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Sunday, May 27, 2007

The fix is in

As of June 15th, the online fill-in PDF version of the 486 is dead. That would be good news, except that it's not going to be replaced. As I have said in the past, I hate the 486 PDF. But the "interview" 486 is even worse. So around here, we'll be back to the paper 486.

For how long? Well, the latest News Brief says that the new online 486 will be "available in time for fall training." I read that as "not available by October 29th." That's the deadline to file for services starting July 1. So except for the applicants that can file early, 2007-2008 will be the Year of the Paper 486.

I'm amazed that USAC is not pulling out all the stops to get the new 486 up by July. Because while doing a 486 on paper is a hassle for me, it's significantly more work for them. And since it looks like the vast majority of FRNs will be approved by July 1, USAC is going to have to deal with paper for most of the 486es for the entire funding year. That's ugly.

Friday, May 25, 2007

Sterilize imperfections!

Remember the Star Trek episode where the NOMAD probe sent from Earth gets damaged, then melds with the alien probe Tan Ru and becomes super-powered and thinks it has to sterilize all imperfections (which includes all life forms except William Shatner)? I'm starting to feel that way about COMADs.

I can absolutely see the need for a COMAD when an audit shows that an applicant engages in waste, fraud or abuse. I'm not so sure about the need for a COMAD for cases where an audit shows a clerical error resulted in an applicant getting too much funding, but I can see where USAC doesn't have much choice.

But at some point, COMADs went bad. USAC is now going back to find apparent rule violations, and then COMADing them. They're not limiting themselves to waste, fraud or abuse, they're going back to find ministerial errors and COMADing them. And some of the ones I've seen are not even completely clear rule violations.

We don't have Cap'n Kirk to befuddle COMADs into self-destructing, as he did with NOMAD. However, I think Bishop Perry may enable us to befuddle COMADs and beam them off our ships. I just got an email from the SLD saying that they intended to reduce the funding from a client's 2005-2006 FRN because they have retroactively found some ineligible services in there, and giving me 15 days to respond. They even list exactly which charges are ineligible. Could it be that COMADs will no longer be lightning bolts out of a blue sky?

U + Ur Envelopes

What does USAC have against P!nk, anyway? I got the reissue of Wave 1 FCDLs yesterday, and OK, the trivial date problem is fixed, but the pink-FCDLs-in-white-envelopes scandal continues. Stop the madness!

Monday, May 21, 2007

Another friendly waive

Today the FCC remanded another 27 cases. While that's nice for the 27 applicants involved, I skimmed through to paragraph 11, where the FCC directed USAC to change the way they talk to applicants. In most of the "Global Orders," that's been the pattern, the FCC remands a bunch of cases, waives any rules necessary, and orders USAC to communicate more openly with applicants. While we'd all like to see more rule clarifications and maybe even some reforms, the directives to USAC have been good.

Take this case: all 27 applicants got burned when they mistaken used a SPIN that belonged to a company that did not have Eligible Telecom Provider (ETP) for a Telecom Services FRN. That's a no-no: all telecom FRNs must have an ETP (aka "common carrier") for the service provider.

So what does USAC do if you have a non-ETP for a telecom FRN? Well, your FRN goes into the black box of PIA, and in past years, just came out rejected. This year, thanks to the Bishop Perry Order, you get an email asking you to confirm that the SPIN is OK. No explanation of why you need to confirm the SPIN, no warning that the FRN will be denied if you do confirm the SPIN, just a request to confirm the SPIN.

[Here's a tip that has for years been part of every presentation I give on the application process: if PIA asks you to repeat information you've already provided, it means you're about to lose funding.]

But in paragraph 11 of this decision, the FCC says: "when an applicant is seeking telecommunications service but the SPIN used is linked to a provider that does not provide telecommunications on a common carrier basis, USAC should explain the problem to the applicant and allow the applicant 15 days to cure its application."

So now PIA has to explain that you're about to lose funding and why, and give you an opportunity to fix it.

It's like a peephole into the black box, so sometimes you can see one of the things that is happening to your application. If we can get enough peepholes, maybe applicants will be able to get a better understanding of how applications are reviewed.

Also, there will be fewer appeals: this year, I got an email asking me to confirm the SPIN, so I checked and found that the service provider had made an error on one of the forms and lost its ETP status. Fortunately, the provider was able to regain ETP status in time for me to meet the PIA deadline. A normal applicant probably wouldn't have figured out the problem, been denided, appealed to USAC and been denied, then appealed to the FCC and gotten a remand and then gotten approval after the funding year was over.

There are still 700 pages of secret rules for the processing of E-Rate applications. It would be nice if the FCC could de-classify most of those pages, but at least rulings like this are effectively de-classifying pages one at a time. At this rate, in 10 years or so, the application process will be transparent enough that applicants won't be so fearful.

Wednesday, May 16, 2007

USAC outwaves FCC

Brace yourself for a flurry of FCDLs. Next week we'll get the first 3 waves of funding for FY 2007. Wave 1 is just a reissue, but Waves 2 and 3 will be new. All 3 waves will be just for fully funded Priority One funding requests. So my earlier suspicions were unfounded.

The big question: Was the 3-week hiatus long enough for USAC to buy more pink envelopes?

Chairman Martin replies

Well, now we have FCC Chairman Martin's answers to Rep. Markey's questions about the Universal Service Program. I already gave my answers. Let's look at Chairman Martin's. I'm going to paraphrase viciously.

1) Should Universal Service be exempt from ADA?
No. “At this time, Commission staff estimates that the universal service program can continue to operate as it does today without triggering an Antideficiency Act violation.”

2) Have recent appeal decisions gone too far? How can we clarify the rules?
The FCC decisions are simplifying the process and directing USAC to do more outreach.

3) Should the poorest districts continue to get highest subsidies? Free telecommunications? Extra subsidies for high-bandwidth services?
Yes. No. Pass.

4) Do you support lifting the $2.25 billion/year cap?

Here's how I score his answers. Since this is an education program, I feel compelled to give him letter grades.
1) F The way the program works now is screwed up, and if you fix it, you'll trigger an ADA violation. If all applicants knew before the start of the funding year what level of funding they would receive, it would be an ADA violation. A violation is avoided only because many applicants don't get approval until 9 months into the funding year whether they're funded, and USAC is sitting on $1 billion in un-rolled-over funds. Not requesting a review from OMB is understandable, but telling Congress that the program doesn't need an exemption is just bad.

2) B+ I have to say, it's true that the program has gotten less confusing. PIA reviewers follow a script, and I have found their scripted responses more straightforward than in the past.

3) C+ If I were Chairman, I would have said that all the major cases of waste, fraud and abuse (WFA*) involve applicants with high subsidies, and that the highest discount percentages are too high. The Chairman tiptoed close to that by saying that the applicant co-pay was important in preventing WFA. If only he would say what the WFA Task Force said back in 2003: the 90% discount causes WFA.

4) B If the fund were uncapped, the Priority Two funding would go through the roof. As I said earlier, though, I'd like to see the cap just on Priority Two. Easy answer, though.

So I think that puts his average somewhere around a C, but only because there's no such thing as an F-- for that first answer.

* Am I the only one who finds it troubling that we E-Rate junkies have an acronym for waste, fraud and abuse?

Monday, May 14, 2007

Pay it forward

So I was just reading on E-Rate Central's weekly update for service providers that USAC will probably have $1 billion in the bank from funds not spent in previous years. Probably they're just holding it as a hedge against another ADA crisis. That's fine, but as long as they're holding it, they should put it to work.

That $1 billion could fund Priority Two for 2007-2008. So right now, USAC could take a look at Priority Two demand for 07-08, and set the denial threshold. Then every February, USAC could look at the next year's Priority Two requests, look at the excess it has on hand, and determine the denial threshold right then. USAC could announce the denial threshold when they issue Wave 1.

What if they're way off on the denial threshold? Well, if they set the threshold too high, then they can just roll the extra money into next year. If they set it too low, they use the 07-08 Priority Two funding as a cushion, and the following year is leaner.

Imagine how nice it would be for applicants to know right away what the denial threshold will be. But the real winner would be PIA. They would be able to deny all the applications under the denial threshold without even taking a glance at the Item 21 Attachments or doing any kind of processing.

Now if there were only some way to set the denial threshold before the application window opens....

Friday, May 11, 2007

Tech plan comments

Oh, I like the Wisconsin Dept. of Public Instruction comments on SECA's petition to clarify the tech plan rules. They come right out and suggest that tech plans should not be required. Now we're talking.

Really, I'd like to see the FCC do a review of all FRNs denied as a result of tech plan deficiencies. I'll bet they would find no cases of waste, fraud and abuse. Instead, they would find honest applicants deprived of funding because of some stupid mistake. Because if an applicant is going to engage in WFA, they can just write it into the tech plan. If an applicant is going to purchase unnecessary services or equipment, they can just write it into their tech plan.

And private schools are caught between a rock and a hard place. Now that the for-pay Tech Plan Approvers ("pay us $500 and we'll approve your plan") seem to be gone, the only way for private schools in many states to get a tech plan approved is to join some kind of association. I don't know what the dues for those associations is, but I'll bet it's more than $500. I have heard that there are "last-resort" approvers that will help, but how would an applicant know that?

Toss the tech planning!

Thursday, May 10, 2007

PIA black box

So I was reading a new appeal from the Baltimore Public Schools, and it got my goat. In a nutshell, BPS had their discount level slashed and lost $10 million in Priority Two funding.

PIA is like a black box. USAC and the FCC keep 700 pages of PIA procedures secret. And it is clear that PIA reviewers are taught to collect information, but not to answer any questions. Also, PIA questions are all oblique, which cause unwary applicants to give the wrong answers. A couple of examples:
PIA says:
"Please confirm the SPIN for this FRN."
What it means:
"The vendor that you gave us is not an Eligible Telecommunications Provider, and this FRN's Category of Service is Telecommunications Service. You're going to lose funding if you don't either change the SPIN, change the Category of Service, or get the service provider to become an ETP."

PIA says:
"Please confirm the establishing 470 for this FRN."
What it means:
"Either you didn't wait 28 days to award a contract and file the 471, or the 470 doesn't include the Category of Service for this FRN. You're going to lose funding if you don't change the Category of Service or find a different 470 to use."

And if you give some information that is going to result in a funding reduction or denial, PIA doesn't warn you. In the case mentioned above, the first that BPS heard that their discount level was being slashed was in the FCDL. Most denials come as a surprise to applicants.

That made sense back in the bad old days; the FCC almost always upheld denials, so it was cheaper for Solix to deny rather than explain. Now, though, with every appeal being remanded, it would be cheaper for Solix to avoid appeals by telling applicants that they are about to be denied, and what they can do about it. It would also save USAC time, since these days I appeal to USAC just so I can get some more information about why an FRN was denied. Finally, it would save the FCC money by cutting down on the number of appeals. It would also save much time and pain for applicants, too, but that's not nearly so persuasive.

PIA is like the "black box" my physics teacher talked about. You can't see what's inside the box. You can only send things in, watch where they come out, and deduce what is inside the box based on the pattern of outputs. I love a good puzzle, so I'm always looking for the patterns of output from PIA, and I have been able to deduce a number of procedures.

But pity the poor applicant, who only gets to send one application into the black box every year. For them, the output seems random. Worse, since the rules change every year, some applicant can give the same input for 5 years and get a different output in the 6th year. And this is no academic exercise: in the case of BPS, $10 million was lost.

C'mon, FCC, open the black box. Or at least whittle down the secret rules to 100 pages or so. It will save time for Solix, USAC and the FCC, and make the process much less intimidating for applicants.

Wednesday, May 09, 2007

Choppy waters

A barrage of sizable waives from the FCC. Five orders totalling 195 applicants. These decisions seem a little different than some other recent ones in that, in addition to waiving rules, they actually overruled the SLD a fair amount. I found three other things interesting.

In the Macomb decision, the FCC decided that "multi-homing" Internet service providers was not eligible. (I don't like the use of the term multi-homing in this way, but I'll go with it.) It ruled that if you want multiple connections to the Internet, they must all be from the most "cost-effective" provider. That's just wrong-headed. It is definitely worth it to pay a bit more to avoid putting all your egs in one basket. When you need to add a second connection to the Internet, the calculation of cost-effectiveness should not be the same as for your first connection. If "reliability" is one of the factors in determining cost-effectiveness (and it should be), choosing a different vendor for your second connection is much more cost-effective. Because the reliability of an applicant's Internet service is greatly increased by multi-homing.

Even more interesting in the Macomb decision, the FCC ruled that for some FRNs, the applicant had not chosen the most cost-effective service. Instead of denying those FRNs, it ruled that those FRNs should be funded, but only based on the price of the most cost-effective vendor. And they didn't say that a waiver was required. The FCC seemed to be saying that you don't have to select the most cost-effective service provider, but that you can only be funded based on the cost of the most cost-effective bid. What's that sound? I think it may be a loud wail coming from the SLD offices. This rule makes the SLD's job tremendously more difficult. Now the SLD can't just deny applications if the applicant can't show that it chose the most cost-effective service. To follow the rules as set forth in this order, PIA is going to have to make its own determination of cost-effectiveness and fund applicants based on the cost of the most cost-effective service. Oy.

Finally, the Boothel decision killed the .75 Rule (a heinous combination of the 2-in-5 Rule and the 30% Rule). That rule had recently disappeared from the SLD Web site, but it's nice to see the FCC put a fork in it by saying that the 30% Rule applies only to ineligible services, not ineligible entities.

And it's nice to see the FCC continuing to whittle away at the 30% Rule, which I hate.

One last thing that struck me: these appeals are old. Of the 195 appeals, by my quick count, 6 are from 2006, 12 from 2005, and 30 from 2004. I don't have the dates when they were all filed, but certainly fewer than 10% were filed in the last year, and probably less than 20% filed within the last 2 years.

Tuesday, May 08, 2007

What's the hold-up?

Now I'm starting to get suspicious. It's been over 3 weeks since Wave 1 came out, and we still haven't seen Wave 2, or even the fixed Wave 1. Can it really be taking that long to fix a little problem with the way that dates print out on the FCDL, or is something else going on?

Of course, I'm hoping that they are waiting for a new shipment of pink envelopes, so that we don't have to endure the anguish of pink paper inside a white (or even blue) envelope.