That doesn't look like 20% per year

Who came up with this idea of phasing out voice service by lowering the discount percentage by 20 every year?  What they should have done is reduce the pre-discount amount by 20% each year.  It's better in three ways:

1. Applicant don't have to keep track of two discount levels, one of which changes every year.
2. It doesn't require a temporary re-write of the Form 471 to allow for different discount levels.  Applicants could just add 20% of the pre-discount cost to the ineligible cost in Item 23b on the Form 471.  OK, technically you'd also have to take the 20% off the BEAR and SPI, too, but why not just let people take a discount off the full amount and hit the cap 20% sooner?
3. The effect on funding would be smoother.  Here's how.

There are two ways of looking at the effect that the phasing out will have on applicants:

1. Funding lost: To applicants using the BEAR, the change will appear as a loss of funding.  How much smaller is the reimbursement check this year?
2. Cost increase: To applicants getting discounts, the change will appear as an increase in cost.  How much bigger is my phone bill this month?

How strongly the effect is felt will depend on the applicant's discount level and invoice mode.  For example, a 90% applicant filing a BEAR will get a reimbursement check that is 22% smaller, but a 90% applicant receiving discounted bills will see it's phone bill triple (it's share will go from 10% to 30%).  Meanwhile a 20% applicant sees 100% of it's funding disappear, but the phone bill only goes up 25% (I know it seems like it should go up 20%, but do the math and you'll see it's 25%).

Here's a table showing the effect for all applicants over the next 3 years.  (Sorry, the 4th and 5th years won't fit.)

	Cost Allocation		Year 1		Year 2		Year 3
Original Discount	Funding Lost	Cost Increase	Funding Lost	Cost Increase	Funding Lost	Cost Increase	Funding Lost	Cost Increase
90%	-20%	20%	-22%	200%	-29%	67%	-40%	40%
80%	-20%	20%	-25%	100%	-33%	50%	-50%	33%
70%	-20%	20%	-29%	67%	-40%	40%	-67%	29%
60%	-20%	20%	-33%	50%	-50%	33%	-100%	25%
50%	-20%	20%	-40%	40%	-67%	29%	-100%	11%
40%	-20%	20%	-50%	33%	-100%	25%
25%	-20%	20%	-80%	27%	-100%	5%
20%	-20%	20%	-100%	25%

The "cost allocations" columns show the apparent funding effect if the 20% is taken off the pre-discount cost.  I didn't have to do columns for every year, because the effect is the same every year.  I didn't really have to do rows, either, since every applicant sees the same effect every year.  Looks fair, doesn't it?

The other columns show the varying effect that applicants will feel as their discount percentage is cut 20%.  Year 1 shows the strongest effect.  Does it seem fair that applicants at the lowest discount level lose 100% of their funding?  Does it seem fair that applicants at the highest discount level see a 200% increase in costs?

Why would the FCC do it?  Well, the FCC is trying to cut voice costs.  What I call "Funding Lost" is, from the FCC perspective, "funding moved from voice to broadband."  Look at that column: for every applicant in every year, it's higher than 20%.  That means that by taking the 20% off the discount level instead of taking 20% off the pre-discount cost, the FCC has accelerated the movement of funding from voice to broadband.

Too bad it whipsaws applicants.