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Wednesday, May 09, 2007

Choppy waters

A barrage of sizable waives from the FCC. Five orders totalling 195 applicants. These decisions seem a little different than some other recent ones in that, in addition to waiving rules, they actually overruled the SLD a fair amount. I found three other things interesting.

In the Macomb decision, the FCC decided that "multi-homing" Internet service providers was not eligible. (I don't like the use of the term multi-homing in this way, but I'll go with it.) It ruled that if you want multiple connections to the Internet, they must all be from the most "cost-effective" provider. That's just wrong-headed. It is definitely worth it to pay a bit more to avoid putting all your egs in one basket. When you need to add a second connection to the Internet, the calculation of cost-effectiveness should not be the same as for your first connection. If "reliability" is one of the factors in determining cost-effectiveness (and it should be), choosing a different vendor for your second connection is much more cost-effective. Because the reliability of an applicant's Internet service is greatly increased by multi-homing.

Even more interesting in the Macomb decision, the FCC ruled that for some FRNs, the applicant had not chosen the most cost-effective service. Instead of denying those FRNs, it ruled that those FRNs should be funded, but only based on the price of the most cost-effective vendor. And they didn't say that a waiver was required. The FCC seemed to be saying that you don't have to select the most cost-effective service provider, but that you can only be funded based on the cost of the most cost-effective bid. What's that sound? I think it may be a loud wail coming from the SLD offices. This rule makes the SLD's job tremendously more difficult. Now the SLD can't just deny applications if the applicant can't show that it chose the most cost-effective service. To follow the rules as set forth in this order, PIA is going to have to make its own determination of cost-effectiveness and fund applicants based on the cost of the most cost-effective service. Oy.

Finally, the Boothel decision killed the .75 Rule (a heinous combination of the 2-in-5 Rule and the 30% Rule). That rule had recently disappeared from the SLD Web site, but it's nice to see the FCC put a fork in it by saying that the 30% Rule applies only to ineligible services, not ineligible entities.

And it's nice to see the FCC continuing to whittle away at the 30% Rule, which I hate.

One last thing that struck me: these appeals are old. Of the 195 appeals, by my quick count, 6 are from 2006, 12 from 2005, and 30 from 2004. I don't have the dates when they were all filed, but certainly fewer than 10% were filed in the last year, and probably less than 20% filed within the last 2 years.

1 comment:

  1. I just re-read Macomb, and man, paragraph 9 is whacked. It says: "Macomb ISD should be entitled to E-rate funding for its Internet connections at a rate associated with the least expensive of the duplicative services."

    The footnote to that sentence cites paragraph 25 of the Fifth Report and Order, which says that if services are found to be duplicative, the cost of the more expensive of the two services will be recovered.

    The Fifth Report and Order (and the Eligible Services List) clearly says that duplicative services are not eligible, and only the less expensive service will be discounted. The Macomb order says duplicative services are OK, and we'll discount both, but we'll only fund based on the cheaper of the two.

    Oops. I don't think the Macomb Order should have any reference to "duplicative" services (since having more than one Internet connection is not necessarily duplicative).