The fog of eligibility

Here's the ugly side of eligible services. For the first time I can remember, the FCC has denied an appeal where the applicant thought that a piece of software was eligible, honestly told PIA exactly what they were requesting, got approved, then were denied after invoicing USAC. As the appeal asks, "How can it be deemed ineligible...1 year after it was initially funded?"

This is a great example of a problem that needs to be fixed. The applicant believed that a software product qualified as a multi-point conferencing unit (MCU) for videoconferencing, which was eligible. The service provider also believed it was eligible. So did the PIA reviewer, so the application was approved. So the software was installed, and the service provider billed USAC. But lately, USAC has been using the invoicing process as another opportunity to assess eligibility, and USAC decided that the software was ineligible, reduced the funding commitment, and refused to pay the invoice.

I'm not saying the software in question is eligible, because I don't have all the info. It may be a "software MCU" with a few extra features (which might be considered "ancillary use"), or it might be management software that expands the capability of an MCU, but isn't an MCU itself.

Eligible or ineligible isn't the point. The point is that the applicant and service provider apparently thought the product was eligible, and the PIA reviewer agreed. It just seems unfair that USAC can come back after the project is done and change their decision on eligibility.

"Approval" should mean something. PIA is scary enough for applicants, but if the result of PIA is only a conditional approval contingent on later approval by other reviewers, applicants can never rest easy.

I have heard the advice, "don't push the envelope on eligibility and you won't run into trouble." OK, but I have to say that even for me (and I consider myself an eligibility expert), there is no envelope, only a dark plain with swirling patches of fog. You can tell when you're deep in the fog, but you can't tell where the edge of the fog is. Even if you pick a clear spot and stand there, the fog may swirl over you.

Webex palantir?

The FCC is doing a workshop on the National Broadband Plan, and the future of the E-Rate is on the agenda. So I know where I'll be this Thursday (August 20th) at 1:00 p.m. (Eastern time).

Here's part of the info I got from NCTET:
The event will be broadcast live via WebEx, Second Life, and web-based video feed, and interested participants will be able to submit questions to the panelists via WebEx, Second Life, and Twitter. The Education team is also soliciting ideas for the Plan via Ideascale at http://usbroadband4ed.ideascale.com/. Information about the Workshop (including video and Twitter feed info) can be found at http://broadband.gov/ws_education.html (WebEx video feed is confirmed, FCC is working on a Quicktime feed as well, which will be posted closer to the event date).

Participants interested in attending in person can register online at http://broadband.gov/workshops/registration.htm?wsid=13, and participants interested in attending via WebEx can register online at https://fccevents.webex.com/fccevents/onstage/g.php?p=0&t=m

Here's the agenda:

1. Broadband and educational outcomes
2. Opportunities and benefits of broadband in education
3. Future use of broadband in education
4. The future of the e-rate
5. Most promising broadband related applications and devices for education
6. Digital literacy

The waive stops here

Ever since the Bishop Perry Order, it sometimes feels like "what will it take for the FCC to actually deny an appeal?" The answer from yesterday's appeal decision: be involved in fraud and your appeal will be denied.

Actually, the FCC has denied other appeals, where it could be demonstrated that the competitive bidding process was not open and fair. That seems to be where they draw the line on granting mulligans on honest mistakes. So it's no surprise that they denied this appeal, where people have been convicted for their behavior in this competitive bidding process.

I just hope the FCC doesn't see such cases as evidence that the Form 470 process is effective. The people involved in this case didn't get caught because of the Form 470 process. The Form 470 does not inhibit the dishonest, it only complicates purchasing for the honest, driving up prices and adding complexity to the process.

My staycation

USAC just announced (on the Service Provider Conference Call) that the big data system switchover that's been in the wind for years is actually going to happen at the end of August. The plan is that some time in late August, all the systems will shut down for 2.5 weeks. The static pages will be available, but not any of the search tools, application tools, Submit a Question, etc.

So my kids will be seeing more of me in late August.

Pretty good timing. Application review and 486es are mostly done, the application window won't open for several weeks, the BEAR deadline is much later.

And Mel Blackwell mentioned that one of the upgrades planned is a new application process where you can take last year's application, edit it and submit it. That was on my 2006 Christmas wish list, so if I were better at PhotoShop, I think I'd have a picture of Mel in a Santa hat here.

Cash rolling in

Well, it's official: the FCC is rolling over $1 billion in unused funds. Interestingly, they're rolling $900 million into the current (2009-2010) funding year, and saving $100 million for the 2010-2011 funding year. I've speculated in the past that the unusually large rollover this year is a one-time bump caused by some accounting changes at USAC, and next year we'lll be back to the more typical level ($600 billion or so). Apparently, the FCC wants to spread the wealth a little bit.

So what will be the denial threshold for 2009-2010? I'm too swamped to really do any real analysis, but let's take a quick look:
With a $900 million carryover, the total funding available is $3.15 billion.
Priority One requests are about $2 billion.
Priority Two requests from 90% applicants are $800 million.
Priority Two requests from 80-89% applicants are $1 billion.
Let's assume USAC denies 15% of the funding requests received. (I think I read that E-Rate Central had figured out that the post-Bishop Perry rate was around there).

In that case, we'd need $2.4 billion to cover P1 and the 90-percenters. We'd need $3.2 billion to have an 80% denial threshold. If we assume that funding requests in the 80%-90% band are evenly distributed, the denial threshold will be 82%. Me, I think USAC is serious about helping more people get approved, so the actual denial threshold will be 84%. We'll know in a year or so.

Anyone care to start a pool?

Notice how my analysis doesn't mention the 2-in-5 rule? That's because the 2-in-5 rule doesn't work. (What, you thought I would mention the denial threshold without beating my favorite dead horse? How long have you been reading this blog?)