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Tuesday, February 25, 2014

Creeping to 2.0

E-Rate Central's latest newsletter includes the first hints at what might be in the NPRM that Chairman Wheeler said would be coming out soon.  To quote E-Rate Central:
Based on the FCC staff’s outreach last week, it is expected that the forthcoming public notice will focus on the following five areas:
  1. Options for revising Priority 2 funding allocation rules to promote broadband connectivity within buildings (think “WiFi”). Based on last summer’s NPRM and related comments, options are likely to include:
    1. Cyclical funding of Priority 2 for all applicants;
    2. Changing the 2-in-5 rule to 1-in-5; and/or
    3. Providing a specific amount of annual funding per applicant, perhaps on a per-student basis.
  2. Options for encouraging Priority 1 broadband connectivity to underserved schools and libraries. This might include additional funding for installation charges as a means of making recurring monthly costs more affordable.
  3. Consideration of the ongoing eligibility of voice services, including cellular.
  4. Strategies for driving down network costs through more cost-effective purchasing methods and/or funding for neutral third-party network design assistance.
  5. Possible funding of demonstration projects involving bulk purchasing and network design.
Of course I'm going to give my opinion:
  1. If the Commission wants to dedicate more funding to WiFi, then they need to put a high Priority on it.  Why not make broadband Priority One, wireless access points Priority Two, etc.  And cut the top discount levels, to free up more funding and encourage applicants to think about the money they're spending.
    1. Really?  The Dinner Table Rule?  I originally proposed it as a joke, and now it's actually being considered.  Oy.
    2. Changing 2-in-5 to 1-in-5.  Right: 2-in-5 has been a total failure, so let's double down.  (Or should I say "halve down"?)  For FY 2013-2014, the fund has only about an eighth of what it needs to cover P2 for 90% applicants.  So if we go to a 1-in-8 Rule, we can cover just the 90% applicants.  If we can somehow stop the growth of P1 demand.  At least a 1-in-5 Rule wouldn't encourage applicants to shorten their equipment replacement cycle.
    3. I've already said I'm not wild about per-student funding. As an idea for refocusing the fund, it's spectacularly bad.  Instead of the FCC setting funding priorities, each applicant will set its own funding priorities.  Maybe that will be broadband, but maybe it won't.
  2. I'm not opposed to letting schools self-provision fiber WANs, but if that catches on, then kiss everything else good-bye for a couple of years, because those big upfront payments could quickly swallow the whole fund.
  3. I've already come out in favor of running voice out of the E-Rate on a rail.  And cell phones should go, too.
  4. "More cost-effective purchasing methods"?  Like scrapping the 470 process, which drives up costs?  I don't think third-party network design is going to drive down network costs.  In my experience, professionally designed networks are more expensive, because the top priority for the designer is CYA, which means an over-engineered network.  I'm not saying it's bad to pay more for a rock-solid network.  I'm just saying it won't drive down costs
  5. I guess if the staff over at the FCC has some spare time on their hands and they want to run a bulk purchasing or network design pilot, no harm done.  But unless they have a control group, how will they know if the pilot was effective?  How about before we launch new pilots, we get some analysis of the LOGO (nee EDU2011) pilot?  
So other than tossing voice out of the program, I can't say I like the way this is headed.  If the FCC wants to force applicants to double their spending on broadband, then they need to bring broadband into Priority One, and demote everything else.

Or you know what would be cool?  Different discounts for different services.  For example: We want applicants to install fiber WANs, so you can have them at 50-90% off, depending on income levels.  We hate maintenance, so you can only get 20-50% off that.  Voice? 10-40%.  That allows applicants to get some funding for whatever service they want, but provides a strong incentive to go with the services that the FCC wants.  Best of all, it's so ridiculously complex that demand for E-Rate consultants would skyrocket. 


  1. Usually, common sense and government regulations are like oil & water. Great insight, thank you for the post!

  2. Oh, dear, I made a calculation error in item 1.2 above. Since we already have the 2-in-5 rule, and still only have about an eighth of the funding we need to provide P2 funding to the 90%ers, multiply 2/5 by 1/8, and it looks like we'll need a 2-in-40 Rule to provide enough funding for the 90%ers.