Hraunfoss back with a vengeance

I knew this wasn't going to end well.  Back in 2010 I noticed that something was up with hraunfoss, the server that hosts most of the FCC's documents related to E-Rate  It wasn't being used on new appeal decisions.  And for a while, URLs that had hraunfoss.fcc.gov in them were redirected to transition.fcc.gov.

Now it seems that hraunfoss is fully back in action, and appeals are stored on that server.  So even if the Icelandic waterfall for which the server is named dries up when global warming claims Iceland's glaciers, hraunfoss will live on.  Cyber-environmental crisis averted.

But Houston, we have a problem.  All that content has moved off transition.fcc.gov back to hraunfoss, so anyone who linked to a document on transition.fcc.gov now has a broken link. I guess it's a punishment for doubting hraunfoss.

So I have to find and fix all those links on this blog.  I hope Blogger has a "search for broken links" tool.

There is a schadenfreude silver lining: I'm not the only one with this problem.  It appears that the FCC is OK (because they had their pages refer to hraunfoss, and then redirected browsers to transition.fcc.gov), but the rest of us that referred to decisions during that time used the transition URL we ended up at, not the hraunfoss address that we were redirected from.  So we're all screwed.

Maybe this photo of hraunfoss will bring me serenity.

The 0-in-5 Rule

On Monday at the USAC Schools & Libraries Committee meeting, it becomes official: the 2-in-5 Rule is worthless.  On the agenda for Monday:

1. Approval to Deny Requests for Priority 2 Services at a Discount Rate of 89 Percent and Below for Funding Year 2012.
2. Approval to Deny Requests for Priority 2 Services at a Discount Rate of 87 Percent and Below for Funding Year 2011.

As I've said before, the 2-in-5 Rule does not work and should be rescinded.

The improper and capricious rollover/tossback into FY2010 aside, the vast majority of E-Rate applicants have never been able to get Priority Two funding.  So for almost everybody, it's a 0-in-5 Rule.

I had such hope when the FCC put the 2-in-5 Rule on the chopping block in the May 2010 NPRM, but somehow it survived.

How do we ameliorate the lack of funding?  Cut the top discount rates.  USAC's Task Force on the Prevention of Waste, Fraud and Abuse recommended it in 2003.  I stated my support in 2005 and expanded my support last year.  The State E-Rate Coordinators' Alliance (SECA) said it a year ago.

I think we just missed our best chance to see it happen, though.  As I mentioned in May, the funding crisis this year got people talking about pro-rating Priority Two funding for 90% applicants.  (Under pro-rating, if the FCC only had $300 million left after paying P1, and had $500 million in P2 requests from 90% applicants, the 90% applicants would get 60% (300/500) of what they asked for.)  Now I'm wishing that the FCC had played a little brinksmanship and put pro-rating out there as a possibility.  The cut-the-top-discount-rate proposal keeps disappearing from FCC reforms, which makes me think that some powerful person or group is putting the kibosh on it behind the scenes.  Now if the 90% applicants saw they were only going to get some unknown percentage of what they asked for, they might prefer to take 75% funding rather than get a 40-80% pro-rating of their 90% funding.

Now we'll have to wait at least another year, until the funding shortage gets large enough that the FCC can't fix it by robbing Peter and rolling it over to pay Paul.

Blurry snapshot

Somehow, I found myself looking at USAC's third quarter projections on the USF, released April 26th.  E-Rate geek that I am, I still found it too tedious to wade through the whole thing, but the tables show a few interesting factoids:

1. Historically, disbursements have been 70-80% of commitments.  That's not too surprising.  I would have guessed a little higher.  What surprised me is that P2 disbursements are only a little lower than P1.  I would have expected to see a lot more P2 unused, since they get approved so late.  But I guess it's easier to use service substitutions to ensure you spend all your P2.
2. Only about 20% of 2011-2012 commitments have been disbursed.  Assuming that disbursements will eventually reach the same level mentioned above, that means that about 30% of disbursements that will eventually be made had been made as of April 26th.  Not surprising for P2, but I would have expected more of P1 FRNs to be paid by SPI, and those FRNs should have been about 75% disbursed.  I guess the BEAR rules.
3. For FY 2010, only about 40% of Internal Connections commitments had been disbursed.  Assuming that the percentage will eventually previous levels, that means something like a third of the disbursements had not been made 9 months after the end of the funding year.
4. Total commitments for 2011 was just over $2 billion.  So with the funding year almost over, only two thirds of the funding has been committed.

The promise of a projection

Well, that was quick.  Yesterday, the FCC ordered USAC to rollover $1.05 billion in unused funds into Funding Year 2012-2013.  How quick?  Well, it was just 8 days after USAC announced it had $1.05 billion available.

But wait a minute, take a close look at that USAC announcement.  It seems to be saying that on August 2nd, USAC will be sending the FCC a projection of funding through the end of September, and that projection will have $1.05 billion in unused funding.

So the FCC just approved a rollover based on the promise of a projection of available funding.

We are a long way from the rules created in the Third Report and Order, now contained in Part 54.507 of 47 U.S.C.: "On an annual basis, in the second quarter of each calendar year, all funds that are collected and that are unused from prior years shall be available for use in  the next full funding year." This order fails on three counts

1. We are in the third quarter of the calendar year.  (OK, so it's almost the second quarter.)
2. Since we're already in 2012-2013, the "next" funding year would be 2013-2014.  (Of course, the FCC thoroughly flouted that part of the rule last year with their tossback into a funding year that had already ended.  At least this year they rolled funds into what is almost the "next" funding year.)
3. USAC has not said it has $1.05 billion in unused funds.  The July 10th letter seemed to be saying that next month it will be projecting that by the end of September there will be $1.05 billion in unused funds.  The rule says "funds that are collected," not "funds that will be projected."

But brushing aside the rules, this is good news for the program, since it means we may get Priority Two funding for 90% applicants with no pro-rating.  However, that may take some time.  As I mentioned earlier, the actual total of P1 requests plus P2 requests from 90% applicants is $3.8 billion, so this rollover is enough only if USAC denies 11% of applications.  That's not an unrealistic number, but I would think that USAC would have to deny 11% of funding before it approves any P2 applications.  Since Solix seems to have been focusing on the slam-dunk applications so far, it's going to take some time to deny that much funding.
Or maybe I'm just being pessimistic again.
Somehow, the whole thing conjures up the Star Trek episode "A Piece of the Action":
"Hey, Oxmix, we need more cash to fund P2 requests."
"Well, here's $400 million."
"You need to find $1.05 billion."
"But The Book says...."
"I would advise yous to keep searchin', Oxmix."
"Oh, right.... Let me check my numbers.... Well, whaddayaknow!  We'll have $1.05 billion in a couple of months."

But I'm sure that's not at all how it happened.

Today's breakfast? Crow.

The latest Funds for Learning newsletter has a link to a letter from USAC to the FCC about rollover funds.  The letter says that a total of just over $1 billion is available.  Then the shocker: "We believe such funds would be sufficient to make commitments at the 90% discount level for Priority 2 requests for Funding Year 2012."  Wow, I didn't think that problem would be over so soon.

So borrowing my math from a previous post, for 2012-2013, demand plus P2 demand from 90% applicants totals over $3.8 billion.  The fund cap is set at $2,338,786,577. add $1,050,000,000 from the rollover, and you've got $3,388,786,577.  So the funding is only sufficient to cover the funding if USAC denies 11% of applications.  I think that's in line with historical data, although of course we can't use recent history, since USAC is still working on funding approvals for 2010-2011 (to say nothing of 2011-2012).

So my prediction that the FCC would have to wait until after the funding year to accumulate enough funding to cover 90% applicants was wildly pessimistic.  I can hear the utterances of frequent readers, dripping with sarcasm: "What?!  This blog pessimistic?  Well, I never!"

So the impending no-funding-for-P2 train wreck is put off for another year.  But the train wreck is coming.

Searching for Christmas

The FCDLs have apparently been issued, but we still can't get commitment info through the Data Retrieval Tool.

Yes, I'll be able to get the info tomorrow (I assume), but it just grates that service providers have had the info on Wave 1 since last month, but I can't get it until the day after the FCDL.  It's like telling a kid he can't have his Christmas presents until the 26th, but all his siblings know what he's getting.

I know, I can use Search Commitments, but that tool doesn't even give you the FRN. How could they leave out the database's primary key? How about showing the service provider?  And who wants to see the address, anyway?  While we're on the subject of this tool's shortcomings, the sorting ability is chock-full of flaws:

1. If you have a list that has multiple pages and click on a column heading to sort based on that column, the sort only works for the first page; if you jump to page 2, it is as if you had not sorted.  And if you try to sort any later page, it dumps you back to page 1.
2. If you make a sort, it tosses out any previous sorting.  So you can't, for example, click on "Name," then click on "Discount" to get a quick look at an alphabetized list of 20% applicants.  Once you click on "Discount," the names are randomized.  (I'm betting that FRN is the secondary key in that sort, but I can't say for sure, because I can't see the FRN.  Grrr.)
3. You can't click on a column a second time to reverse the sort order.  So the only way you're going to see all the 90% applicants is to increase the number of FRNs per page so that you're looking at all the FRNs, sort on discount, and then scroll to the bottom of the page.
4. But wait, you can't do that, because you can't look at all the FRNs on a single page.  You can increase the page size, but only in increments of 50.  So for example there were 7,981 FRNs in CA in 2011, but you can only increase the FRNs/page to 7,950.  So if you want to look at the 90% applicants, you're screwed, because if you sort based on discount, 31 of the 90% FRNs will be on page 2, and when you go to page 2, the sort vanishes, and page 2 has 31 FRNs from applicants whose names fall at the end of the alphabet.

Thank goodness for the "Export to Excel" button.

Wave upon wave

Another new record for this year!  Today's USAC News Brief says, "USAC will release FY2012 Wave 2 Funding Commitment Decision Letters (FCDLs) July 11."  So Wave 2 is coming out 1 day after Wave 1.  I don't think I've ever seen back-to-back waves.

This announcement makes me feel better about one of my gripes concerning the FCC's announcement of Wave 1.  See, by announcing on June 28th what would be in Wave 1, the FCC ensured that none of the applications which cleared PIA between June 28th and July 10th will get an FCDL until the second wave of funding, since the amount of the first wave was fixed in the announcement.  So some applicants are actually going to get a later FCDL, just so the FCC could try to save face by announcing future funding commitments before the start of the funding year.  The back-to-back waves all but solve the problem by making the delay only 1 day.

I originally held myself back from commenting on the FCC's announcement, but today I'm feeling the snark.

First, the tone is a crack-up: "USAC releases...Record Commitment of $646 million."  The whole thing reads like a glorious success, when in fact, it's a miserable failure.  The headline should read: "USAC fails to release any commitments by the start of the funding year."  Instead of "More applicants will receive funding commitment decisions in this wave than any other wave in the program history," it should say, "Never in program history have applicants waited so long to receive funding commitments."  And they even make the $5.24 billion in requests for 2012-2013 seem like a sign of a successful program, instead of the beginning of a long, slow, ugly funding shortage train wreck.  George Orwell could not have written it better.

Second, the tense needs to be corrected in the headline.  See, July 10th (or 11th) is in the future.  So the press release should have started with "USAC Will Release...."  They got the tense right in the rest of the release.

By the way, there was one interesting piece of information in the letter: just over half of applications are in the first wave.  The press release says that "USAC will send over 23,800 letters" and that 46,838 applications were received.  So the first wave will fund half the applications, but commit less than a quarter of the funding for the year.  Looks like it's a good year to be a small applicant.

ESL getting worse

Hey, the new draft Eligible Services List (ESL) has been posted!  I haven't had time to look at it, but I'll give my ill-considered opinions based on the press release.

The press release lists 3 changes, which I'll deal with in reverse order.  The Cliff's Notes [for readers under 30, that's what us old fogies used before SparkNotes] assessment of these 3 changes: the first is meaningless, the second is dishonest, and the third is terrible.  Detailed griping:

1. "Commercially available" is back in.  They took it out last year, but put it back in for clarity.  Oh, please.  The lack of clarity has nothing to do with the phrase "commercially available" and everything with the distinction the FCC is making between "telecommunications services," which must be provided by a common carrier, and "telecommunications," which can be provided by any company over fiber.  The ESL makes it sound like I could offer phone service over fiber without being a common carrier.  The distinction is hopelessly muddy, and "commercially available" doesn't help.  Really, what would a "non-commercially available" service be?  If it's not commercially available, how would applicants obtain the service?  This is the worst kind of jargon, because it masquerades as normal English.
2. They removed citations to the orders, rules, etc. which underlie the eligibility rule to "streamline" the document.  Sorry, that's not "streamlining" the rules; it's "obscuring" the rules.  I'm all for simplifying the rules, but I'm opposed to hiding the complexity of the rules.  Because if people could see how complex this program's rules really are, they would demand real changes.  [And until the changes happened, applicants would be scared into hiring a consultant.]  I think every eligibility determination listed in the ESL should have citations that allow applicants and service providers to see the basis for the determination.
3. And now the big one: they want to divide Priority One eligibility into 3 categories:
   1) Communications connectivity
   2) Voice services
   3) Other designated and related services
   Yup, the old "Telecommunications Services" and "Internet Access" categories would be gone.
   And that idea is terrible for the following reasons:
   
   1. The Form 470 and 471 still have the old categories.  So now applicants will have less idea where to put services on those forms.  Any change to the ESL categories should be coordinated with a change in the forms, and since changing the forms involves public comment and OMB approval, it isn't going to happen for 2013-2014.  If the FCC wants to mess with the categories, they should start by announcing a change to the forms, and get that wrapped up before changing the ESL.  The 3 proposed categories do not align at all with the categories on the form, creating more confusion, not less.
   2. The categories suck.  There is only 1 distinction that matters for Priority One: services that have to be provided by a common carrier, and those services that can be provided by anyone.  Once upon a time, that distinction coincided nicely with the "Telecommunications" and "Internet Access" categories.  Then along came VoIP and dark fiber, and now it's all muddy.  But these new categories really stir up the muck, since they each contain both "Telecommunications Services" and "Information Services" (to use the FCC's old terminology, rendered useless by the FCC's inability to decide where VoIP belonged).

What should the FCC do?  Well, if they want to keep categories, they should:

1. Change the Form 470 and 471 for 2014-2015 so that they have 2 categories of service in Priority One:
   1) Services that must be provided by companies that file a Form 499
   2) services that can be provided by  companies that don't file a Form 499
2. Reorganize the 2014-2015 ESL to make clear which Priority One services must be provided by Form 499 filers.

We'll use the Form 499 distinction, because "common carrier" and "Eligible Telecommunications Provider" got too murky, so it will be clearer to distinguish companies by whether they file a Form 499.  That's the terminology used in USAC's SPIN Contact Search tool, so let's try to be consistent.

But an even better solution would be to get rid of categories entirely.  Don't make applicants keep track of the regulatory status of service providers.  Applicants just apply for eligible services, and get funded.  If it turns out that a service that should have been provided by a Form-499-filer was provided by a company that does not file a Form 499, take it out of the hide of the service provider, since they shouldn't be providing those services.  Really, why should applicants have to get involved in service provider compliance issues?