The 0-in-5 Rule

On Monday at the USAC Schools & Libraries Committee meeting, it becomes official: the 2-in-5 Rule is worthless.  On the agenda for Monday:

1. Approval to Deny Requests for Priority 2 Services at a Discount Rate of 89 Percent and Below for Funding Year 2012.
2. Approval to Deny Requests for Priority 2 Services at a Discount Rate of 87 Percent and Below for Funding Year 2011.

As I've said before, the 2-in-5 Rule does not work and should be rescinded.

The improper and capricious rollover/tossback into FY2010 aside, the vast majority of E-Rate applicants have never been able to get Priority Two funding.  So for almost everybody, it's a 0-in-5 Rule.

I had such hope when the FCC put the 2-in-5 Rule on the chopping block in the May 2010 NPRM, but somehow it survived.

How do we ameliorate the lack of funding?  Cut the top discount rates.  USAC's Task Force on the Prevention of Waste, Fraud and Abuse recommended it in 2003.  I stated my support in 2005 and expanded my support last year.  The State E-Rate Coordinators' Alliance (SECA) said it a year ago.

I think we just missed our best chance to see it happen, though.  As I mentioned in May, the funding crisis this year got people talking about pro-rating Priority Two funding for 90% applicants.  (Under pro-rating, if the FCC only had $300 million left after paying P1, and had $500 million in P2 requests from 90% applicants, the 90% applicants would get 60% (300/500) of what they asked for.)  Now I'm wishing that the FCC had played a little brinksmanship and put pro-rating out there as a possibility.  The cut-the-top-discount-rate proposal keeps disappearing from FCC reforms, which makes me think that some powerful person or group is putting the kibosh on it behind the scenes.  Now if the 90% applicants saw they were only going to get some unknown percentage of what they asked for, they might prefer to take 75% funding rather than get a 40-80% pro-rating of their 90% funding.

Now we'll have to wait at least another year, until the funding shortage gets large enough that the FCC can't fix it by robbing Peter and rolling it over to pay Paul.