Do your I2A PDQ

Somebody at USAC deserves a bonus.  This year for the first time (I think), USAC has released a list of all the FRNs for which no Item 21 Attachment has been submitted.  I think this is the kind of targeted outreach that the FCC was talking about in Paragraph 24 of the Bishop Perry Order: telling applicants they've missed a deadline, and giving them a chance to make it right.  Now if they would just take it that one step further and send the warning directly to all the emails on the forms.  Still, it's a great start.

And being a bit of a data geek, I decided to spend a little of this sunny Saturday browsing the data to see if there was anything interesting.

First, how big a problem is this?  How many FRNs are on the list?  I count 13,707.  Is that a lot?  By my unofficial count, there are 135,861 FRNs for FY2013.  So 10% of all FRNs lack Item 21 Attachments.  That's less than I would have expected.

Next, does one state have the most scofflaws?  (I guess the Item 21 Attachment (I2A) deadline is a rule, not a statute, so perhaps we should call them scoffrules.)  I poked around, but I didn't see any real pattern.  Kudos to American Samoa: I2As were filed for all 10 of the FRNs for that territory.

And who filed the last FRN for FY 2013?  Well, I can't tell which was the last submitted, but since they're assigned sequential numbers, I can see which was the last FRN created.  That would be FRN 2552208, a preschool in IL requesting funding in the amount of $3.84.  Somebody needs to do a cost-benefit analysis there.

But back to my praise for USAC.  I hope we'll see more of this kind of thing.  Like maybe getting rid of the pointless "Notification of Form 470 Posted but No Associated Form 471" letters.

Cool spam

Based on some emails we got today, a few select individuals Forms 470 posted for FY 2011 are being offered a "Legacy Edition commemorative memoir" by Bill Wyman of the Rolling Stones.  Finally, some cool comes to the E-Rate.  Except coincidentally I sang "Hey, you, get off my cloud" to my teenage daughter, and she laughed and thought it was a Weird Al song or something.  So I guess the Stones are only cool to those of us who haven't been cool in 30 years.

It got me thinking, though.  As I complete a Form 470, do I put memoirs from aging rockers under Internet Access or Internal Connections?  I'm fairly sure Bill Wyman does not file a Form 499, so Telecom Services is out.  Maybe I could make the case that but for the income from this book, Bill Wyman "would not function and serve [his] intended purpose with the degree of reliability ordinarily provided in the marketplace."

Alas, poor P2!

Pursuing my own priorities, I forgot to speculate on what most people want to know from the Demand Estimate: what will the Priority Two denial threshold be?

First, the executive summary: the funding cap is up 1.8%, P1 demand is up 11%, P2 demand is up 31%.  So it's ugly.  How ugly?

OK, well let's assume that 10% of applications are denied.  If that's true, then USAC will only need $58 million to cover P1.  No problem.  But to cover P2 requests for 90% applicants, they'll need $1.6 billion.  That's going to require some stretching.  And they're already stretched thin after last year's rollover.

Very ugly,  Could this be the first year of no P2 funding?  I just hope the FCC doesn't resort to pro-rating funding for 90% applicants.  Pro-rating would be incredibly ugly.

And the real ugliness is getting close.  If P1 demand keeps going up by 10% per year, 2 years from now USAC will need a $475 billion rollover just to cover P1.  The year after, $720 billion.

The money is running out fast.

Neighbor looking a little creepy

I'm pretty much an E-Rate guy, but I like to keep an eye on the other programs in the Universal Service Fund, especially since it started looking like the Obama administration might kill the USF by over-extending it.  So I wasn't happy to read about the Broadband Adoption Act of 2013, which aims to allow Lifeline recipients to get a subsidy for broadband.  Uh, oh, I thought: that mission creep could swallow up tons of funding.

But it's not much of a creep.  Under the new law, Lifeline recipients will be eligible to receive a subsidy of $9.25/month for a landline, cell phone, broadband, or a bundle.  That "or" is the key.  Households can only get one subsidy.  The only creep here is for households who don't have phone service, but do have broadband service.  OK, funding those few people won't break the bank.

2-in-5 is 0-9

As expected, USAC released the funding demand estimate for FY 2013.  And once again, the 2-in-5 Rule has completely failed to rein in Priority Two spending. The current funding shortage makes my long-running campaign to repeal the 2-in-5 Rule somewhat irrelevant, but I'm not one to give up an argument just because it's pointless.

"But wait," you're thinking, "funding demand is actually lower."  True enough: overall demand is down 5%.  But the 2-in-5 rule only affects Internal Connections (IC) funding.  "And IC demand is down 19%," you point out.  OK, but let's look at the only applicants who have to worry about the 2-in-5 Rule: the 90-percenters.  IC funding requests by 90% applicants is up 31%.  Now that is failure.

Increase in Internal Connections funding requests from 90% applicants since the 2-in-5 Rule kicked in: 146%.

Can we kill this stupid rule yet?

So what caused the drop in overall demand?  The 0-in-5 Rule.  Historically, all but a few applicants have gotten IC funding zero times every five years.  And for 2013-2014, the 80%ers have figured out that the IC gravy train now only stops at the 90% station, so they've stopped waiting at the platform.  IC demand among applicants with discount levels between 80% and 89% dropped by 63%.  If we remove the effect of that decrease, IC demand is up 10%, total demand up 9%.  Basic Maintenance (BMIC) demand from 80-89% applicants dropped 57%, but BMIC is relatively paltry, so also removing that drop only makes total demand increase 10%.

The more astute among the readers will note that I'm sort of double-counting when I remove the 80-89% decrease, because at least some of that decrease comes from applicants with some 90% locations making the smart move of applying for IC for only those locations, jettisoning funding requests for locations with lower discounts.  That probably explains some of the plummet in IC requests from 80%ers, but it does not explain the whole decrease, since the decrease from 80-89% applicants was $716 million, while the increase from 90%ers was $360 million.

Poking around the data, I'm seeing another effect of the 0-in-5 Rule: Priority One (P1) requests from 80-90% applicants are up 19% over last year (while demand from the rest of the bands is pretty much flat).  It's possible part of the reason is that our sluggish economy is driving applicants further up the discount matrix, but we're not seeing the shift at lower discounts, so I think the main reason is that as 80-89% applicants (and even 90% applicants) give up on P2 funding, they are pushing more into P1.  Funds for Learning saw this several weeks ago in the increase in demand for cell service.  Here it is in broader strokes: applicants are replacing equipment with less cost-effective P1 solutions, because E-Rate funding twists the cost/benefit ratio against equipment purchases.  The FCC is out in front of this one, with their plan to ban free equipment, which will make mobile voice and data solutions much more expensive.  Now is also the time to get rid of the On-Premise Priority One Equipment loophole, because it's about to be abused.  90% applicants are E-Rate junkies now.  They can't afford their current infrastructure without E-Rate paying for it, so if they can't have their P2 funding, they'll go through all sorts of contortions to cram their equipment into P1.

It's a little late now, but the FCC should be weaning the 90%ers off the E-Rate by cutting the top discount rates.  At a 90% discount, almost any contortions needed to get funding are feasible.  With a top discount level of 75%, the E-Rate funding still twists cost-effectiveness, it just doesn't twist nearly as hard.

And, of course, it's time to get rid of the 2-in-5 Rule.

80% P2 DOA

On the agenda for Monday's USAC board meeting:  "Consideration of Approval to Deny Requests for Priority 2 Services at a Discount Rate of 80 Percent and Below for Funding Year 2013."

If approved, USAC would be recommending that Priority Two requests at 80% and below be denied right away.  Of course, the FCC doesn't have to follow that recommendation.

USAC seems to be calling it mighty early.  We haven't even seen the official demand estimate yet, though I'm guessing we'll see it on Monday.  No one should be surprised, though.  The question since before the filing window opened has been whether anyone will get P2 funding.

Dealing with Wheeler?

TIME magazine says Tom Wheeler is the frontrunner to be the new FCC chairman.  Is that good news?  Let's see...

Uh oh, he's a telecom lobbyist.  It seems he was the chief lobbyist for the cell phone companies (President of the CTIA (nee Cellular Telephone Industry Association), 1992-2004) and the cable companies (President of  the National Cable Television Association, 1979-1984).  Apparently, he's the only person in both the cable television and wireless industry halls of fame.  Lately, he's been working for a venture capital firm, and serving as director on boards of telecom-related companies (EarthLink is the only one I recognized).

Like Senator Rockefeller, I'm not eager to have a telecom lobbyist heading up the FCC.  Sen. Rockefeller and fellow Senate Democrats have told President Obama that they would prefer a less industry-friendly candidate, like maybe current Commissioner Rosenworcel.  Coincidentally, she is a former Rockefeller aide. No wonder Commissioner Rosenworcel's vision of E-Rate 2.0 is so close to Sen. Rockefeller's E-Rate 2.0.

But let's get back to Mr. Wheeler.  What about his E-Rate history?

Hey, check it out: he was on the first USAC board.  Of course, those were the days when the SLD was the SLC, and had a separate board, so he doesn't seem to have had anything to do with the E-Rate directly.  Still, he's familiar with the USF; that's got to be good.

I couldn't find anything he's said about the E-Rate program.

One disappointment: somehow, I don't think that someone in the Wireless Hall of Fame is going to join me in my quest to get make cell phones ineligible for E-Rate funding.

E-Rate 2.0? I think I'll wait for v2.1

Hard on the heels of Sen. Rockefeller discussing E-Rate 2.0, we have Commission Rosenworcel jumping on the bandwagon in a recent speech at the Ed Tech Policy Summit.  I'll skip reading the speech and just read the official summary.

First, the Commissioner lays out two reasons we need E-Rate reform:

• E-Rate demand is roughly double the available funding
• 80% of schools and libraries say their bandwidth is not sufficient to meet current needs
• About half of E-Rate schools have Internet access speeds of 3 Mbps or less

To which I say:

• Yeah, and demand would be higher if all the applicants below 80% hadn't given up on Priority Two funding.
• Bandwidth is like salaries: ask anyone how much they need, and it will always be a little bit more than they have.
• Remember the good old days (like 5 years ago), when a T-1 (1.5 Mbps) was luxurious?  Now, 3 Mbps seems tiny.  But I'll come back to this in point 2 below.

Her proposed reforms:

1. More funding for E-Rate coming from savings in other programs.
2. By school year 2015, 100 Mbps per 1,000 students.
3. Public-private partnerships.
4. Simpler process.
5. See how the School Spots program can help close the Digital Divide.

My reactions:

1. I'm all for more funding.  But using savings from other programs doesn't work.  If the cost of the High Cost or Low Income programs goes down, USAC will cut the contribution factor.  You need to raise the E-Rate cap.
2. Actually, PARCC is already forcing schools to meet this benchmark.  So let's see, half the schools are at 3 Mbps or less, and and it looks like the median school has something like 500 students [I found the mean, but not the median], which would require 50 Mbps.  That's a serious uptick.
3. Sounds great, means nothing.
4. Hear! Hear!  Some suggestions of the top of my head:
1. Scrap the 470 (or at least exempt purchases under $10,000, like over in the Rural Healthcare program)
2. No PIA for applications under $3,000
3. Approve funding for 80% of all FRNs by the start of the funding year
4. Publish all the rules
5. Scrap the 2-in-5 Rule
6. Set the P2 denial threshold when the Eligible Services List is released
5. Why study the impact?  I can't think of any way for the FCC to alter the School Spots program to change its impact for schools.

So not earth-shaking reforms, but at least none of the suggestions are negative, unlike the last Commissioner speech I read.  Go Commissioner Rosenworcel!

Throw me a Lifeline

Sometimes I see something in one of the other USF programs that makes me do a double take.  For instance, I just noticed the FCC sending out a bunch of notices like this one, telling people they were double-dipping in the Lifeline program (well, in the case of the individual I happened to choose, quintuple dipping).  [Perhaps the poor applicant was confusing it with "Who Wants to Be a Millionaire?", where you get multiple lifelines.]

My first thought was, "The Commission takes the time to send a citation to each individual who violates the rules in the Lifeline program?!"  My second thought was, "No wonder they don't have time to respond to the massive backlog of E-Rate appeals."

And then I thought back to USAC's annual report, which lists (on p.21) the dollars that are spent administering the different programs in the USF.  USAC spends about $7.5 million on Lifeline and $70 million on E-Rate.  How does USAC manage a program with 16 million applicants for $7.5 million, but it takes $70 million to manage E-Rate, which doesn't even have 100,000 applicants?  Just think: USAC administrative expenditures on the Lifeline Program amount to less than 50 cents per applicant.

I guess there must be fewer Selective Reviews and Cost-Effectiveness Reviews in the Lifeline program.  And I'll bet the Lifeline Program doesn't have 700 pages of secret rules.  But I would expect more frequent abuse from a program like Lifeline, which is all about personal gain, than E-Rate, which is mostly the transfer of Federal dollars to local government agencies.  OK, so probably no one in the Lifeline Program is taking home millions, so maybe they should change the E-Rate's name to "Who Wants to Be a Millionaire?"

Then I could start a discussion on whether the word "Be" should be capitalized in the new name of the program, or the even thornier question of how to deal with punctuation after a title that ends with a question mark.

Complain fare

How did I miss this the first time through USAC's annual report?  There at the bottom of page 14, they show the number of "Complaints about USAC" per quarter.

What?! Only 9 complaints in the whole second quarter?  This blog had more than 9 complaints about USAC in the second quarter.  Where do these numbers come from?  There is no "Complaint" topic in USAC's "Submit a Question."  Oh, here's the Complaint Box.  Hmm, this could be my new hobby....

According to the report, it takes USAC an average of one day to resolve complaints.  So does "resolve" mean "send an email telling the whiner to go pound sand"?  It certainly can't mean "fix the problem."

The O-PPOE windmill

I feel like I need to provide some justification for the crusade against On-Premise Priority One Equipment (O-PPOE) that I launched in my last blog post.

Unfamiliar with O-PPOE?  See my 2006 blog post on the matter.  Here's a concrete example: your ISP installs a router worth $2,000 in your school as part of its service contract.  The ISP can charge you $2,000 for that router as part of a Priority One service, as long as it meets a bunch of criteria.

I've never liked it.  I have three main objections.

First, it's a waste of money.  The service provider can charge you the full cost of the equipment, but you only get to use it for the term of the contract, then the service provider gets the equipment back.  How is that more cost-effective than you buying the equipment?  It's only cost-effective because the E-Rate discount skews the calculations.

Second, the fee that service providers are allowed to charge is way too high.  The equipment can cost up to 67% of the total cost of the first year.  That doesn't sound unreasonable, but with a little algebra, I figured out that it means the one-time cost of equipment can be up to 24 times the monthly cost of the service.  So if you're paying $1,000 a month for a 10 Mbps Internet connection, you can pay $24,000 for a router.  That's a mighty big router. Way too big for a 10 Mbps Internet connection.

I've saved my biggest objection for last: one of the conditions is a total crock.  Here's the condition, as stated by USAC:

Must Allow Sharing of Facilities. The underlying concept of the on-premise Priority 1 approach is that service providers can choose to locate some of their own infrastructure at the applicant site if certain conditions are met. The FCC Order indicates that service providers must have the flexibility to make this infrastructure available on a shared basis to other customers, since such sharing arrangements can result in reduced costs. The applicant may be the only party using the equipment, but there can be no contractual, technical, or other limitation that would prevent the service provider from using equipment that would normally be shared in other similar arrangements with other customers. Applicants must be willing to accept the possibility that the service provider would use the on-premise Priority 1 equipment for additional customers.

Oh, please.  The main use of the O-PPOE loophole has been for ISPs to install a router in the client's building.  How is that router going to be shared?  The client is paying for the circuit to the ISP's NOC, and if I'm the client, I'll hit the roof if someone else's traffic is going over my circuit.  And why would an ISP want to daisy-chain clients?  OK, I could see back in the T-1 days in a remote area maybe it would make sense to deploy a NOC in a client's building to reduce mileage charges.

Wait a minute, though.  My ISP wants to put a NOC in my building (using my rackspace, electricity, cooling, conduits, etc.) to help them serve other customers, and then wants to charge me for the equipment?!  Hell, no!  You want to put your router in my building, in addition to buying your own damn router, you can damn well pay me a co-location fee.  That's the way it goes in "similar arrangements."  OK, maybe I'd let you have some free rackspace for a router to be shared with other clients (and even let you pull other clients' circuits into my MDF) if it means you're going to let me use the router for free, but I'm not going to let you charge me for your router.  There is no way I'm going to pay the full cost of a router, then only get to use it for 2 years, and over those 2 years I have to share it with my ISP's other clients.

And if we're talking about O-PPOE to run my district's WAN, all the objections above are doubled, plus I want to understand how I can be secure with someone else's traffic running through routers which are behind my firewall.

So the sharing that the FCC thinks could happen, and the resulting reduced costs, are illusory.  In the rare cases where infrastructure installed in a client's building will be used by outsiders, the client shouldn't pay for that infrastructure.

I have no problem with service provider equipment installed in a client location.  Sometimes it will be cheaper for a service provider to install equipment in a client's building.  In that case, there should be no charge for the equipment, since installing it is cheaper than not installing it.

I do have a problem with the E-Rate program subsidizing parts of a service provider's infrastructure that will be shared by ineligible entities.  And that is what O-PPOE is supposed to do: equipment partially funded by the E-Rate is supposed to be available to service provider clients that are ineligible for E-Rate funding.


O-PPOE is an ill-considered loophole poorly created for a single applicant which is now being abused by thousands of applicants. It's based on an idea of sharing which is fictional, but if it were true, would be a diversion of E-Rate funds to ineligible entities.

O-PPOE needs to go.

No free phones? O-PPOE, take me away!

Hear that howling?  It's cell phone providers, upset by the FCC's latest proposal on free phones.  If this proposal were dated April 1 instead of April 9, I would have suspected an April Fool's joke.  I've said before that applicants should be paying for their own phones.  I'm just shocked to hear the FCC say it.  After all, they released a Clarification Order just to carve out a loophole for free cell phones.  Of course, that loophole did blow up in their face.  [My apologies to those of you riled by the heinous mixed metaphors in those last two sentences.]

I like the new proposal: no free ineligible stuff crammed into a bundle.  You want to get a phone with your cell phone service, you have to remove the cost of the phone from your funding request.  As I've pointed out, in some cases the cost of the phone is equal to the cost of the two-year contract, so you're left with an eligible cost of $0.

I would be jumping up and down, but there is a cynical voice in the back of my head saying that the FCC just published this proposal so that cell phone providers would howl, and point out that they pay a lot into the fund.  They could point out that the cost of free handsets is not cost-allocated out when they calculate their contribution to the USF.  Also, they could follow the lead of the Web hosting companies, and get their clients to spamment the FCC.  So I'm holding my celebration until this proposal becomes a rule.

The FCC also seeks comment on ways to reduce the administrative burden on applicants who will now have to cost-allocate out the ineligible handset cost.  Cost allocation is difficult with some equipment, like a videoconferencing endpoint, where you can't buy the eligible CODEC without the ineligible microphone, but with cell phones, it's dead easy.  Here are three easy ways off the top of my head to determine the cost of your cell phone:

1. Tell your cell phone carrier that you want a new phone without extending your contract.  You can probably do this online, and you'll see the cost of the phone.
2. Use state contract pricing.  State contracts generally acknowledge that free cell phones are bad public contracting.
3. Go online and find someone selling an unlocked version of the phone you want.  Walmart has a nice selection, as does Amazon.

The administrative burden of determining the cost of a cell phone is trivial.
Interestingly, the FCC has anticipated the next loophole that service providers will try to use to provide free handsets: ancillary use.  But there's no need to worry, because, as I've said before, free cell phones fail miserably in trying to satisfy the conditions for ancillary use:

1. "Insubstantial component": Nope.  As I've already said, in some cases, the total of the monthly payments on a two-year contract is close to the cost of the phone.  And in most cases, the cost of the phone is around 50% of the cost of the two-year contract.
2. A separate price cannot be determined: No again.  Give me the model of phone you want, and I'll give you the price in 2 minutes.  I gave you three ways to do it a couple of paragraphs back.
3. "Most cost-effective means of obtaining the eligible functionality without regard to the value of the ineligible functionality": And one more "no."  Plans that don't include the option to get a free phone are cheaper than plans that do.  They're just harder to find (unless you can use state contract).

Sorry, no ancillary use.
But the FCC didn't address the loophole that providers will be able to shove handsets through: On-Premise Priority One Equipment (O-PPOE).  Let's see how they fare against the "Tennessee Test."  Here are the requirements laid out by USAC.

1. Same service provider:  Yup.
2. Maintenance by service provider: Sure.  Cell phones have a warranty, and VoIP providers replace broken phones.
3. No transfer of ownership: VoIP providers already do this.  Cell phone providers don't want to take back old cell phones (because of the cost of disposing of all the hazardous waste in a cell phone), but maybe they could be persuaded.
4. Limited initial capital costs: Initial capital costs = $0.  Moving on.
5. Cannot be used for any other purpose:  It's a phone.  Just a phone.
6. Local network not dependent on O-PPOE:  Absolutely.  Unplug a VoIP phone, and everything but that phone works fine.  And cell phones are completely independent.
7. Must allow sharing:  The idea of a router in a school building being shared is in most cases ludicrous, so maybe a phone is no more ludicrous.  The requirement is only that sharing be contractually and technically possible, not that sharing be practical, and certainly not that sharing actually has to occur.  So as long as I could let other people use my phone, we're good.
8. Limited to WAN components: Yup, the phones have nothing to do with the local area network.
9. Essential to Priority One service:  Uh-huh.  Disconnect the phone, no more service.
10. Specific demarcation: In this case, the air in between your mouth and the phone.
11. Continuous:  Another sticky one for VoIP providers.  The provider would have to do the cabling and provide switches.  In that case, there will probably be an initial capital cost.  But we'll keep it to less than 67% of the total cost for the first year.  For cell phone providers, no problem.
12. Economically justifiable: No redundant components or unreasonable functional utility here.
13. Must be telecom or Internet Access: Well, technically VoIP doesn't meet this criterion: the FCC hasn't decided whether VoIP is telecom or IA, so it's technically neither, but since the distinction is going away, maybe USAC will be revising this requirement.

So service providers will need to ignore reality to pass items 7, VoIP providers will have to do some work to pass item 11, and cell phone providers will have to take back old phones to pass item 3.  But I wouldn't put it past them.

But what they're more likely to do is bypass the Tennessee Test.  See, USAC says, "In the case of such a single basic termination component at the applicant's site, the requirement to meet all conditions as provided in this document does not apply."  Service providers can claim that a handset a basic termination component of their phone service.  Of course it isn't, but since "basic termination component" hasn't been defined, it's a wide-open loophole.

I hope that cell phone and VoIP providers get right on this, because after seeing that the FCC plans to close the free cell phone loophole, I have hope that once the O-PPOE loophole is stretched to such a ridiculous extent, the FCC will slam it shut.

Yes, the E-Rate Quixote has found a new windmill: O-PPOE should be out of the program.  My stance is that all equipment installed as part of a Priority One service should be forced to pass the Ancillary Use test.  That way, the FCC doesn't have to define "basic termination component" and we can get rid of the ridiculous list above.  I mean really, a loophole with 13 requirements?  So you order a T-1 line, it comes with a CSU/DSU, fine.  You order cable Internet access, if your cable company gives everyone a cable modem free (they usually do), then fine.  If your cable company chooses to charge $2/month for the cable modem, then suck it up and pay the whole $2 yourself.  If you want your cable company to give you a router/firewall, and that costs $10/month, then you have to shoulder that cost, too.

What should have just been a celebration has turned into another line of ranting.  Even I didn't see that coming.

USAC wants you

Another notice that slipped out unnoticed during the filing window frenzy: the FCC released the amount of the cap increase for funding year 2013.  It's only 1.8%, even less than last year's 2.1%.  So there's an extra $41,527,908 in the fund.

Last year, we needed a $1.05 billion rollover just to fund Priority Two for 90% applicants.  This increase almost takes care of the $.05 billion, so now we just need to find an even billion.  Unless demand goes up by 20%, like it did last year, in which case we'll need to scrape together $1.7 billion or so.  And that's just to cover P2 for the 90-percenters.

I'm guessing USAC got all the change out from under the couch cushions last year, so I'll be curious to see what happens this year.  I learned my lesson last year, though: after I predicted no P2 funding until the end of the funding year, USAC and the FCC proved me wrong.

Maybe the FCC will start selling E-Rate Bonds to cover the increases.  How can you turn down this poor fellow?  Looks like he sustained an injury beating his head against the Unbundled Warranty rules.  Or maybe he was blindsided by the VoIP handset rules.

Today's grammar question:  I noticed that, for me at least, USAC is anarthrous, but the FCC and the E-Rate are not.  Why is that?

Deadline streamline

E-Rate Central reports that "USAC announced last week that the FCC had instructed it to begin issuing automatic invoice deadline extensions, effective as for FY 2012 FRNs."  Though I can't find any written announcement, E-RC is reporting that if you miss the invoicing deadline (120 day from the last date of service or the filing of the Form 486, whichever is later), you'll get an automatic one-year extension.

I'm all for that!  It kind of makes the invoice deadline meaningless, but I guess if USAC told people they had to file their BEAR within 485 days of the end of the funding year, a lot would wait until the 484^th day.

So far this streamlining thing seems to be going really well.

Fruitless searching

One last note from the USAC annual report.  One of their footnotes sent me on a tirade that I decided needed it's own post:

Challenge	Solution	Impact
Users struggled with the Search Posted 470 Information tool because of its limited capabilities for searching and reporting results.	Instead of making changes to the existing tool, we created a brand new one with expanded search options and multiple reporting formats.	The new Download 470 Information tool gives users access to the information they need, the way they want it.

How did I miss the announcement of the new 470 Download Tool?  Maybe because I don't consult for service providers.  So let's take a look.  Yup, it's an improvement.  Maybe a big improvement for some users.  But I don't see how searching and reporting are improved.  Why not?  Because there is no standardization across 470s.  I just downloaded a pile of 470s, and let's look at what applicants called local telephone service on their 470s:

• Phone Services
• Local Voice Service
• Local, Long Distance & Intralata phone service
• Local and/or long distance phone svc
• local and long distance voice service
• Telephone Land Lines
• Local Telephone service
• Local Phone and Long distance servive

Honest to God, those are the first 8 requests, so they're a kind of random sample.  Now what kind of search could I make that would return all 8 of those requests?  Misspellings and abbreviations aside, there is no common term for this service.  Searching for "local" would find 6, but would also return "local area network,"   etc. "Phone" would find 5 (assuming your query would catch the "phone" substring in "telephone"), but would also return cell phones and phone systems and so forth.  And let's not get started on whether the lines need to be POTS, Centrex, PRI, SIP, hosted VoIP, etc.

So no, the new tool doesn't give me the information service providers want in the way they want it.  Because the form doesn't collect the information in the way they want it.

The Form 470 needs to have a series of pull-down options like the online Item 21 Attachment (only more attached to reality).  Once you choose "Local phone service," then you have a second pull-down that shows "POTS, Centex, etc."  Then you put in a number of lines.  If you want some POTS lines for your elevators and alarms, but hosted VoIP for desk phones, you need to use 2 separate lines on the 470.  What's that?  I'm adding complexity?  No, I'm revealing complexity that exists.  Like all the forms, the 470 hides the complexity of this program.

Currently, the Form 470 is completely inadequate as a tool for creating a fair and open competitive bidding process.  The only thing it does is create worthless spambids, followed by spam not related to the E-Rate, followed by virus attacks and sales cold calls.

How could the problem be fixed without increasing complexity?  Get the FCC out of the business of regulating the purchasing process.

Report complaints

USAC's annual report is out.  Nap time!  In order to avoid somnolence, I just skimmed it.  A couple of highlights:

Operational improvements started in late 2011 paid off with the biggest first wave of funding in the program’s history in 2012. In this wave, USAC released a record 23,800 commitment letters for nearly $646 million in 2012, compared to 18,500
letters for $398 million in 2011. This 29 percent increase in commitments resulted in part from greater operational efficiencies in program review processes and outreach to program participants encouraging them to file applications more accurately online.

Good thing I didn't have anything in my mouth when I read that paragraph.  Remember the first wave of 2012?  It was the biggest first wave mostly because it was so late.  As of the start the funding year, $0 had been approved.

In July, USAC worked with the FCC to identify $1.05 billion in unused funds from previous years, which the FCC approved for USAC to carry forward for use in FY2012. This allowed the Schools and Libraries Program to fund more of the neediest applicants.

"Fund more of the neediest applicants"?  Nope.  It allowed them to give more funding to the neediest applicants (P2 in addition to P1), but it did not allow them to fund more applicants, needy or otherwise.

Finally, some observations to be filed under the category of "Why non-accountants should not try to decode annual reports."

• The E-Rate has more than $5 billion in "investments" (p.20).  Wait, USAC has $5 billion burning a hole in its pocket, and 89% applicants can't get P2 funding?  C'mon USAC, loosen up.  Prudent saving is unamerican.
• The USF has over half a billion in "Allowance for doubtful accounts" (p. 20).  Investopedia says that means USAC believes it won't be able to collect $500 million in money it's owed.  So service providers reneg on 500 megadollars, and *I'm* stuck with all these damn PQA requests?!
• "Cash paid for administrative costs" is $70 million for the E-Rate, and $17 million for the High Cost fund.  That feels like a program that gives funds mostly to public entities gets 4 times the scrutiny of a program which is almost twice as big, and gives money to the private sector.  That just feels wrong.

Maybe USAC should not release any funding commitments until after the funding year is over.  That way, we could have a gargantuan first wave, we wouldn't have to keep $5 billion lying around to cover commitments, and administrative costs would drop, since USAC would only have to make one payment per FRN.

Maybe I shouldn't have said that out loud.

Minimis Maximus

USAC has sent another semi-annual audit report to the FCC, and the de minimis standard seems to be moving in the right direction.  I played with the numbers in the accompanying spreadsheet, and I like what I see.  As I've mentioned before, at least one applicant from FY 2005 is getting a de minimis exemption for over $18,293.  Now that's a nice minimis.  Even more encouraging, there is no longer any evidence of a recovery for less than $1,000.  Since recoveries are summed for each year, I can't say for sure, and it seems likely that at least one of the three applicants in the "Notification Letter (CAL) Issued" row for 2010 is being pursued for less than $1,000, but in general, recovery amounts seem much higher.

It's still mathematically impossible for same de minimis standard to have been applied to all applicants across all funding years, but at least the situation is improving.

CIPA and your cell phone

The ALA published a nice article on CIPA and the First Amendment.  It's written for libraries, of course, but there is plenty of good information in there for schools, too.

Of course, I'm not going to recap the article; read it for yourself.  I'm going to pluck one-and-a-half sentences out of the article and twist them to my own purposes.  In this case, to further my quixotic (and only semi-serious) quest to throw cell phones out of the E-Rate.

"Institutions subject to CIPA’s mandate must place filters on all computers owned by the school or library, including those computers used by staff.  A person authorized by the institution may disable the filter...."

I'm no lawyer, but I think that includes the smartphones that districts get for free when they sign two-year contracts.  You could argue that the phone is not owned by the school, but I don't see that holding water.  You could also argue it's a phone, not a computer, but since your phone has more computing power than the computers on Apollo space capsules, I don't think that argument holds water, either.  So in my opinion, which of course holds no legal weight, the superintendent's iPhone should have a filter on it.  If the supe requests it, the filter can be disabled, but the filter should still be there.

I suppose a cell phone which cannot access the Internet doesn't have to be filtered.  [Obscene images can be transferred by text message, but since that doesn't involve Internet access, I suppose that CIPA doesn't apply.]  So the cheap phones that have replaced pagers on the belts of custodians are probably exempt from CIPA, but shouldn't all those administrators' smartphones be filtered?

Another unwritten loophole that must exist in order for smartphones to remain eligible for E-Rate funding.

Why is my quest only semi-serious?  Well, I've got to think that cell phone companies pay a significant amount into the Universal Service Fund, so it seems unfair not to let them get anything out of it.  On the other hand, cell phone companies get a lot of the blame for the burgeoning costs over at the High Cost (sorry, Connect America) and Low Income programs, so maybe they should leave the E-Rate.