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Friday, April 27, 2007

Oh, my achin' eyes

Now the USAC mailroom is messing with my head (and eyes). Today's mail included letters from USAC concerning FY2002, FY2006 and FY2008, so I got white, yellow and pink paper. But get this: the pink and yellow paper came in white envelopes, while the white paper came in a blue envelope. What is going on?

It got me wondering where USAC's mail room is, so I checked the postal stamp. Cedar Rapids, IA? No wonder it takes 5 days for first-class mail to reach me.

Thursday, April 26, 2007

Today's mailbag

Some of the Wave 1 FCDLs I've been waiting for arrived today, and oh, the horror! About half of the pink FCDLs came in white envelopes, the other half in blue envelopes. This is a new level of messing with my head. Am I being punished for complaining in a previous post about some of the pink envelopes being more salmon-colored than the paper inside them?

Many of the dates on the FCDL are incorrectly shown as 7/1/07, but the good people at E-Rate Central assure me that it's an error that will be corrected in Wave 2.

I also got a couple of COMADs from some old Web hosting FRNs. Could this be the start of something big? Now that the rules on Web hosting are beginning to get clearer, will the SLD try to apply the new rules to old FRNs? If so, the FCC had better brace for a new wave of appeals, and the SLD had better brace for a new wave of waivers.

Tuesday, April 24, 2007

Wave, not waive

The first wave for 07-08 is out! OK, it came out yesterday, and vendors and state E-Rate coordinators seem to have gotten the information before that, but today is the first day that it's available through the Data Request Tool, so it's the first time it's available to applicants.

It's no tsunami, but it's a very nice start. And from the inundation of PIA requests I'm getting, I would say that the pace is going to keep up. Could we be getting back to the days where almost all Priority One requests are decided by June 30?

I haven't downloaded the data for all states yet, but I did take a look at NJ. The Garden State did well, with over 25% of FRNs (1238 out of 4578). It gets even more striking when you take out Priority Two FRNS: almost a third of NJ's Priority One FRNs have been approved.

Since the PIA reviewers sit in NJ, could it be home-court advantage? I don't think so. I see what others have noticed: PIA seems to have focused on simple (small) applications. With over 600 school districts, NJ has more than its share of small applications. So we got more than our share of approvals in the first wave.

Did PIA really focus on smaller applications? Well, here's a factoid for you: in NJ, the average value of FRNs already approved is $8,154.10, while the average value of Priority One FRNs not yet approved is $13,637.89.

But maybe it's just a result of larger FRNs taking longer on average. I certainly hope that PIA procedures call for more scrutiny for a request for $200,000 than a request for $200.

If PIA would lighten up on their requests, maybe I'd take a look at national statistics, but I don't see it happening any time soon.

Wednesday, April 18, 2007

Ancient and mysterious remand

Maybe I should get some more caffeine and reread the FCC's latest decision, because I don't get it at all.

It's about an application from 2000 from the VA DOE to lease satellite time. It seems USAC determined that the service provider was not a Common Carrier, and that leased satellite time was not a telecommunications service, so the funding request was denied. The Wireline Competition Bureau upheld the decision, and the VA DOE appealed in May 2002.

Five short years later, the Commission is remanding the case to USAC, requiring that USAC investigate:
1) Whether the service provider was a Common Carrier; and
2) Whether the service, which provided distance learning (eligible) over leased satellite time (ineligible), was eligible.

The first request is confusing me. My understanding has always been that the FCC is responsible for designating which companies are common carriers. Is USAC really responsible for deciding which companies are common carriers? I don't know if I'm comfortable with a subsidiary of a telecommunications trade association deciding who is a common carrier. I don't mean to impugn the good folks at USAC, but it seems to me it creates the perception of a conflict of interest.

The second request also has me confused. The ESL from 2000 says that Distance Learning is eligible if provided as a Telecommunications Service, and this distance learning was provided through leased satellite time, which the FCC had already said was not a telecom service. The FCC seems to be saying that if an eligible service rides on top of an ineligible one, the service might be eligible.

Alas, poor USAC. To top it off, since we're talking about an FRN from FY2000, there may be no records; applicants and service providers are only required to keep records for five years.

One positive note from the order: the FCC is saying that distance learning is eligible because it's on the Eligible Services List for that year. That's very nice: back in those days, ESLs were just guidelines created by USAC, and did not have FCC approval, so it's nice to see that the FCC is choosing to treat old ESLs like they were authoritative.

Tuesday, April 17, 2007

Who speaks for the libraries?

SECA (the State E-Rate Coordinator's Alliance) has entered the fray over proposed changes to the invoicing process. They filed comments opposing the idea of removing the option of discounted bills and a petition to have the FCC overturn its recent decision to allow AT&T's ARF system.

I agree with what they have to say, but I find it interesting that it is at odds with the invoicing system that the ALA proposed way back when (on page 24 of their NPRM comments). Who is speaking for the libraries on this question? Well, I haven't taken a survey, but I have done some presentations for library directors and library E-Rate staff, and my sense is that most of them like being able to do a single BEAR after the end of the year for telecommunications, but prefer discounts for Internal Connections. What they would definitely not like is the ALA system, where they pay up front and file a BEAR every month.

And SECA is definitely right that the ARF system is not an acceptable replacement for discounted bills. It's more like a simplified BEAR; since it uses the SPI, no certifications are required, so there's no faxing back and forth.

Thursday, April 05, 2007

Like a cheap suit

The Atlanta Public Schools just can't seem to put the E-Rate mess behind them. A while back they had their 15 minutes of fame as poster child for abuse of the program: missing equipment, equipment never installed, etc. Now, according to the Atlanta Journal-Constitution, APS is suing 5 service providers, claiming they didn't receive $3.5 million of the E-Rate funding that was sent to those service providers.

I took a quick look at the E-Rate disbursements to the five vendors named in the suit from 1998-2002: $45 million. So around 8% of the funding they should have gotten from these vendors allegedly didn't reach them.

If APS is able to prove that this money never did reach them, do you think it will make the FCC question their practice of sending all payments to the service provider?

Wide of the Markey

Representative Ed Markey, now chairman of the committee overseeing the E-Rate program in the House, sent a letter to FCC Chairman Kevin Martin on April 2nd. Most of the concern seems to be about the High Cost program, which is ballooning, but there are some questions about the E-Rate at the end.

Since blogs are all about self-agrandizement, I think I'll post my answers to the questions:

1) Should Universal Service be exempt from ADA? Yes.

2) Have recent appeal decisions gone too far? How can we clarify the rules? Well, if recent appeal decisions actually granted funding, I would say that some have gone a bit too far, but since they're just waiving a rule here or there and kicking the decision back to the SLD. I would like to see clarification of the rules, but that has nothing to do with the appeals. The first step in clarifying the rules should be created a single book that contains all the rules.

3) Should the poorest districts continue to get highest subsidies? Free telecommunications? Extra subsidies for high-bandwidth services? Yes, no, no. I support the graduated funding that the E-Rate currently uses, though I think the top discount for Priority 2 funding should be 70%. But free services are a bad idea. I haven't seen any fraud or abuse by applicants in telecom or Internet access. But when it comes to waste, it's all shades of gray: what is the line between a top-notch network and gold-plated network? Low income students should have access to top-notch networks, but not gold-plated. If services are given away for free, then I think the FCC is going to have to get into setting bright-line standards for networks. I prefer to the current system.

4) Do you support lifting the $2.25 billion/year cap? No. Well, actually, what I'd like to see is a cap on Priority 2 equipment of maybe $1 billion, and then let telecommunications and Internet access be as large as need be. I guess you'd have to cap Basic Maintenance, too. That way USAC would know how much funding is available for Prio 2 before any applications are filed, and we could get Priority 2 funding flowing that much quicker.

Monday, April 02, 2007

New economics for USAC

One sentence in the recent Brownsville Order got me thinking about another way that the FCC's about-face in handling appeal improves the picture for applicants. Remanding almost every appeal they get is great for those who appeal, but it also is creating an incentive for USAC to take more time with applicants.

In paragraph 12, the FCC said, "If USAC helps applicants provide correct technology plan documentation initially, USAC should be able to reduce the money it spends on administering the fund because fewer appeals will be filed protesting the denial of funding for these types of issues."

That got me thinking.

In the bad old days, if USAC denied an application, it stayed denied. I used to tell clients, "We can appeal to USAC, where we'll have a slim chance of getting relief, and then appeal to the FCC, where we stand almost no chance of relief." (Now I tell clients, "We'll appeal to USAC to get some more information on why we were denied, then appeal to the FCC, where we stand a good chance of getting relief.") So there was no economic incentive for USAC to make the extra effort to get the information needed to approve an application.

Since Bishop Perry, USAC can count on a lot of denied applications being remanded. In fact, I would say that most denials would be remanded, except most applicants don't realize they can appeal, or don't want to go through the bother (or the person doing the application is afraid that s/he's going to get fired for not getting the funding, and thinks an appeal might draw attention to the denial). As the word spreads that the FCC waives more than Queen Elizabeth, more and more denials will be appealed and remanded.

Which changes the efficiency formula for USAC. Now more weight will have to be given to getting the info necessary to approve funding than to moving the application along. So while the FCC's statement quoted above was not true 18 months ago, it is increasingly true now.

And that's good for applicants, although it means either longer waits to get approved, or more money taken from the fund to cover increased PIA costs, or both.

When I gave presentations on navigating the application process, when it came to PIA, I always advised people to remember that they shared a goal with their reviewer: to move their application off the reviewer's desk. The difference was that the applicant wanted it approved off the reviewer's desk, while the reviewer just wanted it off, and approving it was the simplest way to get it off. Now that so many denials are boomeranging, USAC will have to find an incentive for reviewers to spend more time working to get approval.

I have found almost everyone at the SLD and Solix willing to help in getting an application approved, just because they're decent people, but now it will be in their companies' economic interest to be helpful.

Sunday, April 01, 2007

A good start, now spread it around

The FCC's recent global order on technology plan, the Brownsville Order, is a nice try, but the tech planning process is still a mess.

My favorite part is paragraph 12, which says, "if an applicant responds to a request by USAC to provide technology plan documentation and the documentation provided by the applicant is deficient (e.g., is outdated or will expire before the end of the relevant funding year), USAC shall: (1) inform the applicant promptly in writing of any and all deficiencies, along with a clear and specific explanation of how the applicant can remedy those deficiencies; and (2) permit the applicant to submit correct documentation, if any, within 15 calendar days."

This should be the rule for all situations. It often happens that the SLD asks a question that any E-Rate wonk would understand, but which is not clear to educators and librarians, so the answer is not what the SLD is looking for. Often they'll ask the exact same question again, without clarifying. If they don't like that answer, either, then they just deny the FRN. (The East Orange Community Charter School appeal that I filed is a good example.)

I've been telling anyone who'll listen that what they should do is send out a letter saying, "You're about to lose funding, and here's why." Then explain in plain English (or "American," as Mel Blackwell likes to say), why they're going to lose funding.

The Alpaugh Order comes close in Paragraph 6, requiring USAC to to be specific, but it does not require them to identify deficiencies in whatever documents are supplied.

The alternative is the current situation: applicants get blind-sided by a denial, appeal to SLD and get denied, then appeal to the FCC and have their funding restored. What a waste of applicant, SLD and FCC time.

How will Jason survive this one?

Has my request been answered? I've been complaining for months and months about the unkillable "two-signature/two-date" (2s/2d) rule. It now appears that the "Jason rule" may finally be dead.

The SLD has long held that in order for a contract to be valid for the E-Rate program, there must be two signatures and two dates on the contract. In a couple of recent appeal decisions (Richmond County and Gayville-Volin), the FCC has clearly stated that even though the contracts in those cases did not have two dates, they were valid contracts. But the SLD seemed to take the position that the FCC didn't say that all contracts with one date are valid.

Along comes the Adams County Order. Blah, blah, blah, waive this, waive that. But what's this in footnote 29? "To the extent state contract law does not require two signatures and two dates for a valid contract, Commission precedent does not impose such a requirement. We note that in detailing document retention requirements, the Commission required both beneficiaries and service providers to retain executed contracts that are 'signed and dated by both parties.' ... We clarify that this language was not intended to establish a new rule regarding the validity of a contractual agreement."

I can't see how 2s/2d can survive this one. But isn't that what people say at the end of the Jason movies?