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Friday, July 18, 2014

Where have all the dollars gone?

I saw a Funds for Learning analysis applying the purported changes in the new reform proposals to past years to see what effect it would have had.  Of course, I jumped right to the graphs.  But in the first graph, I was distracted by the numbers, because they didn't add up.  FFL has total P1 demand for 2013 at $2.551 billion.  But USAC's 2013 Demand Estimate said the total P1 demand was $2.709 billion.  Why are those numbers different?

Then I decided to check FFL's numbers for broadband vs. non-broadband.  So I went to the table of funding by category that USAC sent to the FCC in June.  I dumped it into a spreadsheet to play with.  The total of the requests on that table is $2.103 billion.  Somehow that table says requests were 22% less than the Demand Estimate.

Let's see what the Data Retrieval Tool (DRT) says.  The total ($2.719 billion) is just a little higher than in the Demand Estimate.

Say, it looks like about $452 million in P1 funding was denied, and $139 billion in P1 funding is still in review, for a total of $591 million.  That would explain the difference between the Demand Estimate and the recent data estimate. But the that isn't what USAC said the table was.


Generally, it's easy to say what's "broadband."  OC-1 (50 Mbps), yes.  E-mail service, no.  But some things are a bit nebulous.  ATM and Frame Relay, for instance, are variable-speed.  And what about T-1s?  I think 1.5 Mbps falls short of most standards for "broadband," but you could bond them....  Is the FCC really going to toss T-1 lines out of the program?  If not, will they toss out PRIs?  They're basically specialized T-1s.

Leaving all the questionables in the "broadband" category, I find that demand will drop about 32%.  Taking out all the questionables, demand will drop by 40%.  (FFL, by the way, estimated 35%.)

If we use that 40% number, 2013's $2.7 billion in demand would have been only $1.6 billion.  And if USAC reductions and denials were 8.5% of the total (which is where they are now), approved funding would be $1.5 billion.  So if we get a little inflation over the next few years, we could make it to the $1 billion/year that we'll need to fund broadband to provide C2 funding once every 5 years (assuming $150/student and negligible funding for libraries and the continuing non-participation of most private schools).

But spending on broadband is not going to stay flat, especially if you take away funding for T-1 lines.

The numbers only work if we're unrealistically optimistic and ignore monkey wrenches like voice not being fully phased out for years.

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