNs should be funded by June 30. Ideally, they should be funded by May 31, so the service providers have time to set up their accounting systems to discount. As an interim goal, 70% of apps should be processed by May 31, 90% by June 30.

Basic maintenance is a problem since it's Priority 2, but if they sent out FCDLs that say something like "Will be funded if funds are available" (instead of "As yet unfunded"), I think we could count that as an application processed. Even better, move Basic Maintenance to Priority 1, or pre-fund Priority 2.

Tuesday, July 31, 2007

The good, the bad and the ugly

So the proposed Eligible Services List is out. Of course, I'll be submitting fulsome comments to the FCC, but here are the highlights I see.

The Good:
  1. "Basic telephone service" has been expanded to include Centrex, and some other services. It makes no difference to the way applicants have been doing things, but it does cut off at the knees the new invisible USAC rules about Centrex having to be on the Form 470 unless you can show that you had Centrex prior to the start of the funding year (or is it prior to the filing of the Form 470?).

The Bad:

  1. Anti-spam still not eligible. With 90% of all email now being spam, no one runs an email server without anti-spam. It is necessary.
  2. Anti-virus still not eligible. No one should connect a computer to the Internet without anti-virus. It is necessary.
  3. Web filtering still not eligible. It just seems fair that if you have to filter to get E-Rate funding, filtering should be eligible.

The Ugly:

  1. Web hosting. Actually, this year's definition is much better than previous years, but it's still going to be a year of pain. It's like Cinderella's ugly stepsister trying on the glass slipper. The ESL has a glass-slipper definition, and every value-added Web host is trying to force their product into it. And since most of the rules in the E-Rate program are secret, the glass slipper is hidden inside a bag, with just a little bit sticking out, so there's no way to know whether removing a toe would make the foot fit. And the poor applicants are going to end up holding the bag.
  2. Basic Maintenance. I didn't notice any changes to the ESL in this area, and change is badly needed. It would have been a miracle if the ESL could have fixed all the problems with maintenance, but this ESL does nothing to help.
  3. "File servers." A quick review shows 2 places (plus the index) where the term "file server" is still used in place of the term "server." The number of sightings keeps going down, but this has been a pet peeve for years.

Friday, July 27, 2007

The ESL is here! Almost.

The FCC has announced the new proposed Eligible Services List. The actual list isn't attached to the announcement, but ought to be around on Monday. But the announcement does describe the changes coming:
  1. Centrex is now basic telephone service.
  2. Clarifies the use of the Internet for distance learning and video conferencing.
  3. Clarifies that calendaring can be considered an "ancillary" part of an email service.
  4. Clarifies Web hosting.
  5. "Failover" has apparently been added to "redundant" as unfundable.

My instacomments:

  1. It's about time.
  2. Ho hum. They keep clarifying, and some company comes along and thinks it's outsmarted the regulations, and they clarify again.
  3. It's about time that someone realized that it's hard to get email without calendaring.
  4. I'll believe it when I see it. These regulations have been getting somewhat less vague over the last 3 years, but they still confuse most applicants and service providers.
  5. I understand the need to keep districts from buying two of everything, but the rules really should acknowledge that sometimes, failover/redundancy is good network engineering. An applicant's best friend: "load balancing."

I'm sure I'll have more to say when I see the actual list.

30% rule lives on?

So I was perusing some of the denial reasons for 2007-2008, just to get a look at the new FCDL comments with their expanded length, and what did I see: several denials due to the 30% rule. How can this be? The FCC gutted the 30% Rule by requiring the SLD to get applicant authorization for any cost allocations.

And in my experience, PIA has been toeing the line. Every time they wanted to change the amount of one of my clients' FRNs, they asked me if it was OK. So how are these people getting denied? I can think of two possibilities.

First, they asked the applicant if the cost allocation is OK, then got no response. After 15 days, they do the cost allocation and invoke the 30% Rule and all the funding is gone.

Second, they asked the applicant if the cost allocation is OK, without mentioning the 30% Rule, the oblivious applicant OKs the cost allocation, then gets blind-sided by the 30% Rule. I had assumed that applicants agreeing to reduce the amount requested would not be subject to the 30% Rule, but now I wonder.

I hope this is simply a case of a few applicants not responding to PIA requests for confirmation of cost allocations. Because there's no way the FCC, in its current mood, is going to uphold the denial of entire FRNs when the applicant has agreed to reduce the amount requested.

The FCC should just come out and say: "The 30% Rule is bad: it punishes honest mistakes and doesn't save the SLD any work. We're tossing it out."

And while they're at it: "The 2-in-5 Rule is bad: it makes a complicated mess, and hasn't helped spread around Priority 2 funding. We're tossing it out."

Tuesday, July 24, 2007

Things that make you go "Hmmm..."

Ever notice that the online Form 471 requires that you put in a recurring charge for maintenance FRNs, but the online Item 21 Attachment only allows a one-time charge? Hmmm....

Black clouds at PIA

This isn't a problem yet, but I just know it's going to be. Another case where two separate things have been fudged into one part of the form to simplify things, much like the BEN/location confusion.

The background:
Two clients currently under PIA review have basic maintenance requests, and have separate admin buildings. These admin buildings do not have internal connections components which are necessary for transport of data from instructional areas, so they aren't eligible for Internal Connections funding. However, they do rely on the internal connections in another building for their Internet access.

The problem:
Block 4 is used for two purposes: discount calculation and determination of locations receiving service. Normally, the two coincide. However, in this case, the two purposes require different Block 4s. For discount calculation, I think the admin building should be in there, since it relies on some of the components being maintained in order to receive Priority 1 service. But since no equipment in the admin is eligible, the admin building will not be receiving maintenance under the E-Rate contract.

So for discount calculation, the admin building should be in Block 4. But for determining the location where service is performed, it should not be.

The resolution:
I wish I knew. Maybe PIA has a procedure for this, but the storm clouds gathering on the horizon indicate an FCC appeal on the way.

Monday, July 23, 2007

Refresh fatigue

I'm getting tired of hitting my refresh button. It's about 2:30 pm, and I still can't sign up for the SLD's fall training sessions. What's the deal? I've been poised to get my registration in for hours now.

A call to the Client Service Bureau confirmed that they are still planning to begin accepting registration today, but the nice woman I talked to couldn't say what time. (I forgot to ask who signs her paycheck, Vangent or Solix?)

I can see not opening registration until noon, to give all those Californians time to get to work, but at this point, it's getting to be unfair to easterners: it's summer time, which means many school employees will be leaving by 3:30 or 4:00.

Imagine if it were every year

The FCC's unjust rollover of $650 million into the E-Rate program for 2007-2008 has had a happy result: USAC has requested approval to fund Priority 2 down to 83%. Amazing to have it go down to 83% so early.

The dark side: the gutsy appeal from the Gallup-McKinley County (NM) Public Schools (apparently penned by E-Rate Central's George McDonald), saying that the 2006-2007 denial threshold of 86% was unnecessarily conservative and should be lowered. Gallup-McKinley bet on the denial threshold being 85% or lower. (The 2-in-5 Rule was supposed to get funding to lower the threshold, and no one knew yet what a failure it is.)

It looks like Gallup-McKinley had the good sense to submit an application for the same equipment for 2007-2008, but they lost $2.7 million in maintenance funding. If they had grouped the 90% schools together with perhaps one or two 80% schools or admin buildings with lots of infrastructure, they could have gotten most of that $2.7 million.

Which brings me back to what the FCC should have done with the money: let it sit until September, and then announce the denial threshold for the 2008-2009 funding year at the same time that the Eligible Services List is released. With all the extra money, they could have announced an 85% threshold with confidence that there would be some money left over. In subsequent years, they could fine-tune the process for setting the threshold. Imagine: every year, 60 days before the opening of the window, we'd know what was eligible and what applicants could get Priority 2 funding.

They could also do really the right thing: cut the top discount for Priority 2 to 75% (and scrap the 2-in-5 rule). 75% is still a very nice discount for needy districts, but the 25% "co-pay" would cut a lot of waste, fraud and abuse. And it would free up some money for the rest of the applicants.