C2 blues

The FCC has released a staff report on the E-Rate Modernization Order (I guess I have to give up on calling it 7R&O and go with EMO) "to help stakeholders and the public navigate the large and data-intensive record in the E-rate Modernization proceeding...."

You know I'm going to do an "analysis," which for this blog means, "picking out a few things here and there and making snarky comments and rants about them."  In this post, let's look at the new Category 2 (C2) info.

[But first, a quick side rant: " the schools and libraries universal service support program, commonly known as E-rate...."  I would submit that it is more commonly known as "E-Rate" (with a capital "R"), among Congresspeople, the press, and even FCC Commissioners.  Was this report edited by our Russian mole?]

I like pictures, so let's jump right to Figures 1 and 2.  The staff says it shows "provided internal connections support for only four to 11 percent of ... schools participating in the program each year...[and] no more than three percent each year of public library locations."  I say it shows that spending roughly $1 billion/year on Priority 2 met the needs of only 4-11% of schools and 1-3% of libraries per year.  Now we're going to try to meet the needs of 20% of schools and libraries with $1 billion.  Oh that's right, we're not going to try to meet anyone's needs, unless that need is less than $150/student or $2.30/sq.ft.

"In February 2014, USAC determined that, for the first time, there was insufficient E-rate funding to fully support any internal connections requests...."  Even I'm tired of this rant.

On to Figure 4.  It looks like a good justification for the $150/student number, since it looks like $150/student is the median request.  Some problems:

1. I think this includes libraries.  Library applications have student counts in Block 4, so you can do a per-student analysis, but it really throws things off, since library requests are much smaller than school requests.
2. More than half of applicants are over the $150/student limit.  That means $150/student would not have met the needs of most applicants.
3. The idea of the ConnectED is to bring Wi-Fi to 99% of students.  That means better (more expensive) networks.  The amount of money that 90% applicants found sufficient to maintain networks in 2012 is not sufficient to upgrade networks at schools that have been making do for years.
4. Those applicants could get P2 funding twice every 5 years.  So if $150 was the median need in one year, the median needed over 5 years would be $300.

What the data actually show is that the per-student cap for five years needs to be well over $300.

Figure 5: Wait, what?  How were the deciles divided?  The most profligate decile is about a seventeenth the size of the most miserly decile.  Even the two most spendthrift deciles have less than half the number of students in the stingiest decile. The top "decile" is just a few outliers.  Calling these divisions "deciles" is extremely misleading.  It's like doing an analysis based on household size, and dividing it into "deciles" starting with 0 kids and ending with 9 kids, obscuring the fact that over 30 million households would be in each of the 2 lowest "deciles," while less than 2 million would be in the 3 highest "deciles" combined.

"Under the new approach, 'schools in districts that seek category two funding during funding years 2015 or 2016 will be eligible to request E-rate discounts on purchases of up to $150 (pre-discount) per student for category two services over a five-year period.'"  Yeah, not exactly.  Applicants who apply in those 2 years will be limited to $150/student over 5 years, but under current rules, there will be no C2 funding past FY2016.  So while I earlier christened this the "$150-in-5" Rule, it would be more accurate to call it the "$150-in-5-but-you-better-spend-it-all-in-the-first-2" Rule.  By my analysis, the funding currently committed will not be enough to fund applicants with discounts of 81% or less.

Figure 5 shows that by giving applicants less than half what they need (see my comments on Figure 4 above), we can serve more than twice as many students.  Algebraically, that would be:

Hey, make it $25/student, and with the $2 billion we already have, we'll be able to cover all the school districts and those few libraries willing to put up with CIPA and the paperwork.

"funding category two requests for all schools and libraries nationwide will require approximately $1 billion per year over each of the next five years."  Not quite.  If certain assumptions turn out to be correct, funding C2 requests at $150/student may require about $5 billion.  Spreading it over 5 years is not required.  And spreading it over 5 years when you only have 2 years of funding is irresponsible.

I guess modernization ≠ improvement.