Search This Blog

Monday, March 17, 2014

Wheeler? More like Circular Sawyer

Commissioner Wheeler spoke at the Council of Chief State School Officers Legislative Conference today.  The transcript is online.  Let's see if there is any information beyond what's been in his recent speeches and statements.

First, the analysis you're dying for: did the Chairman capitalize the "R" in "E-Rate"?  Yes!  I counted 46 uses: 43 were capitalized, 2 were not, and once he put E-RATE in all caps for emphasis.

As usual, I will eschew a reasoned critique of the speech, and just respond to what jumps out at me.

"At the end of this process, the way in which we pay for certain things may need to change. And the things that have historically been paid for by E-Rate may no longer qualify."  We've heard that before, but then the Chairman gets specific.  Here's the list, and my estimate of the savings to the program (based on this table and guesswork). Of course, I'll give my opinion.
  • "Narrowband pagers." <$1 million.  Yup, cut them loose.  "Paging" always created confusion among schools, which still do intercom paging.  What's with the "narrowband"?  Aren't all pagers narrowband now?  If there are any wideband pagers in the wild, will they still be eligible?  It is amusing that "narrowband" and "broadband" sound like opposites, even though they have nothing to do with each other.
  • "Legacy PBX systems are an historic relic." $0 (no PBX funding in 2013-2014).  Do you mean legacy as in "outmoded" or as in "not Internet-dependent"?  If all voice is getting chucked, then voice hardware should go, too.
  • "Mobile phones."  $176 million.  Chalk one up for Don Quixote!
  • Email. $10 million.  Why should the E-Rate pay for email when Google is offering free email in exchange for being able to mine student emails and send them ads?
  • Text messaging: $0.02 million.  Absolutely.
  • Slow speed connectivity.  I can't estimate this without knowing the "slow speed" cutoff; chopping T-1s would save $142 million.  Now this idea will create some heat.  The two reasons that schools don't have high-speed connections are: 1) can' t afford it, or 2) don't need it.  Is the FCC really going to say, "Those bonded T-1s are too poky: if you want E-Rate funding, you're going to have to spend $200,000 to get fiber pulled to your school?" or "Your usage never exceeds 20 Mbps, but the President says you need 100 Mbps.  Upgrade or lose your funding."  This is the E-Rate equivalent of "The floggings will continue until morale improves."  The poorest, smallest, most remote schools would be exclude from funding for connectivity, because even their discounted share for 100 Mbps would be out of reach.  Is that what we're aiming for?
  • Domain name registration. $0.001 million.  Please, yes.  I hate filing FRNs with a pre-discount amount of $24.95, but I can't tell my clients that their $9.98 in funding isn't worth going after.
  • Web hosting.  $27 million.  Batten down the hatches!  A wave of spamments is on the way.
  • 800 number services. $0.085 million. How did this get on the list in the first place? It's basically paying the toll charges for calls from ineligible locations.
  • Analog voice.  $377 million.  Don Quixote strikes again!  The Chairman dances around, talking about "evolve" and schools deciding to move to digital voice, but it's clear that POTS lines are in the crosshairs.  I would toss out all voice, digital and analog.  Why leave VoIP in there?  It hardly seems technology-neutral to make determinations on the eligibility of voice based on transmission protocol.  And where does that leave PRIs?  They are digital circuits, but the only work with "legacy" PBXes, and whacking them would save us another $51 million.  We'd better tighten up the jargon, too: a lot of people hearing "digital voice" will think of digital handsets, which are phones that interface with a traditional PBX.  If you want to separate VoIP from other voice protocols, call it VoIP, not digital voice.
  • What should be on this list, but is not: video.  $6 million for Distance Learning/Video Conf.  Only transport of video is eligible, and video is transported over IP, so let's toss video out of the program.
Removing cell phones and analog voice would save us $553 to $604 million (depending on whether PRIs get lumped in with analog voice).  Removing all the other services listed except "slow speed" would save us $38 million.

"I will not hesitate to recommend [raising the contribution rate] should it be warranted."  When are you going to make up your mind about whether it's warranted?  Because the rest of us in the E-Rate community have made up our minds.  Does he want to uncap the E-Rate, and raise the contribution level to cover the April 2015 Demand Estimate (which will show what it will cost to cover the cost of the reformed E-Rate)?  My very conservative estimate was that the program will need more than $3 billion per year.  FFL estimated $6.8 billion.  So even if we cut services worth $600 million, the fund will need to double, if not triple.

"Within the FCC I will soon be announcing a special strike make certain there is adherence to the rules...."  "Strike force"?!  Suddenly, I feel like a Crimean Tatar.  Those of us in the applicant community feel battered enough without being hit by a strike force.  I'm sure venture capitalists often use military metaphors, but librarians and teachers do not.

"First, why is it that the prices paid by like schools in like circumstances vary so widely?"
  1. Prices drop every year, and applicants generally lock in for 3 years or more.
  2. The Form 470 process prevents schools from finding the best price.
  3. Service providers ignore the Lowest Corresponding Price rule.
  4. When you have a 90% discount, money is no object.
  5. Services that look the same can be different under the hood.  Around here, 100 Mbps over FiOS or a cable modem costs about $200/month, while 100 Mbps over metro Ethernet costs over $1800/month.  Same bandwidth number, same service provider, 9 times the price.
  6. Circumstances may not be as like as they appear.  A few miles can make a huge difference in price, depending on things like installed infrastructure, cable franchise, line of sight.
"What can we do to help all schools pay the lowest price for the best service?"
  1. Free the Item 21 Attachments!
  2. Enforce your Lowest Corresponding Price rules.  Make service providers tell applicants their LCP.
  3. Toss the Form 470.  Allow applicants to negotiate contracts as they see fit.
  4. Allow applicants to make operational SPIN changes any time they want.
  5. Don't force applicants to sign illegal contracts locking in prices 3-4 months before service starts.
  6. Lower the top discount levels.
"Second, how do we have a program that has a growth path in terms of the bandwidth it enables?"  Uncap the program.  Pare down the Eligible Services List, then fund everything on the list for every applicant.

"... only a united front will move the E-Rate program forward."  You heard the man!  Everybody unite behind my suggestions!

All in all, not a bad speech.  I think Chairman Wheeler was pretty upfront about the pain that's coming to applicants who count on the E-Rate to cover 90% of their phone bill.  I just wish he would acknowledge that the fund needs to increase, and lay off on the "strike force" rhetoric.

No comments:

Post a Comment