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Sunday, March 16, 2014

A little fact-checking

Over on The Hill's blog, a couple of economists have blasted the E-Rate.  I think that Evan Marwell of EducationSuperHighway did a pretty good rebuttal on the question of whether schools need more bandwidth, so I'm going to stick to fact-checking the first post, because it seemed full of misinformation.  Follow along as I read the screed.

What's this about funding being moved from the Connect America Fund (née High Cost Program)?  Check it out: there is over $1 billion sitting in reserve over there (see page 10 of this report).  Is the FCC going to transfer that to the E-Rate?  Let's take a look at paragraph 561 of the USF/ICC Transformation Order: "Excess contributions shall instead be credited to a new Connect America Fund reserve account, to be used as described below."  What's the description below? "we direct USAC to use the balances accrued in the CAF reserve account to reduce high-cost demand to $1.125 billion in any quarter that would otherwise exceed $1.125 billion."  Nothing about E-Rate.  Not that the Commission doesn't waive its own rules when it wants to, but I don't think they've ever moved funds between programs.  I'm betting that money stays in the CAF.

"...the money comes largely from low-income telephone users...."  "Largely" makes it sound like the majority of the fund comes from the poor.  I find that hard to believe.  I don't know of any figures describing how much of the fund comes from low-income phone users, but it's hard to see how the poorest 16% of our population (that's the percentage below the poverty line) has higher telephone costs than the rest of the population plus all the businesses in the country.  Even if you expand "low-income" to 25% of the population, and say "largely" means "25%," I'm not buying that the poorest 25% of our population spends as much on interstate telephone services as the other 75% of the population plus all the businesses.

"As of 2008 (the year for which the most recent government data exist), 98 percent of public schools were broadband connected...."  Yes, but "broadband" is an imprecise and moving target.  In 2008, "broadband" meant maybe 1.5 Mbps or 3 Mbps.  Now I expect 5 times that speed to my cell phone.

So we just need enough bandwidth to allow access to Khan Academy?  OK, let's see what bandwidth Khan Academy recommends: " it's best to plan for >1 Mbps per student or device."  Hey, what do you know, that means that the higher ConnectED goal, the aspirational goal of 1 Gbps per 1,000 students, is just a little bit too small.  So let's skip right over the 100 Mbps/1,000 student goal.

"The Government Accountability Office has repeatedly criticized E-Rate programs...."  And by "repeatedly," you mean "thrice." In 20052009 and 2010.  Interesting how the GAO stopped generating reports once Rep. Joe "Bleed the E-Rate Dry" Barton stopped requesting them.  Nevertheless, the GAO had some valid criticisms.

" districts are using the money to buy fancy 'Promethean Boards' to replace white boards."  Not exactly.  The Montgomery County Superintendent wants to use the reimbursements they receive from E-Rate to make lease payments on Promethean Boards.  Montgomery County does what many applicants do: they pay the full amount of their phone and Internet bills, then at the end of the year they file reimbursement requests.  When those reimbursements comes in, they are free to use it however they want.  I agree it sounds fishy to say they're using E-Rate funds to purchase the boards, but there's nothing improper going on.  The E-Rate is subsidizing telecommunications and Internet costs, but the district is choosing to apply the subsidy to purchasing the boards rather than applying it to their telecom budget.

"...a 2013 expose found that over $3 million had flowed to an orthodox Jewish high school where students are forbidden to use computers...."  Yes, that does look like program abuse.  And it's not limited to NYC.

“'E-Rate' is now called 'ConnectEd.'”  Nope.  Two different things.  The E-Rate will help fund ConnectED, along with some contributions from the private sector to cover those parts of the ConnectED program that are not eligible for E-Rate funding.

"...the tax that funds it falls disproportionately on low-income consumers."  First, it's not a tax.  If the authors had read the 2005 GAO report, they would know that one of the GAO's criticisms of the program was that the USF contribution is not a tax.  "Disproportionately"?  I don't know.  USF contributions are a percentage of interstate telecommunications costs.  So for the fee to fall "disproportionately" on the low-income, their interstate telecom expenditures would have to be disproportionately high.  I guess it depends on the proportion we're talking about.  I would not be surprised if the USF contribution was a higher proportion of family income for low-income families, but I haven't seen any figures on that.  But I would bet that the percentage of contributions paid by low-income families is disproportionately low relative to their percentage of the population.  Again, I don't have any actual data, though, so I can't say.

" justification in law or policy."  The Telecommunications Act of 1996 specifies setting up a program to bring advanced telecommunications services to schools.

For an article by a couple of college professors, it seems to me there was a paucity of facts and an excess of unsupported claims.  And I'm disappointed that sources weren't cited.  I give it a C-.

1 comment:

  1. I got interested in the authors' question: "Why, one might ask, does the FCC have bigger reserves than a Fortune 500 corporation?" The answer, of course, is that the FCC is being prudent, recognizing that demand on CAF will grow in future years, so it's putting money aside.

    But I was really wondering: How big are corporations' cash reserves? Let's look at the biggest I can think of off the top of my head (numbers are from Yahoo! Finance today):
    Microsoft: $83 billion
    Google: $57 billion
    Apple: $40 billion (plus another $100 million overseas)

    What about the bottom of the Fortune 500?
    Nash-Finch: $1.2 million (had to use EDGAR to look at their 8-K to get this)
    CA: $3 billion
    YRC Worldwide: $176 million

    So the FCC does have more cash than some companies on the Fortune 500.