LCP FTW

Well, lookie: Lowest Corresponding Price (LCP) is raising its head again. It had a brief heyday last decade, but then seemed to go back into the background. But now a whistleblower lawsuit started ten years ago may actually be going to trial. Someone did an analysis of what AT&T was charging schools, and discovered that they were not giving schools the LCP, and filed suit. The suit's already been to the Supreme Court and back, and now it looks like it may get to trial on January 20.

Under the hood of the revenue base

So Anchornets has got me thinking about the USF contribution methodology. I've already posted about how the increase in the Contribution Factor (38.1% currently) is due more to a shrinking revenue base than to increases in program expenditures (and the expenditure increases are mostly over at the High Cost program).

But it got me thinking about how the revenue base is calculated, so I thought I'd look into it. Is the information useful? I don't see how unless you work for a carrier, USAC or the FCC. Is it interesting? If your answer is yes, you are too far down the USF rabbit hole.

The revenue base comes to USAC via the 499-Q, by which carriers report their interstate and international long distance revenue. (The USF fee is only charged on interstate and international revenue.)

But where do the carriers get the number from? It's not like the old days, when your phone bill listed each long distance call and the amount you paid for it. That was the norm in 1996 when the E-Rate was being created. Telecom people call those lists call detail records (CDRs). In those days, carriers could just add up all their interstate and international call revenue, since they were keeping track of each call.

But that's not an option for most modern carriers, so they have two options: 1) a traffic study or 2) the "safe harbor." 

The traffic study is what it sounds like: the carrier randomly selects a set of calls and then determines what percentage are long distance. So a wireless provider might find that 25% of their users' calls are interstate or international, so their percentage of interstate usage (PIU); they can multiply their total revenue by 25% to come up with their revenue base for the USF.

The safe harbor is a percentage that the FCC sets for carriers who can't or don't want to do a traffic study. It was last set in the 2006 Contribution Methodology Reform Order, which set the safe harbor at 37.1% for cell phones (paragraph 2) and 64.9% for VoIP (paragraph 53). (For those keeping score at home, it left the safe harbor for pagers at 12% and for analog SMR dispatch (whatever the hell that is) at 1%.) So a cell phone provider too lazy to do a traffic study can multiply their total revenue by 37.1% to come up with their revenue base for the USF.

What percentage of carriers are using the safe harbor percentages? I wish I could find that out. Does anyone out there know? [Why do I want that piece of data? Because it's there.]

I warned you at the beginning that this post wouldn't be useful or interesting. 

Let your geek flag fly

 Just finished SHLB's AnchorNets conference. It's a great place to geek out with other people who know the names of the FCC Commissioners, are happy to discuss the E-Rate Modernization Order, and know why Jessica Rosenworcel deserves a standing ovation.

My favorite sessions: 

1.  A discussion on the proper relationship between applicants and service providers. Not a lot of good news, and there's a lot of grey area, but the session did a good job of delineating the edges of the grey area.
2. A panel with two staffers of Senators on the USF Working Group, mostly because it seemed clear that they understand that the contribution methodology is job one. 

If that sounds like fun to you, register for AnchorNets 2026 now and get $150 off the price. 

Wi-Fi on a Mission

 Seems to good to be true, but apparently it's for real.

As you are probably aware, the FCC pulled the rug out from under applicants for school bus Wi-Fi and Wi-Fi hotspot lending for Funding Year 2025-2026. The Eligible Services List said those services were eligible, but three months into the funding year, the FCC reversed course and made those services ineligible for FY 2025-2026.

What's a school or library to do? You've only budgeted for your post-discount share, so you'll have to kill the program. But wait! Along comes a white knight in the form of Mission Telecom, who has announced that they'll provide service at whatever your post-discount cost would have been. 

Some caveats:

1. They use the T-Mobile network, so if you don't have a good T-Mobile signal in your area....
2. The discount is only available through June 30, 2026.
3. You still have to get out of your existing contract(s). This could be a major sticking point for school and libraries, but there's nothing Mission Telecom can do about it. Maybe you could beg for mercy from your existing carrier.

Kudos to Mission Telecom! 

MIBS in the crosshairs

 The new draft ESL seems to have it in for MIBS. The paragraph doesn't actually say, "We're thinking about dumping MIBS," but it does ask, "Are there any substantial benefits for funding MIBS?... Are there any cost savings and efficiencies for funding MIBS?" It seems like they're saying: "OK, we've had MIBS for a couple of years; is it doing any good?" That's rather threatening.

They also ask about narrowing the definition of MIBS so applicants don't face the question: "Is it MIBS or is it BMIC?" I'm all for clarifying the difference between MIBS and BMIC. 

Should they get rid of MIBS? No, I think they should expand it. Right now, if you buy an appliance that monitors your network, it's ineligible. But if you buy a service that monitors your network, it's eligible. And if that service installs an appliance on your network, that's eligible. Why?

I think the FCC should just make network monitoring eligible. It's an essential part of operating any network.

The FCC should widen the eligibility of Category Two equipment and services in general. Because with the ridiculously small budget that schools get for C2, there isn't enough to keep switches and APs upgraded, much less pay for maintenance or firewalls or monitoring. So just let applicants decide which of many needs will be covered by E-Rate, and which eligible items will be left unfunded. 

And for Pete's sake, raise the per-student budget for C2. We're way under the cap every year, and schools need more to cover eligible items.

Licentious maintenance

The draft ESL for 2026-2027 is out. The big change, of course, is the disappearance of school bus WiFi and WiFi hotspot lending. But there is an apparently subtle but actually significant change.

The Commission is proposing "to treat all currently eligible software- or remote-based services, including bug fixes, security patches, software-based technical assistance, and configuration changes...." like they currently treat licenses: allow applicants to purchase multi-year contracts as internal connections.

Why is that a big deal? SMARTnet. OK, most manufacturers' service contracts will be affected, but Cisco's SMARTnet is what jumped to mind. What typically happens now: a district signs a three-year contract covering their Cisco gear, then cost-allocates out the ineligible hardware replacement portion of the service, then divides the remainder by three and applies for one year of the eligible portion of the service. And that's in the ideal case where the contract starts on July 1st. Lots of contracts don't, so now you have to create two FRNs, each covering part of the year. And since you have to pay the whole amount of the three-year contract, you can't SPI years two and three; the district has to pay the full amount now and wait two years to get their reimbursement.

But now, applicants will just put in the whole eligible amount in the first year. What a relief.

It's also a good change because the line between licenses and service contracts was always pretty blurry. If you have to buy it in order for the access point to work, it's a license, right? But if you also get software updates and phone support with it, is it still just a license? Every year, I feared that USAC might force us to cost-allocate out any maintenance services from licenses.

It's a small change, but it makes the application process easier for applicants, so I say, "Bravo!" 

They're baaaaack

To no one's surprise, Consumers' Research has filed another petition for review with the Fifth Circuit. They had earlier stipulated to the dismissal of their petition in which the Supreme Court found the USF's funding mechanism to be constitutional. The new petition takes a slightly different approach, incorporating some of Justice Gorsuch's dissent to the Supreme Court's decision.

Still feels like a Hail Mary pass, but sometimes those work....