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Monday, September 17, 2007

Follow the money

I took a glance at the contribution factor proposal for Q4 2007. The only part I found interested was the table on page 2, which breaks down costs for each program. I can see why there's so much excitement about the High Cost program. Back in '96, the E-Rate and High Cost were about the same, I think. Now it looks like High Cost is more than twice as big as E-Rate. Granted, the E-Rate cap, which does not adjust for inflation, means the program is being cut a bit every year, but still....

I dumped the numbers in a spreadsheet because I was interested in what percentage admin costs were of the total for each program. E-Rate comes in around 3%, which I think is quite reasonable.

Here's something that sticks in my craw a little: the admin costs for E-Rate and Rural Health Care (RHC) are about 10 times the cost for High-Cost and Low-Income. What do E-Rate and RHC have in common? The funding goes to someone other than a telco. One message you could take from that is: we trust telcos, but we don't trust schools, libraries and hospitals.

Of course, if I look at where waste, fraud and abuse is being found in the E-Rate program, I can't think of any cases involving telcos.

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