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Saturday, July 12, 2014

Winners and losers

Who wins under the E-Rate Modernization Order?  Who loses?  It's too early to say conclusively, but based on what we know, I can make a few solid guesses.

  1. 90%-discount applicants.  The Priority 2 gravy train had come to an end.  Now the FCC has sacrificed everyone's telephone reimbursement and leveraged the fund (meaning it no longer has enough money to pay its obligations) to create enough funding to give 90%-discount applicants one more chunk of P2 (sorry C2) funding.  80% applicants may get in on the party, but that's not a sure thing.
  2. Data network equipment vendors.  The P2 spigot had run dry, and now the FCC has turned it back on for a couple of years.  And they don't have to share with those pesky PBX vendors.  OK, so the data vendors also sell voice equipment, but still, they've got to be happy that voice is gone.  And the 2-year limit on funding means that applicants who bought 802.11n access points last year are going to buy 802.11ac access points next year, because who knows when they'll have another chance.
  3. Big phone companies.  You thought they'd be on the list of losers, since voice got kicked out of the program?  I think the phone companies are winners for the following reasons:
    1. The E-Rate will drive applicants away from traditional voice, which at this point is just a pain in the neck for the baby bells.  If VoIP is out (and it seems it is), that will sting a little, but not really.
    2. All those pesky services like webhosting and email that were offered by non-carriers get driven out of the program, leaving only services offered by telcos in Category 1.  
    3. With voice hardware out of the program, telcos will get more of that lucrative hosted phone service.
    4. The emphasis on consortia and bulk buying will create a marketplace where small telcos can't compete, so the big boys get a bigger slice of the pie.
  1. Phone equipment vendors.  Since voice is being phased out, at least hosted voice will get a little E-Rate funding for the next 5 years.  Somehow I don't think phone systems are going to get into C2, so PBX funding stops now.  Juicy PBX maintenance contracts are a thing of the past.  Eventually hosted and premises-based voice will be on an even footing, but for now, E-Rate tilts the playing field in favor of hosted.
  2. CIPA rebels.  If you don't comply with CIPA, you can only get funds for telecommunications.  As voice gets phased out, there goes most of your funding.  If you have multiple sites and you connect your buildings with circuits purchased from a company that files a 499, then you should still be able to get funding for those circuits, but that's it.  Libraries and private schools get left out again.
  3. Cell phone companies.  Just think: 90% applicants are going to find that their cell phone costs triple next year (from 10% of the actual cost to 30%).  Suddenly, giving employees a stipend to use their own phones looks good.  On the other hand, it sounds like the FCC does not intend to toss mobile data out of the program, so maybe the cell phone companies will be able to sell that to all the schools that can't get C2 funding for Wi-Fi.
  4. Schools serving special populations.  $150/student may be close to enough if you have a 15:1 student-teacher ratio, but when the ratio is 4:1, and you add in therapists, etc., and your student population is small, it's a sad joke.
  5. Schools that need Wi-Fi now.  These changes don't take effect until July 1, 2015, and even then, only applicants with extremely high discounts will get Wi-Fi funding.  And all schools need Wi-Fi now; schools need to prepare for all their students to take PARCC or SBAC in 8 months.  The FCC arrives with a couple of buckets 3 months after the house burned down.

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