Web hosting eligibility rumblings

I hear a rumor that the SLD is going to start doing cost allocation for Web hosting the same way they do it for servers. Ick.

First, I have to say that the SLD has to do something because of the "value-added" Web hosts have been providing unrealistic cost allocations.

"Value-added" Web hosts are a good thing: districts pay extra to get a prefab structure for their content. You want teacher homework pages? OK, here are some templates to choose from, and the permissions scheme is set up to allow teachers to publish only to their own pages. Sports schedules? Yup, there's a module for that. So these value-added Web hosts make it easy to have a current, useful Web site. Many of my clients use them, and most are very happy.

But let's get real about the cost allocation figures. Go to any normal Web hosting site(1&1, GoDaddy, etc.), and the costs range from $3-$30 per month, depending on features, etc. You would be hard-pressed to find a hosting plan that costs more than $20 without ineligible features like databases, e-commerce, etc. That's $240 per year.

Meanwhile, the cheapest value-added host I've seen is $2400 per year. Some are running well over $10,000. [Hey, if that's what it takes to get staff to update the site regularly, it's worth the money, and a lot cheaper than hiring a Webmaster.] So the vast majority of the cost comes from the content management system and the service, right? But the value-added hosts claim that 84%-100% of the cost is for Web hosting. I guess the SLD has finally had enough of that.

This new cost allocation guide isn't good, though. They're saying that if you offer a combination of eligible and ineligible services, you divide the number of eligible services by the total number of services. Most value-added Web hosts would be 50% eligible: 1 eligible service (Web hosting) and 1 ineligible service (content management). If they also offer email, now they're 67% percent eligible, since they now have 2 eligible services.

So why is that bad? Well, for one thing, 50% of some of the more expensive value-added hosts is still too much. For another, it makes ASPs 50% eligible. Schools that are paying for Web-based fiscal systems would be able to claim 1 eligible service (Web hosting) and 1 ineligible service (application hosting). Now a $30,000 piece of software with a hosting cost of less than $1,000 will be eligible for E-Rate funding on $15,000 of the cost.

A better solution? Perhaps the brightline that the FCC has mentioned, but never implemented. Give a school district E-Rate funding on up to $1,000 for Web hosting. Or to reduce the howls from the larger districts, make it $1 per student. That way the E-Rate doesn't end up paying for lots of Web-based applications.