Search This Blog

Tuesday, July 01, 2014

That's not what I was asking

The FCC seems to have noticed that applicants are very concerned about some of the rumors the reform proposal now circulating in their offices.  The obvious solution: publish the proposal.  The FCC solution: release a Q&A blog post -- long on spin, short on specifics -- and a report on the effect of the reform.  Let's take a look at the blog post first.

First, the Q&A:
1. How do the numbers add up?  
The FCC says: we've already leveraged the fund to get $2 billion for the next 2 years.  After that, the funding will come from: 1) $1.2 billion in savings from tossing voice, etc. out of the program, and 2) cost savings.
I say: 1) Sorry, but the services that the Chairman talked about chopping gets us less than $0.7 billion.  And most of that evaporates if you leave VoIP in the program, because applicants will just move their voice to IP.  2) Transparency will help applicants lower costs by maybe 10%, which is nowhere near enough.  The GSA minotaur isn't going to save money.  Neither are consortia.

2. What about Priority 1?
The FCC says: 1) Price transparency will allow rural applicants to use pricing for similar applicants to negotiate lower pricing.  2) Low-dollar applicants will not need to go through competitive bidding if they meet certain price thresholds.
I say: 1) How does that work?  A rural library in Colorado can go to CenturyLink and say, "Hey, libraries in Kansas are getting a lower rate from AT&T than you're giving us here."  And CenturyLink will respond, "You're right; you should move to Kansas."  Price transparency is helpful where there is competition.  Which is not rural America.  2) That sounds like a great way to reduce administrative overhead, but it doesn't really lower costs, does it?

3. What does this mean for rural schools?
The FCC says: 1) Wi-Fi funding for rural schools will be increased by 75%.  2) "substantially easier for low dollar purchasers, including smaller, rural schools and libraries to purchase 100 Mbps or higher business/enterprise service commonly available below a certain price."  3) "greater pricing transparency in the program would help lower rates for services in rural areas."
I say: 1) Yup, by mortgaging the program to come up with $2 billion, and reducing the non-Wi-Fi services available, Wi-Fi funding goes up.  Since no one knows what portion of Internal Connections goes to Wi-Fi equipment, the 75% growth can't be disproven.  2) Chop!  There goes another head off the hydra.  First new head: I have to hope that someone offers service below the cutoff price, which is much less likely in a rural area.  Second new head: I have to figure out if I need enterprise-class service, or will my cable company's "business class" cable-modem service meet this definition?  Third new head: I guess if the service provider says "100 Mbps," that's good enough, or do I need to show that I'm actually getting 100 Mbps?  Fourth new head: If the price goes up later, do I have to bid it out then?  3) As stated above, transparency will lower rates only in areas where there is competition, and where applicants are close enough that comparisons can be made.

4. What does this mean for urban schools?
The FCC says: 60% more Wi-Fi funding.
I say: See the first item in the question above.  Let's see: the FCC is mortgaging the future of the program to temporarily increase the fund by less than 30%, and somehow that's going to increase funding for everybody by 60-72%.  Show us that math.

5.  Does the proposal make E-Rate funding more equitable?
The FCC says: The proposal "would require a common sense budget for Wi-Fi spending...."  The current system only benefits a few applicants.  The reform will spread the money but "that those who need it most receive the most."
I say: If by "common sense" you mean "based on a gut feeling, not actual data," then I agree.  The current system benefits only a few applicants because: 1) 90% is too close to free, and 2) there isn't enough money in the fund.  The proposal addresses both issues, though I think 80% is still too close to free and there still isn't enough money (hence the need for the 1-in-5 nonsense).  Based on the stats above and mention of "bump," it sounds like rural schools will get more.  Is that equitable?  Depends who you ask.

"What our discussions have revealed is that everyone shares the same goals...."  Only if you make the goals really vague like "modernize the program."  When it gets down to concrete steps, the one that has the strongest support is to increase the size of the fund.  And that isn't in the proposal.

No comments:

Post a Comment