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Tuesday, March 20, 2007

FCC says no

Yesterday's FCC ruling on Sprint's appeal is noteworthy only because it harkens back to the bad old days.

Sprint was asking for an exemption for PBXes installed as part of a telecommunications service prior to 2003. When the FCC established the "on-premise Priority One equipment" loophole in the Tennessee Order, Sprint saw it as an opportunity to get Priority One funding for PBXes, and installed PBXes on client premises. Then came the 3rd Report and Order in December 2003, which explicitly said that PBXes were not eligible for Priority One funding.

Of course, the contracts Sprint signed way back when were long-term, so that the cost of the PBX was spread across many years. So when the 3rd Report and Order came along, Sprint's customers were stuck with long-term contracts that were suddenly not eligible for E-Rate.

Sprint's appeal was pretty reasonable, really: they asked for an exemption on contracts signed before the 3rd Report and Order came out.

And the FCC said no. I'm surprised at two things in the ruling. First, that the FCC said no. While there have been a few denials sprinkled in among all the appeal approvals in the past few months, for the past 15 months or so, the FCC has been very generous in granting appeals.

Second, the FCC treated the "no-PBX" rule in the 3rd Report and Order as a clarification of existing rules, applying it retroactively. This is the way the FCC operated in the past: we know that we didn't state the rule until 2003, but it was a rule before that, just not explicitly stated. In recent months, the FCC has not taken this position. In the case of vendor selection, for instance, the FCC has held that applications before the Ysleta Order don't have to follow the rules in that Order. I blogged about this a few months back.

So this decision took me back to the bad old days when the FCC denied almost all appeals, and treated every new rule as a "clarification" which applied retroactively. Let's hope it's not the pendulum swinging back.

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