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Wednesday, December 17, 2014

I'll reserve my applause

Well, I think we finally know where Chairman Wheeler found that extra $2 billion.  In a letter to USAC on reserve funding, the FCC changed the rules for how much USAC should hold in reserve for: 1) FRNs not yet approved, 2) invoices not yet paid, and 3) appeals not yet decided.

I don't know what the old rules were, but the new rules are refreshingly simple: hold enough in reserve to cover not-yet-approved applications for the current funding year and the previous two years.  Don't hold anything more for uninvoiced FRNs or FRNs under appeal.

That, combined with the new tighter rules on invoice deadline extensions, will allow USAC to cut the size of their reserve funds.  Apparently the Chairman believes it will free up $2 billion over the next 2 years.  Well, it actually only has to free up maybe $400 million per year, since the normal rollover is apparently included in the $1-billion-a-year, and that's been running $600 million or so every year.

You know I have to complain.  I have four complaints:
  1. The fund will be more highly leveraged.  Not a problem unless the program loses its ADA exemption.  And that would never happen, right?  I mean, we only had a complete shutdown of new commitments that one time like 10 years ago; since then we've gotten temporary extensions every year or two.  And the current extension runs through Dec. 31, 2015, so Republicans in Congress will have a whole year to cool down after the FCC this month ignored their objections and approved the President's plan to fund a new education initiative by increasing the USF contribution factor, circumventing the need to get Congress' approval.  Surely they won't still be feeling vengeful a whole year from now....
  2. In 2 years, rollovers will be much smaller.  The funds that will be made available in the next 2 years are largely funds that would have become available in later years once invoice deadline extensions ran out and decisions were made on appeals.  So the $2 billion is mostly just future rollbacks clawed back into the present.
  3. You want to cut the reserve for unpaid invoices?  Stop treating the invoice payment process like another opportunity to review FRNs.  If USAC said the services were OK a year and a half ago, don't let them change their minds after the bills have been paid.  Even better, on Sept. 30 every year, send out notices to applicants of any FRNs that have not been invoiced.
  4. You want to cut the reserve for undecided appeals?  Decide the appeals.  The FCC has gotten much better about deciding appeals that come in, but there is a huge backlog still sitting waiting for decisions.  Just implement my "any appeal not decided in 90 days or the appeal is automatically granted" suggestion.
But at least we got to see the rules.

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