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Monday, February 13, 2017

Get fiber while the getting's good

Looks like Commissioner O'Rielly is coming after self-provisioned fiber.  This is nothing new.  The Commissioner's first blog post included the statement "E-Rate funding must leverage the private sector networks and services, not overbuild them."  The most troubling part of the letter: "Regardless, I see absolutely no justification for using E-[R]ate funds for such a purpose.  Instead, any universal service funding for broadband deployment should be targeted, through the high-cost program, to unserved communities most in need of support."  It's that "regardless" that sends a chill up my spine.

But before we get to the meat of the letter, let's look at the most important question: Did the Commissioner use a small "r" in "E-Rate"?  He did.  That's disappointing, especially because back when he first arrived at the FCC, he used a capital "R."  Did the mole get to him?

I disagree with the Commissioner's position for a few reasons:
  1. The current rules require that a district prove that self-provisioned fiber is cheaper than existing networks.  The E-Rate only pays for self-provisioned fiber when it is cheaper than the existing service.  So in every case, self-provisioned fiber is reducing the amount of E-Rate funding needed.  It's the opposite of wasteful.  I have a client that built a self-provisioned network before it was eligible for E-Rate, because it saved them money, even with the E-Rate putting a thumb on the scale by discounting service from the existing network and not from the self-provisioned network.  Even with a 40% discount, the existing service providers' networks were more expensive than undiscounted private fiber.  Maybe self-provisioned isn't always cheaper, but the E-Rate will only fund it when it is cheaper.
  2. The Commissioner seems to be saying that self-provisioned fiber shouldn't be allowed if "there is already at least one private broadband company operating in the county...."  That is a troubling line of thinking.  Forbid competition, even when it reduces reliance on E-Rate funding?
  3. This seems like an extension on the FCC's fear of "duplicative" services.  I'd invite the Commissioners to talk to their CIO about the Commission's infrastructure.  I'll bet the CIO won't say "duplicative," but will mention "redundancy" and "backup" as virtues.  I'm all for eliminating waste, but duplication is not necessarily waste when it comes to technology.  In IT, "redundant" is good, and "single point of failure" is bad.
  4. I don't like "overbuild."  Instead, let's say "encourage competition" or "break monopolies."  Commissioner O'Rielly doesn't want to "support artificial competition."  I say we should support any kind of competition we can.  I'd prefer organic competition, but artificial is better than none.
  5. The Commissioner says, "Overbuilding is especially problematic when those existing networks are subsidized by other federal funding...."  Wait, so we give one service provider a leg up on installing fiber, and then deny other providers who can install new fiber and beat the price of the subsidized network?  Is that fair?
  6. The Commissioner says he hears concern about overbuilding "[i]n meetings with outside parties...."  Those outside parties wouldn't be the incumbents who currently have a monopoly on installed fiber, would they?  What did the E-Rate applicants say about overbuilding when you talked to them about it?  You are having as many meetings with applicants as you are with service providers, right?
I have to say, he does have a good example attached to his letter.  The applicant says that the self-provisioned fiber will be a "backup system" to a county-wide fiber network now being installed "until we know that [the county WAN] is complete and fully functional."  OK, that seems like a bad reason to build your own fiber network; private fiber is a long-term investment, and the new fiber won't be up before the county WAN.  And if the county WAN includes redundant connections to each school and a redundant connection to the Internet, then it does seem unnecessary to build another network.  But the district would have to kick in half the cost of the WAN (they have a 50% discount), so they seem to believe that the service is worth paying for.  (Or at least potentially worth paying for; the bids aren't in.)  Because self-provisioning will be cheaper.  For the applicant and for the E-Rate program.

What's an applicant to do?  Get your self-provisioned fiber application in now.  I smell changes in the eligibility of dark fiber for FY 2018-2019.  Also, make sure to use the option to get the entire E-Rate payment in the first year.  When weighing whether to self-provision, don't factor in E-Rate funding past 2017-2018.  Because as the Commission's recent order reiterates, "A multi-year contract does not insulate applicants and service providers from changes in program rules, including changes to the eligible services list...."

But even FY 2017-2018 is not going to be smooth sailing.  Commissioner O'Rielly has requested a bunch of info from USAC on self-provisioned networks.  Ugh.  Approvals of self-provisioned fiber for FY 2016-2017 were delayed over 6 months while USAC figured out what info they needed and how to approve those requests.  I had been thinking that maybe next year would go more smoothly, but I'll bet this is going to throw USAC into uncertainty and self-doubt.  I know it's thrown me into uncertainty.

And here I thought the E-Rate would be left alone for a year while the Commission went after bigger (and less popular) fish.

Thursday, February 09, 2017

Waive that mess

Well now, there's something you don't see every day: the FCC fixing a problem before applicants have to go through the deny-appeal-appeal dance.  I've already ranted about what a mess the FCC created by saying that connections between 2 schools in the same building were C1 (scroll down past my whining about streams, roads and campi).  Now the FCC has, without anyone asking, fixed it in a new Order.  Basically, they waived the mess for 2017, which will give them a chance to fix it in next year's Eligible Services List.

And there's more good new in footnote 24.  The text there makes it pretty clear that if a school's campus had a road running through it,  and the district considered them two campuses, then they can stay two campuses.  That footnote even makes it sound like any district can decide to divide up a campus into a bunch of smaller campuses if there are roads or streams running through the campus.  It's not much of a clarification, but at least it gives the impression that the FCC was trying to give applicants more flexibility in determining what a "campus" is.

Friday, February 03, 2017

Set wide the window. Let me drink the day.*

At last, the filing window has been announced!  Opening February 27, closing May 11.

Buried in the middle of that announcement is a new procedure you need to pay attention to: this year we have a sort of storm window.  This year, all entity information, including enrollments and NSLP, will be locked when the window opens.  So you've got 3 weeks to make sure that you have all the correct entities in EPC, and that the entities have the correct info.  How many RALs is that going to create?

Here's a little historical context:
Fund Year FCC releases ESL  Window announced Days passed Window open 60 days? Window close Window days
2005 10/14/2004 11/5/2004 22 12/14/2004 61 2/17/2005 65
2006 11/22/2005 11/23/2005 1 12/6/2005 14 2/16/2006 72
2007 10/19/2006 10/20/2006 1 11/14/2006 26 2/7/2007 85
2008 10/19/2007 10/28/2007 9 11/7/2007 19 2/7/2008 92
2009 11/21/2008 11/24/2008 3 12/2/2008 11 2/12/2009 72
2010 12/2/2009 12/3/2009 1 12/3/2009 1 2/11/2010 70
2011 12/6/2010 12/10/2010 4 1/11/2011 36 3/24/2011 72
2012 9/28/2011 11/22/2011 55 1/9/2012 103 3/20/2012 71
2013 9/27/2012 11/13/2012 47 12/12/2012 76 3/14/2013 92
2014 10/22/2013 11/20/2013 29 1/9/2014 79 3/26/2014 76
2015 10/28/2014 12/19/2014 52 1/14/2015 78 3/26/2015 71
2016 9/11/2015 1/25/2016 136 2/3/2016 145 4/29/2016 86
2017 9/12/2016 2/3/2017 144 2/27/2017 168 5/11/2017 73
Some explanations:
"Days passed" is the number of days that passed between the release of the ESL and the announcement of the window dates.
"60 days" is the number of days between the release of the ESL and the opening of the window, which should be at least 60 days per the Third Report and Order.
"Window days" is the number of days that the window is open.

This year's timing is similar to last year's unprecedented timing, just pushed back a couple of weeks to fit in the "pre-window" entity correction window.  (And last year's got pushed back further during the window.)

*Edith Wharton

Thursday, February 02, 2017

So far, so good

I'm liking the first change that I've noticed Chairman Pai make.  He's making the FCC more transparent.  No, really.  He's released to the public the documents that the FCC will be voting on at their next meeting.  In the past, the public didn't get to see those documents until after the meeting (in the case of the E-Rate Modernization Order, 10 days after the meeting).

That's a good change.

Even better, he's trying it out with a couple of documents to see how it works before making it a rule.  I am very happy to see the Chairman testing his ideas before committing to them.  That bodes very well for a decrease in unintended consequences.  I didn't expect Commissioner 3.14159... to make the FCC more rational.