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Friday, January 16, 2009

I've got your maintenance right here

I just saw a request filed with the FCC from a service provider about Basic Maintenance of Internal Connections (BMIC). I don't know how the service provider would feel about me bandying their name about, so I'll just use "SP" to refer to them.

SP correctly identified a basic problem with BMIC: no one gets approval for these contracts in time to cover July, so now they have to decide whether to front the money in the hopes of later approval, or forego maintenance. But the remedy that SP proposes falls short.

SP suggests that applicants be allowed to make an annual payment, then if funding isn't approved, decide what to do at that point. But the math doesn't work: we're talking about 90% applicants, so if they're paying 10% of the contract amount, that will cover just over a month. As a result, in early August the applicant still won't have funding approval, and the 10% payment will have run out.

A single annual payment is half the solution. The other half is to allow applicants to pay get funding for the annual payment even if the contract does not run July 1-June30.

That would allow applicants to set up maintenance contracts to run June-May.

Let me give an example. Let's say the change I'm suggesting is implemented for 2009-2010. In that case, an applicant would sign a contract now to cover June 2010-May 2011, and put it on their 471. In that scenario, the applicant doesn't care if their BMIC FRNs are funded by July 1, as long as they get funded before the end of the funding year.

True, the first year would be ugly: applicants would have to have one contract to cover July 2009-May 2010, and another to cover June 2010-May 2011. But in subsequent years, it would be much better for applicants.

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