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Tuesday, December 23, 2008

Not in my sandbox

I was just reading about a ex parte presentation to the FCC to have the Universal Service Fund pay for a "Fiber to the Library" initiative. I like the idea of the initiative, but I don't like the idea of having the E-Rate pay for 100% of it.

The thing that turned me against it was the assertion that libraries are more deserving of funding than schools because libraries "serve everyone." Well, I think if you went to any community in the country and counted up the number of people who visit a school in a year and compare it to the number of people who visit a library, the school wins. Compare the number of people who use the Internet in a school and the number of people who use the Internet in a library, and the school wins bigger. Compare the number of devices connected to the Internet or the amount of bandwidth used, and the schools win even bigger.

While libraries serve everyone in theory, in fact schools serve more people and make more use of the Internet.

I'm all for libraries getting their fair share of E-Rate funding. But nothing should be funded 100% by E-Rate. And no preference should be given to schools over libraries, or libraries over schools.

Tuesday, December 16, 2008

Holiday cheer

Today a holiday tradition brought a smile to my lips. That's nice, except the tradition I'm talking about is on the USAC home page: the countdown to the end of the filing window. It just strikes my funny bone that the countdown includes the number of seconds until the window closes.

Once upon a time, seconds mattered. I can't find the appeal, but I remember back in the bad old days, an applicant drove a long way to a post office open until midnight (I seem to remember a snow storm involved). The courier arrived at 11:59, but didn't get to the front of the line until 12:01 (a line at the post office at midnight?). The FCC said, "Sorry, denied. You should have applied earlier." (OK, that's not a real quote. Here's a real one: "We find that the above-captioned Petitioners have not demonstrated special circumstances to warrant waiver. The Commission has strictly and consistently enforced filing deadlines, allowing waivers of deadlines only in very limited and compelling situations. In light of the large number of applications that the Schools and Libraries Division (SLD) of USAC reviews and processes each year, it is administratively necessary to place on the applicant the responsibility of complying with all relevant rules and procedures, including filing deadlines. Hence, employee illness, staff failure to perform a job properly, inclement weather, or misunderstanding of the rules does not relieve applicants of their responsibility to comply with the Commission’s rules and procedures. Further, the assertion that denial of an application may have a detrimental impact on an applicant does not create special circumstances or suggest particular facts that warrant a waiver of the Commission’s rules.")

Bishop Perry hasn't been around as long, but he sure spreads as much joy in the E-Rate community as that bishop from Izmir.

Monday, December 15, 2008

New math

Oh, I forgot to mention one thing that puzzled me about Table 4 in the OIG's Audit Analysis. It shows the percentage of applicants that failed for each of the 21 different causes. For a few of the listed causes, the OIG said 0.1% of applicants failed for that reason. It's been a long time since I took a math course, but I'm sure 0.1% is one in a thousand. There were only 260 audits.

If one applicant failed for a given reason, that would be 0.4% of the sample (OK, 0.3846%, but we're rounding up).

How could any percentage less than 0.4% appear in that table? Am I missing something?

Friday, December 12, 2008

Why we fail

The FCC's Inspector General (OIG) has released its analysis of Round 2 audits. And the picture is not pretty.

The bottom line is that the E-Rate program is nowhere near making the 2.5% threshold for improper payments, so we're getting more audits. But we already knew that.

I dumped the results into a spreadsheet, just to see what jumped out at me. Here's what jumped out:

Two of the audits accounted for 50% of the total amount of improper payments from the 260 audits. A curse on those two applicants for making us all look bad! Oh, wait, they've already been cursed with multi-million-dollar COMADs.

Of the 260 audits, only 93 did not result in recovery. Over 64% of applicants made some kind of error. How can we change that? Simplify, simplify, simplify. I came up with a couple thousand pages of rules without even trying.

OIG came up with 21 causes for improper payments. Among those causes that the auditors found resulted no errors:
  • USAC error
  • Solix error
  • NECA error
"NECA error"? What error could NECA make? Something about the way they formed USAC? And the audits don'texamine the actions of Solix and USAC, so there's no way for them to find their errors.

There were four causes associated with FCC rules:
  1. Imprecise FCC Rule/s
  2. Contradictory FCC Rule/s
  3. Overly Complex FCC Rule/s
  4. Disregarded FCC Rule/s
The Auditors found that the first 3 caused 0.2% of the improper payments made, while #4 caused 44% of the improper payments. So almost every applicant who broke an FCC rule told the auditors that they had disregarded FCC rules? I'm guessing the auditors made a judgment call that the rules were not imprecise, contradictory or overly complex. It would be more instructive if the auditors asked applicants: "Here is a rule you didn't follow. Do you find this rule precise, unequivocal and simple? Why didn't you follow the rule?"

Because as it is, the results make it appear that applicants understood the rules and chose to violate them. I'm sure that happens, but not anywhere near 44% of the time.

Thursday, December 11, 2008

Neighbors finally mowing the lawn

Here's a piece of good news for the E-Rate. The FCC has announced an interim emergency cap on the amount of support for competitive eligible telecommunications carriers for the High Cost Program. That's good for the E-Rate in an indirect way.

As I've written before, the High Cost program has been the main driver in the ballooning of the Universal Service Fund (USF). And with ballooning cost comes increased scrutiny. So even though the E-Rate is capped, our program gets increased scrutiny because our cohorts in the USF are all growing.

Monday, December 08, 2008

Sauce for the goose

This week's schadenfreude: the FCC OIG's semiannual report dinged USAC for their fixed asset record-keeping. I don't wish USAC ill, but after copying pages and pages of clients asset records in order to pass the Extended Outreach Site Visit ("it's not an audit, but we will check compliance"), there is a petty little part of me that is just happy to see it happen to them.

I wonder if there is any relation between the recent jump in available funds and the OIG audit. Seems the audit found problems with the way USAC accounted for the allowance for doubtful accounts (with the acronym ADA, jangling the nerves of this survivor of the 2004 Anti-Deficiency Act debacle).

The FCC got dinged, too, for its process for dealing with public comments, consumer complaints and inquiries. I wonder if they brought up the way the FCC manages the public comments about the Eligible Services List or the number of appeals sitting idle for years. Probably not.

Sunday, December 07, 2008

Audit tsunami?

Well, the FCC's Office of the Inspector General (OIG) has released its latest Semiannual Report, and the news is not good.

There's the usual smattering of significant fraud cases. None of the stories had enough detail to be really interesting, though.

But the really bad news is that the Round 2 IPIA audits for E-Rate have again found more than 2.5% of payments were improper. So here comes Round 3.

How big will this wave of audits be? The report doesn't give a number, but the OIG is definitely ramping up for a bigger effort by hiring more people, so I think we can expect more audits. On the other hand, Round 3 will cover all four USF programs, whereas Round 2 only covered E-Rate and High Cost. So I'm betting on 315 audits for the E-Rate program. Anyone else care to hazard a guess?

When will the Round 3 tsunami hit? The OIG has already selected the lucky recipients, though the report doesn't say when we'll all get the good news. It does say USAC is currently contracting for Round 3. So my speculation is that USAC wraps up the contracts by the end of the year, and the bad news goes out in January. Let's hope they are sensitive enough this year not to have the audit responses due at the end of the filing window.

Friday, December 05, 2008

A little light reading

Here's my favorite line from this week's Schools and Libraries News Brief:

"Before you begin, be sure to review all relevant program guidance."

Like that's even possible. So it got me wondering, how many pages of guidance are on the SLD Web site? So I figured if I googled on the pages in with the word "the" in it, I'd catch almost all the pages. Google says: 781 Web pages.

Of course, that's only the USAC guidance. Based on a quick scan of the FCC's Schools & Libraries Web page, it looks like close to 200 FCC E-Rate orders.

And then, of course, there's the 700-page tome of secret PIA rules.

If we have to review all that, all of a sudden a 73-day window seems short.