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Sunday, March 31, 2019

A shell game, only with caps

Am I the only one who is starting to feel like this?
[If you aren't familiar with the children's book Caps for Sale, I recommend it.]

The E-Rate was born with a $2.25 billion cap on it.  Then we added a cap on Category 2 spending.  Now the FCC is thinking about putting a cap on overall spending in the Universal Service Fund (USF).  Enough with the caps already!

To be precise, what we know publicly is that Chairman Pai has circulated an item suggesting that the Commission release an NPRM about "Universal Service Contribution Methodology."  Apparently, by circulating the item, he has allowed the Commissioners to vote privately on the measure instead of voting in a public meeting.

Commissioner Rosenworcel and Senator Markey (who's like godfather of the E-Rate or something) have already expressed their displeasure.  Commissioner O'Rielly has expressed his support.

To me, the best argument against this overall cap comes from Commissioner O'Rielly: "Fact: 3 of 4 USF programs already have hard spending caps & the other has a soft cap requiring Commission action if it were exceeded.  An overall cap doesn’t add new budgetary pressures than those that already exist!"

In other words, "This proposal has no effect."  If it doesn't do anything, let's not consider it.

Of course, it could have an effect, and if it does, it won't be a good one for our little patch of the USF.  I don't see the E-Rate needing a cap increase, unless they bring back voice or increase the C2 cap, but if other programs need more cap space, it would mean reducing the caps of other programs.

There is an effort underway to increase the cap over at Rural Health Care, but that program is small enough that it wouldn't significantly affect the other programs.

I think this cap is all about the Lifeline Program.  USAC has determined that 10.7 million households participate in the program, but 39 million households are eligible.  So if even half the eligible households were funded, the cost of the Lifeline Program would increase by around $1 billion.  And wouldn't you know, the Lifeline Program is the one with the "soft cap."

So instead of putting a hard cap on Lifeline, the FCC wants to put a hard cap on the whole USF.  Why be so indirect?  I mean, I can see how it looks bad to say, "We're only going to provide enough funding to serve 28% of the people eligible for the Lifeline program," but who would notice?  Currently, 72% of the people eligible for the Lifeline program haven't noticed it exists.

Don't put another cap on 3 other programs just because Lifeline isn't capped.

Thursday, March 28, 2019

Surf's up?

The FCC has approved the PIA review procedures.  That means that USAC can start approving 471s today.  Based on the PIA inquiries we've received so far, it looks like we're going to start with a "low-hanging fruit" wave of small, simple C1 applications.  That seems like a good move; let all the new PIA reviewers dip their toes in the shallow water before throwing them off the deep end.

Side rant: Since I've been so quiet over the past couple of years, I would be remiss if I did not take advantage of this opportunity to rant about the irony of the FCC issuing public approval of the secret rules by which applications are processed.  Did you know that every year the FCC approves a 700-page set of procedures for processing applications?  (Well, it was 700 pages in 2009, but I'm too lazy to file a FOIA request to find out how long it is now.)  Because the FCC says that the routine processing of funding applications from local governments is a law enforcement action.

So much secrecy.

When can we expect the first wave?  If the recent past is any guide, we should be seeing a wave in April.  Maybe even mid-April.  Of course, it's a new company handling PIA¹, so a delay wouldn't be surprising.
Here's a table of dates from past years:
FY Window close Days passed PIA approved Days passed First FCDL Total days Million Apps
2019 3/27/19 0 3/27/2019
2018 3/22/18 6 3/28/2018 23 4/20/2018 29 $501*15,033*
2017 5/11/2017 1 5/12/2017 14 5/26/2017 15 $47 4,919
2016 5/26/2016 14 6/9/2016 7 6/16/2016 21$17 2,251
2015 4/16/2015 -27 3/20/2015 62 5/21/2015 35 $151 7,100
2014 3/26/2014 -19 3/7/2014 69 5/15/2014 50 $607 14,600
2013 3/14/2013 57 5/10/2013 19 5/29/2013 76 $130 12,023
2012 3/20/2012 35 4/24/2012 77 7/10/2012 112 $646 23,800
2011 3/24/2011 75 6/7/2011 19 6/26/2011 94 $398 18,500
2010 2/11/2010 91 5/13/2010 13 5/26/2010 104 $429 18,200
2009 2/12/2009 49 4/2/2009 26 4/28/2009 75 $134 6,931
2008 2/7/2008 63 4/10/2008 21 5/1/2008 84 $352 10,000
2007 2/8/2007 4/23/2007 74 $202 21,000
2006 2/16/2006 4/26/2006 69 $184 4,880
2005 2/17/2005 6/27/2005 130 $342 7,700
2004 2/4/2004 4/27/2004 83 $43
2003 1/16/2003 5/1/2003 105 $230
2002 1/17/2002 4/24/2002 97 $233 9,300
2001 1/18/2001 7/23/2001 186 $478
2000 1/19/2000 4/14/2000 86 $253 13,000
1999 3/11/1999 7/13/1999 124 $116 6,000
1998 11/23/1998 $73 3,000
*The FY 2018 first wave was so huge, they released it on in two waves, on 4/20 and 4/21; I'm counting those as one wave.

¹ For those who didn't know, USAC is actually a pretty small company.  All of the application processing (and the Client Service Bureau) is outsourced.  The contract to handle PIA has always gone to Solix (nee NECA Services), but in January, it switched to a company called Maximus.  So far things seem OK to me, but we're just jumping into PIA season.

The squeeze

It's past time to trot out my annual table of ESL and window dates (I missed 2018 entirely).  First, my comments on the trends I see in the dates.  [The most important trend ended up buried in the middle, so I put it in bold.]
  1. The ESL release date has been sliding.  It should be July 1, but it's sliding towards December.  On the one hand, the ESL isn't changing much, so it doesn't matter much.  On the other hand, the ESL isn't changing much, so why the long review?
  2. The "60 days" column is shrinking, almost hitting the minimum in 2019.  That's bad.  The 60-day rule was put in place so that applicants would have time to look at the ESL, decide what they were going to apply for, post a Form 470, wait 28 days, select a vendor and be ready for the opening of the window.
  3. The size of the window is shrinking a little.  That wouldn't be a big deal, except that with the "60 days" number dropping, we've gone from having 241 days from the release of the ESL to the close of the window in 2017 to having only 131 days in 2019.  That means applicants have a lot less time to look at needs and budgets, put together a 470, collect bids, sign a contract and file a Form 471.  I still wouldn't say it's a tight squeeze (we only had 71 days in 2010), but it's a squeeze.
  4. The window close have moved from May, where it was for a couple of years, to late March.  It's better than the old mid-February close dates, but I'm all for closing the window in May.  Did you notice that the window closed in May for a couple of years, and the sky didn't fall?
Fund YearFCC releases ESL Days passedWindow announcedPrep daysWindow open60 days?Window closeWindow days
(ext. to 4/16/2015)
(ext. to 5/26/2016)**
** Extended to 7/21/16 for consortia and libraries
Some explanations:
"Days passed" is the number of days that passed between the release of the ESL and the announcement of the window dates.
"Prep days" is the number of days between the announcement of the window dates and the opening of the window.
"60 days" is the number of days between the release of the ESL and the opening of the window, which should be at least 60 days per the Third Report and Order
"Window days" is the number of days that the window is open.

Tuesday, March 26, 2019

Get a life

Really?!  I mean, I expect EPC to be  c r a w l i n g  on the last few days of the filing window, but c'mon, it's 9:00 pm!  Even Pacific Time, it's 6:00 pm.  Don't you people have lives? 

Or could it be that EPC is not currently burdened, but is sucking wind after a strenuous day?

Friday, March 22, 2019

The Midnight Save & Share

Here's an EPC "feature" that has stuck around.  I have previously described the "Midnight Save & Share."  We never studied it closely enough to discover exactly when or why it happened, but if you leave a draft form in your Tasks list (waiting for info or whatever), at some point EPC may decide that you should share your work, and at midnight will Save & Share the form, meaning that it drops into the Tasks list of every user authorized to see the form.  It doesn't seem to happen as much as it did back in 2016 and 2017, but it still happens.

One mystifying change: the Midnight Save & Share does not generate the email to all users that EPC sends when you click the "Save & Share" button:
That's a problem and an improvement. 

A problem because the person who had the form in their Tasks list isn't notified that the form has appeared in other people's Tasks lists.  All authorized users now have that form in their Tasks list, and any of them can now "Accept" that form and move it only to their Tasks list, causing it to disappear from the original owner's Tasks list.

An improvement because that email creates confusion.  No one who gets that email needs to "Create a Form 471," since the form has already been created; someone needs to continue a Form 471.  But some of the people who get the email don't need to do anything.  In our case, every time we Save & Share, we can expect an email or call from at least one employee of the client, asking what they should do.  Or worse, they just Accept the form and Submit it.

At On-Tech, we run into that problem all the time.  See, we like to have at least 2 sets of eyeballs view every form before we submit.  However, only one person at a time can have access to a draft file, and the only way to transfer a draft from from my Tasks list to yours is Save & Share.  So we have to Save & Share every form at least once.

Instead of "Save & Share," how about a "Transfer" option?  Or maybe when you click "Save & Share," you get to pick who you share with?

One improvement that we have seen with "Save & Share."  It used to mean "Save & Give Away"; when you shared a form, it vanished from your Tasks list.  So you couldn't see the form unless another user Accepted it and then Save-&-Shared it, so it would reappear in your Tasks list.

I just have trouble believing that building a portal from the ground up would have been harder than it's been trying to shoehorn the E-Rate process into Appian's business process management platform.  Even now, I think we should start from scratch.

Thursday, March 07, 2019

Does the "O" in "O'Rielly" stand for "overbuilding"?

Oh, boy, Commissioner O'Rielly is back on the overbuilding warpath.  In a nutshell, Commissioner O'Rielly feels that the E-Rate should not be funding any special construction costs for wide-area networks where fiber is already available.  He can't see why the E-Rate should be paying to lay new fiber if there is fiber already laid in the area, especially if the existing fiber was also subsidized with federal funds.  So he's written a letter to USAC requesting info on consortium special construction projects.

Before I get to the letter, I'll give my response to that idea.  Mostly, I agree.  The E-Rate should not pay for new networks where a network exists UNLESS -- and this is where I differ with the Commissioner -- it's cheaper.  I don't think the E-Rate program should be paying extra to avoid special construction.  I think that's wasteful.  Current rules only allow special construction if the applicant can demonstrate that it's cheaper than the other alternatives.  So overbuilding only happens when it's the cheapest option available.

I don't think of having E-Rate pay for a fiber network where one exists as "overbuilding."  I think of it as "encouraging competition."  But there's no way the E-Rate should pay extra to encourage competition.  The E-Rate should only pay for a second network if it's cheaper than using the existing network.

On to the specifics in the letter.

First, the most important questions: did the Commissioner capitalize the "R" in "E-Rate"?  Yes, consistently.  Huzzah!  Go big "R"!

I don't have the specifics on the case that the Commissioner refers to in the letter, but it strikes me as exactly the kind of project the FCC envisioned when they allowed dark fiber network: a huge rural area with spotty fiber access.

Now I'll take a shot at responding to the Commissioner's questions:
1. Does USAC understand the E-Rate rules to permit funding for special construction projects, whether self-provisioned networks or networks owned by a commercial provider, that would duplicate, in whole or in part, fiber networks that have been built using federal funds? 
Only if it's cheaper.
2. Does USAC understand the E-Rate rules to permit a consortium to receive funding for the construction of a WAN to provide Internet access to the entire consortium, even where existing fiber-based providers are already capable of serving individual consortium members? 
Only if it's cheaper.  And oh yeah, the Commission has wanted to "encourage schools and libraries to aggregate their demand with others to create a consortium with sufficient demand to attract competitors and thereby negotiate lower rates or at least secure efficiencies, particularly in lower density regions" since the Universal Service Order that started it all (see paragraph 476).  I don't believe that consortia lower prices, and I agree that telecommunications purchases that cover a large area often make it impossible for many companies to bid, but I don't make the rules.
3. Since the 2014 E-Rate Orders, how many applicants have requested E-Rate funding for special construction of consortium-wide WANs, and how much funding was requested by these applicants? 
State-wide networks had better batten down the hatches, because I think they're about to get hit with Hurricane Michael.
4. How many requests for consortium-wide WAN projects have received funding commitments, and what is the total amount of funding committed for such requests? 
The number won't be big: only 362 consortia filed a Form 470 this year (out of 16,976 applicants filing).
a. How many of those WAN projects would result in overbuilding another provider’s network, in whole or in part? 
OK, what do you mean by "overbuild"?  If a service provider leases existing dark fiber to use as part of the network, does that count as overbuilding?  For example, if Service Provider A fiber running between 2 towns, and Service Provider B leases a few pair from Service Provider B and then lays fiber from A's network to the schools in those towns, and connects that WANlet to a bigger WAN, did B "overbuild" A?  What if Service Provider A has existing fiber running past 2 of the 5 schools in a district, would a new WAN from Service Provider B that connects all 5 buildings count as "overbuilding"?
b. How many of those WAN projects would result in overbuilding, in whole or in part, providers that receive funds from the High Cost or Rural Health Care programs? 
And how many of those High Cost funding recipients replied to all Forms 470 in their geographic area, as required by the Second Modernization Order (see paragraph 67)? Commissioner O'Rielly didn't ask; in his Dissenting Statement to the Second Modernization Order, he opined that "a new requirement that Connect America Fund recipients participate in the E-rate competitive bidding process ... could have unintended negative consequences for the CAF program."
5. How many consortium-wide WAN projects have been denied on cost-effectiveness grounds? 
Interesting question.  How would USAC determine cost-effectiveness?  It's not like there's a list price for fiber WANs.  They do scrutinize cost in special construction applications much more closely  than other applications, but it's rare that you can do a truly apples-to-apples comparison of the cost to lay fiber, because it depends on so many factors.
6. How many consortium-wide WAN projects are currently awaiting a funding decision by USAC? 
Another interesting question.  I'd be sweating if I had a consortium WAN application sitting in PIA right now.
7. To the extent that USAC has approved funding requests for the construction of consortium-wide WANs that partially or fully overbuild existing fiber providers, and considers such projects, whether self-provisioned or owned by a commercial provider, to be eligible for funding under current E-Rate rules, has USAC alerted the FCC of the overbuilding risk created by such projects? Has USAC alerted the FCC of an apparent gap in current program rules that permits USAC approval of such projects?
"Overbuilding risk"?  What's that?  The risk that service providers with existing fiber will try to gouge applicants by charging more to use their existing fiber than it costs to lay new fiber?  Me, I have no problem with "an apparent gap in current program rules" that allows applicants to save money and lowers costs for the E-Rate fund.  But Commissioner O'Rielly seems to think that the rules need to be changed so that applicants and the E-Rate can pay more for WANs just to prevent any competition to carriers with existing fiber.

And here's my question for Commissioner O'Rielly: Before writing this letter, did you talk to any stakeholders other than service providers with existing fiber?

Sunday, March 03, 2019

Buh bye

I have plenty of complaints about the E-Rate, but you know what the *biggest* problem is?

The 35% drop in the number of schools and libraries applying for E-Rate.

Where'd I get that number?  Well, Funds for Learning counted the number of applicants filing Forms 470 in FY 2014 at 26,059.  In FY 2019 they counted  16,976.

The count of 470s is not a perfect count of participation, since applicants under multi-year contracts or will only a cable modem don't have to post a 470, but it's a good indicator of participation.

I compared this year's numbers to an analysis I did back in 2011 using FY 2009 numbers.  I looked at how many applicants could have applied vs how many did.  Now I've added in 2019 numbers.  (Call me lazy, but I didn't update the number of districts, schools and libraries; I just don't think the numbers have changed that much.)
Applied 2009 Applied 2019 Change
Total Number Participation Number Participation Number Participation
School district 13809 12833 93% 9627 70% -3206 -25%
Single School 33740 7142 21% 5072 15% -2070 -29%
Library 9225 3672 40% 1915 21% -1757 -48%
Consortium n/a 439 n/a 362 n/a -77 -18%
24086 16976

Wow, almost half the libraries that were applying in 2009 have left the program.  I would have expected a bigger drop among individual schools.

The drop in school districts is bigger than I would have expected.  We've certainly seen clients leave the program because the meager E-Rate reimbursement isn't worth the hassle of applying, but I wouldn't have expected a drop of 25%.