Just listen to yourself

I don't have much time to investigate the other programs in the Universal Service Fund, but E-Rate Central took a look at a recent Rural Health Care order that might have some implications for the E-Rate.  [The order is just called "Report and Order"; could this be that program's First Report & Order?  Let's all snicker at the USF noobs.]

The whole thing bears reading, but two points seemed to me worth writing about:

First, the discount is being set at 65%, lowered from 85% in the pilot.  Two of the reasons mentioned:

1. "...to ensure that HCPs have a financial stake in the services and infrastructure they are purchasing, thereby providing a strong incentive for cost-effective decision-making and promoting the efficient use of universal service funding."
2. "A 65 percent discount rate will help keep demand for the overall health care universal service...below the...cap."  

Some of us have been citing those two reasons in our arguments to lower the top discount rate in the E-Rate program.  So it's nice to see the FCC endorse the ideas, even if it's not in our program.

Second, the order sets some common-sense procurement rules.  I really liked two of them:

1. You don't need to competitively bid purchases with an annual cost less than $10,000.  I'm guessing that would exempt maybe 60-75% of all FRNs. (The median funding request is $3,000, which means a pre-discount amount of less than $10,000 for all but the 20% applicants).
2. You can use any contract "awarded pursuant to applicable federal, state, Tribal, or local competitive bidding processes" without having to do any competitive bidding.  Buy off state contract, you don't need any bidding.

Those two exemptions would probably eliminate the need to post a Form 470 for 80% of applicants.  Which would save money for everyone.  Apart from administrative costs, applicants would have the flexibility to get the best deal, unshackled from the FCC's ever-growing and ineffective competitive bidding rules.

Maybe I'll just cut and paste a few key parts from this decision and submit them ex parte on the subjects of discount levels and competitive bidding.

CER 0, LCP 2

Another decision related to the earlier reversal of a denial based on a cost-effectiveness review.  USAC denied the funding because it found that over the course of 5 years, the cost of of the firewall/email/webhosting service was more than twice the cost of buying the equipment and running the infrastructure itself.  The service provider pointed out that USAC's cost estimates assumed that there would be no ongoing costs to the do-it-yourself solution.  (I see a lot of people making the same mistake, believing that data infrastructure is "set it and forget it.")  The FCC decided that calculation was not right.

And again, Lowest Corresponding Price (LCP) got a nod.

But how about all the other CER denials that have been piling up for the last 5 years?  It's high time that the FCC did away with Cost Effectiveness Reviews, or at least clarified the process.

Cadere decisis

Could the FCC be reversing the trend of taking years to deny appeals for being filed days late?  In it's latest decision, the FCC actually decides an appeal within the legally required 90 days, and grants the appellant a waiver for filing the appeal 2 days late.  It's like the Bizarro FCC.

Except I can't find any appeal filed on the day the FCC filed that appeal.  I do see an appeal apparently from that school, but it's just asking for a waiver to file the appeal, and it's dated a month earlier.

The moral of the story: if you're going to file after 60 days, include a request for a waiver of the appeal deadline, and give a good reason why you filed late.

Phishing in the Form 470 Ocean

Just a bit of warning.  Some phisher is sending out emails to all the email addresses that were on Form 470s last fall.  Here is the text:

As part of our security measures, we deliver appropriate monitoring of transactions and customers to identify potentially unusual or suspicious activity and transactions in the American Express online system.

Please review the "Suspicious Activity Report" document attached to this email.

Your Cardmember information is included in the upper-right corner of this document to help you recognize this as a customer service e-mail from American Express. To learn more about e-mail security or report a suspicious e-mail, please visit us at http://www.americanexpress.com/phishing

Thank you for your Cardmembership.

Sincerely,

Grace_Saunders

Tier III Support

American Express Account Security

Fraud Prevention and Detection Network

  

Copyright 2012 American Express Company. All rights reserved.

The message comes with a ZIP file, which contains the virus PSW.Fareit.A.Trojan.  According to Microsoft, "PWS:Win32/Fareit.A is a trojan that steals sensitive information from the affected user's computer and sends it to a remote attacker."  So if you clicked on the ZIP file, you had better start drastic action.

Now all the email addresses from 2012's Forms 470 have fallen into the hands of people spreading viruses.

I'll take this opportunity to repeat my call for a new Form 470 that does not allow spammers to download a file with a list of names and email addresses from every 470 in the country.  And, of course, repeat my opinion that the FCC should bow out of trying to force their vision of competitive bidding onto applicants' purchasing processes.

Rush to Judgement

Reading the FCC's latest appeal decision, in my head I heard that Sesame Street song that goes, "One of these things is not like the others...."

The decision deals with 91 requests for a waiver of the Form 471 filing deadline.  The first thing that struck me: all the applications deal with the current funding year, and were filed since October of this year.  A couple of them were filed less than 10 days ago!  The 57 appellants in Appendices A and B, which were granted waivers, are mighty happy about that, but the 33 appellants in Appendix D, who were denied, probably wish the FCC had taken more time to consider their pleas.

The FCC laid out 3 criteria for granting waivers:

1. The Form 471 filed on time, and only the Item 21 attachments or certification were late.
2. The Form 471 was filed close to the deadline, and an employee was really sick.
3. The Form 471 was filed close to the deadline despite delays beyond the applicant's control. 

The poor folks in Appendix D didn't meet any of those, I guess.

Those of you who treat life as a series of word problems are probably now sitting with your hands raised, squirming with the effort of not blurting out the answer, "There is one applicant in Appendix C!"

Gold star for you.

Appendix C is the one thing that is not like the other.  It's an appeal filed six years ago for Funding Year 2004.  What is this hoary appeal doing in this decision?  It's not like it was a similar issue.

Without looking at the appeal, there is a point of interest.  Once again, the FCC has said, "You filed your appeal late, but because USAC erred, we're going to let it slide."  The FCC has in some cases been lenient about appeal deadlines in the case of clear USAC error.  I haven't figured out a pattern on when to expect leniency, though; some appeals of clear USAC error still get denied for not being timely filed.

I looked up the appeal, and I'm kind of surprised it was granted.  It looks like a USAC error, but the appeal was filed well after the funding denial reached the applicant, and the FCC has been pretty tight on appeal deadlines.

I have to agree with the FCC that " it is in the public interest to waive the deadline for its late-filed appeal."  I just wish the FCC's standards on accepting late-filed appeals seemed more consistent.

Unhand that handset

E-Rate Central's weekly update has a great history of the free-handset-with-your-VoIP controversy.  The bottom line: there are still 100 applications twisting in the wind because a service provider liberally interpreted the FCC's statements concerning free cell phones, and the FCC hasn't decided whether that interpretation is allowable.  (Actually, I think the FCC just hasn't decided on the right justification to deny the handsets, but I do tend toward the cynical.)

I don't have anything new to say on the matter, I just wanted to give a shout-out to the E-Rate Central update.  I will repeat my earlier suggestion: in order to be allowed, free services should pass the Ancillary Use conditions:

1. Ineligible features are an insubstantial and inseparable component part of an eligible product or service.
2.  A price for the ineligible component cannot be determined.
3. The product or service is the most cost-effective means of obtaining the eligible functionality without regard to the value of the ineligible functionality.

And as I pointed out earlier, free cell phones do not meet those criteria.  The price for the ineligible component is easily identifiable, the cost is far from insubstantial, and the component is easily separable.  Solve the problem by making applicants identify the cost of "free"handsets (cell phone or VoIP) and remove it from their funding requests.

Or better yet, apply the "eligible location" requirement to cell phone service (as we do for data service to those same devices).  That would make cell phone service ineligible for E-Rate funding.

NSLP deflation

Another pretty graph from Funds for Learning, this one about the number of kids served in various discount bands. The FFL numbers seemed unbelievably high to me, so I looked into NSLP a little.  Turns out the FFL numbers may be in the ballpark, though it is tough to say for sure, because there are a lot of ways to reach a 72% discount.

But I found this interesting tidbit: "Between 16 percent and 25 percent of those whose family incomes make them eligible for free or reduced-price meals are not certified." (http://www.fns.usda.gov/Ora/menu/Published/CNP/FILES/SNDA-FoodServ-Pt4.pdf, page 128)

So discounts should be even higher.