Bad ideas repeated

The Public Notice seeking comment, promised by Chairman Wheeler and leaked last week, has been published.  Let's see what's in it.  Just a warning, I'm feeling a bit cranky today.

In paragraph 7, we see the claim that "an initial review by Commission staff has found that the Commission can free up an additional $2 billion over the next two years...."  Can we get a peek at that review?  Where are they freeing it from?  The Low Income savings aren't going to be that big.  The Chairman mentioned freeing up money from appeals; are they going to implement the asinine suggestion from the recent NPRM that all appeals more than 180 days old be denied?

Paragraph 8: "57 percent of district leaders do not believe that their schools’ wireless networks have the capacity to handle a one-to-one student-to-device deployment."  My reaction: most of the other 43% of district leaders are in for a rude surprise.  802.11 wasn't conceived to handle 30 devices in a single room, with 30 more in the adjacent rooms.  For coffee shops, it's fine.  For a school building, buckle up, it could get bumpy.

Paragraph 12 raises a real conundrum.  It's absolutely right that if you suddenly pump 1 Gbps to most applicants, their firewalls, routers and content filters will choke.  But if we're trying to figure out how to find enough money to fund things, it doesn't seem like a good idea to expand eligibility.

Paragraph 14:  The 1-in-5 Rule!  Ack!  Didn't we just read in paragraph 9 that the 2-in-5 Rule was a failure?  This rule will change applicant thinking from "What do I need next year?" to "What might I need in the next 5 years?"  Applicants buy crap they don't need because they might need it years from now, and they won't be able to get E-Rate funding then.  Did someone say gigabit by 2017?  Better buy gigabit-capable router, firewall and content filter this year, even though by 2017 those products will probably be services in the cloud, so I'd never actually need the equipment, and in any case would be much cheaper in a few years.

Paragraph 16: I like this approach to pro-rating: fund the applicants with the most low-income first, then work your way down until the money runs out.

Paragraph 17:  As bad as the 1-in-5 Rule is, the Dinner Table Rule is worse.  Put yourself in the position of a tech director who can get E-Rate funding on whatever equipment you want this year, but there is no way of knowing the next time you'll get funded.  Of course, you want to buy a ton of gear, but then you have to wonder how you're going to replace it all if your number doesn't come up for another 10 years.  This rule takes the unpredictability of P2 funding to the next level.

Paragraph 18: "If the Commission were to use available funds to front-load support for eligible internal connections in funding years 2015 and 2016...."  What planet are these people on?  For 2013-2014, even if the Commission had "freed up" an extra $1 billion from whatever mysterious source they have, it would not have covered P2 even at just the 90% level.  If they want to fund Internal Connections for 40%ers, they're going to need $billions without front-loading.

Paragraph 20: Now here's a compromise that might work.  Apply the per-student funding model to Priority Two only.  I like it more than the straight per-student model.  But it's not a good way to focus spending on FCC priorities, since it allows each applicant to focus on its own priorities.

Paragraph 22: How would per-student p2 give funding certainty?  If we're going to fund all P1, then do per-student for P2, then they won't be able to set the per-student amount until after the funding window.  Or are they going to set aside, say, $1 billion for P2, and then pro-rate P1?  But even if they set aside $1 billion, then the amount per student would be affected by the number of applicants applying for P2.

Paragraph 26: It is a shame that schools and libraries can't afford to pay to get fiber laid.  The E-Rate program isn't really set up to deliver large, one-time infusions of capital, so why don't we set up a separate program for that?  Let's give it plenty of money, maybe 3 times the annual E-Rate budget.  Oh yeah, we did that in 2009: $7.2 of the American Recovery and Reinvestment Act was used for bringing broadband to places where it wasn't.  BTOP was part of that.  Take a look at the tiny dent $7.2 billion made.  Let's not pretend we can do better with $2.3 billion.

Paragraph 27: Why minimize recurring costs?  Both school/library budgets and the E-Rate program are much better able to handle recurring costs than one-time expenditures.

Paragraph 28: Why would you want to give more support to up-front costs?  The idea of incentives is to change the cost-effectiveness calculation.  Why would the FCC want to encourage applicants to pay a large up-front fee if that arrangement would not otherwise be as cost-effective as the alternative?  If the applicant decides an up-front fee is more cost-effective, fund that.  If spreading the cost out is more cost-effective, fund that.  I don't see any need to put a thumb on the scales.

Paragraph 30: Support to help schools to meet bandwidth targets.  What on Earth?  This paragraph seems to be saying that if you're being a responsible tech director, and you've realized that there is no real reason for you to install a 100 Mbps connection to a school that isn't close to saturating its current 50 Mbps pipe, we're going to move you to the back of the line, behind those applicants who want to install some wasteful dark fiber.  Or are they saying that if you already have a 100 Mbps connection, they're going to cut you off the following year?  Again, there is no reason to put a thumb on the scales.  Let each applicant purchase the bandwidth that makes sense for that applicant.  If that doesn't match some bandwidth targets that SETDA pulled out of the air, which the President repeated in a speech, well, I just can't feel bad about that.

Paragraph 31: Ways to prioritize deployment costs.  Wait, isn't broadband going to be Priority One?  So now you're preparing us for the fact that these whacky new rules might mean Priority One demand is going to exceed available funding?  OK, I know that the Chairman wants to try his "business-like management practices" before raising the contribution level, but after we've applied those practices and we're still out of money, isn't it time to increase contributions?

Paragraph 33: Requiring amortization doesn't hurt any specific size of applicants.  Most service providers will finance the installation cost over whatever period the customer wants.  The amortization does cause an increase in cost, though, since the service provider is going to have to pay commercial interest rates, and if I were a bank, I'd want a high interest rate to loan money to a company laying fiber; they go belly up all the time (see some examples at the end of this post).

Paragraph 35: Consortium purchasing.  Again, why put a thumb on the scales?  If applicants can get good pricing through a consortium, fund that.  If purchasing individually is cheaper, fund that.  Why spend money trying to get applicants to move to a consortium when it's less cost-effective?

Paragraph 36:  Require tech plans for all services.  Hey, if applicants have a 3-year tech plan, how about not changing the tech planning rules every 2 years?  I think tech plans can be useful, but not mandatory tech plans.  Applicants who are only making a tech plan just to get E-Rate funding will do the minimum, then put it on a shelf for 3 years.  And what evidence is there that tech planning cuts spending?  If I want a gold-plated network, I'll make a gold-plated tech plan.

Paragraph 37:  Get the Item 21 Attachment data into a standard format, then publish the data.  The FCC is already collecting the data, they just can't use it in the current format.

Paragraph 40: It would appear from this section that the question is no longer whether to toss voice, but when to toss voice.

Paragraph 42: "We expect that the diminished availability of E-rate funding for voice services will be ameliorated by the fact that many applicants have transitioned or will transition to VoIP, which is generally considered to be more cost-efficient than traditional voice services."  Who considers it more cost-effective?  Let's check the footnote.  Ah, VoIP providers consider VoIP more cost effective.  But let's say VoIP were cheaper: if I cut your salary by 15% per year until it was zero, and cut your living costs by 10% one time, would you feel "ameliorated"?  I wouldn't.

Paragraph 52: Allow POTS for remote schools.  The goal is to get broadband to 99% of students.  Paying for POTS, no matter how necessary, doesn't get us there.  And hey, those applicants are already taking more than their share by paying for Internet from a satellite.

Paragraph 53: We pay for POTS until after the applicant has 100 Mbps?  First of all, that provides an incentive to keep bandwidth below 100 Mbps.  Also, the reason that we're talking about getting rid of voice is because we can't afford to pay for voice and broadband, so don't we have to toss voice before we can afford to give everyone fat pipes?

Paragraph 55: No need for demonstration projects.  Just let everyone look at the Item 21 Attachments.  The data you want is already there.

Paragraph 62:  Demonstration projects to streamline the application process?  Let me file for 100 applicants without submitting a Form 470, and file funding requests based on quotes, not illegal contracts.  Then ask me if I thought it went well.  The evidence for the effectiveness of consortia is anecdotal statements from a few Rural Health Care applicants.  I'll give you anecdotes from 100 applicants.

Hey, where is Lowest Corresponding Price?  That's the best way to lower costs.