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Friday, December 27, 2013

Hard of hearing

I got a little behind over the holidays, so I'm just now posting about the December 12th Congressional oversight hearings.

Two of the Commissioners, Pai and Rosenworcel, mentioned the E-Rate in their opening statements.  I didn't see anything new their statements, so if you're interested in what I think of what they said, just check out earlier posts on Pai and Rosenworcel and the NPRM.

I listened to the hearing while working, so I can't promise I heard every significant thing that was said about E-Rate, but here is what jumped out at me.

One of the congresspeople asked Chairman Wheeler about the E-Rate.  His response:  “On E-Rate, … there is a leader on this Commission….  I would like to associate myself with the remarks of Commissioner Rosenworcel.”  Well, that certainly makes me think that we're going to see implementation of Commissioner Rosenworcel's ideas.

When asked when we'll see reform, Commissioner Wheeler said: “We are going to put out a schedule … to address this issue.”  How about giving us a schedule on when you're going to put out that schedule?
When asked what Congress could do to improve the program, Commissioner Rosenworcel said: “I think we can do more with the program just as it is.” There was a lost opportunity.  I guess if I were a Commissioner, I'd stick close to the "just leave us alone" line, too, but there are some things that Congress could do.  How about scrapping CIPA, for example?

Here are some other statements from Commissioner Rosenworcel, along with my comments:
  • “[W]e do subsidize a whole bunch of old-fashioned services right now.  We should phase those out over time, and focus instead on capacity and bandwidth.”  Another clear indication that E-Rate is going to become about Internet, not telecommunications.  I'm pleased to see "over time" in there; I was afraid applicants would be whipsawed by sudden changes in the ESL for 2015-2016.
  • “[W]e need to reduce bureaucracy.  Bureaucracy gets in the way of small and often rural schools….”  Bureaucracy gets in the way of every applicant.  It's more obvious for small applicants because they can't justify hiring staff or a consultant for the paltry funding they get.  Rurality is irrelevant.  I'm all for reducing bureaucracy.  Who isn't?  "Bureaucracy" is second only to "terrorism" in provoking antipathy.  But let's be clear: the way to reduce bureaucracy is to reduce the number of rules, and make all the rules public.  Bureaucracy is not reduced by carving out special rules for small applicants or consortia or rural applicants or fiber or VoIP or whatever.
  • “I’d like to see us encourage greater use of consortia to improve bulk buying power, and also have multi-year applications to reduce the administrative burden….”  Ugh, again with the consortia.  Consortia don't always lead to lower prices.  Consortium purchasing benefits large service providers more than small applicants.
Commissioner Pai didn't get as much time, but he did get to answer one question.
Rep. Pompeo: “Who is responsible for policing to make sure the E-Rate program is being used appropriately..?
Comm. Pai: “In theory, the Universal Service Administrative Company, as overseen by us, monitors, [the program], but in practice, given the limited resources at USAC and given the limited resources the FCC has to oversee USAC, there is not a great deal transparency and accountability in the system.”
The lack of transparency has nothing to do with lack of resources.  In fact, the FCC and USAC expend resources keeping the system opaque.  The lack of transparency in this program is the result of an attitude at the FCC and USAC that if local government officials are given information, they will use it to defraud the program.

Rep. Pompeo voiced concerns about a ne'er-do-well service provider now operating under a different name and expanding its use of government funding in Colorado.  He didn't mention a name, so I had to do some digging.  I think I found what he was talking about in a Denver Post article.  It seems that a Colorado fiber network funded by federal BTOP tax dollars is being turned over to Affiniti, the successor to the bankrupt Trillion.  If you're not familiar with Trillion, here is a good summary of their fate.  Apparently, Affiniti is also taking over a BTOP-funded network in Florida.  It does seem unsavory that networks built with tax dollars are being turned over to a private company, but the other way to look at it is that Affiniti bought assets from Trillion after their federal funding unexpectedly dried up (due to E-Rate investigations), and is now taking over from other federal funding recipients who ran out of money.

Perhaps instead of complaining about the company that's taking over these assets, we should take a look at the advisability of using federal funds to build fiber networks.  Oh dear, did I just call into question the wisdom of the FCC's proposed course change for the E-Rate?  And so soon after Christmas, too.  Well, hopefully I can work myself off the naughty list by next December.

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