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Monday, February 11, 2013

You say "service," I say "purchase"; let's call the whole thing off

What do E-Rate geeks think about in the shower?  Cost allocation and ancillary use, of course.  By the end of this morning's shower, I was thinking about my rather rakish suggestion that cell phone service should be run out of the E-Rate program.

My main argument is that unique among all services, the use of cell phones from ineligible locations is allowed.  And I would argue that a very significant portion of the use of administrators' cell phones takes place off campus.

But I also oppose giving out free phones.  It's bad public contracting, and is a clear violation of program rules.  In their efforts to build a loophole to allow the free cell phones, the FCC has opened up a can of worms.  (Why did they use a can opener to build a loophole?  Sorry, my metaphors got out of my control.)

Drying off this morning, I was thinking about the most egregious case of free phones.  Check this out.

Some (maybe all) cell phone providers have an enterprise pool plan, similar to a family plan, where you pay a monthly amount for a bucket of minutes (like $50/month for 700 minutes), and you can add phones to that plan for $10/month.  All the phones you add share that bucket of 700 minutes.  This is a great plan for custodians, for example, where you don't need to have conversations, you just need to be able to efficiently dispatch custodians with mops on November 1st every year.  (The day after Halloween is peak mop demand in schools.)  And of course, if you sign a 2-year contract, you get a free phone.

So think about what you're really buying.  Over the course of the 2-year contract, you will pay $240.  And you will get a free phone worth $200-$250.  You're not getting an increase in service, since the new phone is sharing the existing pool of minutes, so use of the cell phone service does not increase.  The $10/month add-on is not for more cell phone service.  It is a handset purchase financed over 2 years.

I can't remember a more obvious case of an equipment purchase disguised as a service.  Providing a $100 VoIP phone on a two-year contract where the total cost is $480 seems reasonable by comparison.

[Even in my quixotic quest to get cell phones kicked out of the program, I just can't put the above propaganda out there without qualifying it.  Each new phone under a family plan does actually increase the number of minutes used, just not the number of paid minutes.  What actually makes this phone plan great for custodians is that if you choose a cell phone provider that allows free minutes to other subscribers of that provider, then everyone on the plan can call each other without using any minutes from the pool.  So you use the provider's infrastructure without ever using any minutes from the pool.  When you consider that and the financing cost of the phone, it's hard to see how a cell phone company makes money on this plan.]


  1. Anonymous5:29 PM

    Did you mean to say, "My main argument is that unique among all services, the use of cell phones from ineligible locations is allowed."

    1. Well, maybe "tolerated" would have been a better choice of words than "allowed." There is no specific exemption, but there is no specific prohibition. Only under Wireless Internet Access do we find "Off-campus use must be removed by cost allocation." If applicants had to certify that all cell phone use was on campus (or cost allocate off-campus use), funding requests for cell phones would plummet.