Free the handsets!

I don't often listen to the Service Provider Conference Call, but I could tell this week's was going to be exciting, so I made a point of getting on the call.  It did not disappoint.

The reason for the excitement?  USAC recently decided that one VoIP provider could provide free phones with their service.  Other VoIP providers were hot because:

1. The standards for providing free equipment with Priority One service are too vague to tell whether an offering meets them.  The FCC published a request for comments in August, but has not taken action on it so far. 
2. USAC didn't tell anyone that they were making decisions on eligibility of free handsets.  VoIP providers who had been saying that free handset eligibility was undecided were caught flat-footed.
3. USAC didn't explain the basis for the decisions, so other providers couldn't tell what they needed to do in order to offer free phones.
4. This is all happening in the middle of the filing window.  Service providers who thought it prudent to wait for an FCC decision are now at a competitive disadvantage.

So the beginning of the call went normally, and then the VoIP phone issue came up, and things got a little heated.  Speaking for USAC was the Senior Director whose title should be Bearer of Bad News, because it seems like every time USAC has to convey an unpleasant message to the E-Rate community, she gets the nod.

The message was pretty clear:

1. No, USAC does not have any more information on the standards for the allowability of free phones.
2. In the case of this single service provider, USAC was satisfied that they definitely met the requirements of the Clarification Order, which is all that USAC has to go on.  USAC is making such decisions on a case by case basis.
3. USAC reached their decision because of information on the service provider's website.

But it didn't seem like the VoIP providers on the call heard that third item, because they were just too steamed.  They kept trying to change USAC's mind, which is a mistake.

How dare USAC make decisions without clear guidance, providers wanted to know.  I wanted to say, USAC has to do this all the time.  The FCC often makes the mistake of thinking vague rules are simple rules, so USAC is always guessing at the FCC's intent.

My advice: don't get mad, get funded.

VoIP providers should have noticed that they got the recipe for being allowed to offer free phones: if your website offers free phones to a large swath of customers, you'll get approved.  In the case of the approved provider, they offer free phones to public sector and enterprise customers who sign a two-year contract.

And if the FCC eventually makes a decision, and it turns out VoIP phones are not eligible, the Commission is likely to make the new rules apply in the future, not retroactively.  And if the rules are applied retroactively, you have an excellent case for a waiver of any COMAD.

And in all the excitement, I'll bet a lot of people missed another important tidbit: USAC made it clear that the Clarification Order applies only to free equipment.  Bundling free services will still fall under the rules of the Free Services Advisory.  So the new offer by one VoIP provider of free emergency blast messaging is likely to run into trouble.  But if history is any guide, it will be a couple of years before we know for sure.

My solution to this whole mess?  Make free equipment pass the Ancillary Use tests.  That would force applicants to purchase cell phones, as they should.  Actually, they shouldn't be getting funding for cell phones, anyway, since they are often used at ineligible locations.