A late Xmas present.

When I went got my mail today, my heart sank. There was a new shape of missive from USAC: a standard letter-sized window envelope. A different form factor is usually bad news: either USAC has dreamed up a new way to scrutinize an application, or one of my clients has come under unusual scrutiny. But not this time.

When I opened the envelopes, I found a late Christmas present: quarterly payment authorization reports!

Those of you who are not consultants may not understand my glee, so I'll explain. Every quarter, USAC prints a report of all disbursements for each applicant, and mails it to the applicant. That's a good idea, since it gives applicants a chance to spot service providers who are not forwarding disbursements. The problem is that the reports are sent to the Billed Entity's address, to no person in particular. So at a typical school district, they bounce around like Pachinko balls until they either get to the E-Rate person, or go into the trash. That's bad for me as a consultant, since I'm not even in that Pachinko machine. Now, the letter comes straight to me. Excellent!

Just goes to show you, you gotta believe. That Santa at the mall looked fake to me, but I told him that I wanted Quarterly Payment Authorization Reports mailed straight to me, and here we are. I wonder if I'll get the changes to the Eligible Services List I asked for....

Slippery slope

Nothing is more insufferable than a curmudgeon who's been proven right. So you might want to skip this post, because one of my most curmudgeonly concerns is being born out.

As I pointed out in my original post on the Katrina relief and my post on the request to extend the relief, I don't think the E-Rate program is a good tool for disaster relief. And now the FCC is being asked to go further down the slippery slope of disaster relief.

There is a new appeal with a heart-rending tornado story, requesting the kind of aid received by schools damaged by Katrina. This community was hit as hard as many of the Katrina communities. How can the FCC deny them help? And if they do help this community, how will they deny other schools destroyed by other natural disasters? USAC will need a FEMA liaison.

It's hard-hearted, but I just don't see why funds for disaster relief should come from my phone bill.

I've got your LOA right here

So the FCC has remanded another batch of appeals. The subject this time: LOAs. I only found three sentences that applied to all applicants. From paragraph 11: "we direct USAC to reach out to consortia when there are ministerial errors on their LOAs." And from the footnote to that sentence: "For example, Minnesota OET submitted an LOA initially that did not provide enough detail regarding the services for which the consortium leader was authorized to apply.... USAC could have allowed the applicant to remedy that ministerial error, rather than denying the application."

My reading of those sentences is that if an applicant has an LOA that does not include one of the five required elements, that can be corrected after the submission of the 471. Good news for the program, and consistent with Bishop Perry and his issue.

Of course, I'm not going to miss out on my opportunity for a rant. What is the purpose of the LOA? In a consortium, who is the billed entity? The consortium. The consortium is the only entity that can apply for E-Rate funding. To me, if you agree to purchase services through a consortium, it is clear that you want the consortium to seek E-Rate funding, with or without an LOA. (Aside: in this decision, the FCC said that a consortium agreement that included the five elements required for an LOA could be counted as an LOA. And the FCC said that an LOA which lacks any of the five elements can be corrected after the fact. So doesn't that mean that USAC should accept any consortium agreement as an LOA and allow the applicant to "correct" it after the fact by adding the five elements that were missing?)

The only time that I can see that an LOA serves any purpose is when a consortium is purchasing Priority Two equipment for consortium members' locations. That burns one of the members' years for the "2-in-5 rule." But since LOAs do not have to make clear that consequence, it is a poor vehicle for that purpose. And as I've said in the past, the 2-in-5 rule should be rescinded.

So consortium LOAs are yet another example of unnecessary complexity.

I'm all for LOAs for consultants (unless the written agreement between the consultant and the applicant includes the five elements). But consortium LOAs should go.

It's official: 2-in-5 Rule has failed. Again.

USAC has just announced that in the next wave of funding, they will begin to deny all 80% Priority Two requests. Applicants at 81% and 82% are still on the bubble.

I'm surprised it didn't get down into the seventies, and since I'm a pessimist, I think most people are surprised. Even Mel Blackwell was prognosticating a much lower denial threshold back during the September trainings.

Take a look at the graph. Notice the trend? And it gets even worse when you consider that this year, we had a huge unjust rollover, larger than the 2003 rollover that drove the discount level to 70% (and would have driven it lower if the FCC hadn't blindsided USAC with the rollover after everyone below 70% had already been denied).

There are lots of viewpoints on the fairest way to distribute Priority Two funding, but one thing is certain: the FCC's "2-in-5 Rule" has failed utterly in the goal stated in the Third Report and Order: "funds will be made available to more eligible schools and libraries on a regular basis." The 2-in-5 Rule creates many problems, and fails to solve any problems, so it's time to throw it over the side.

Get your popcorn!

Just in time to qualify for the Oscars, the SLD has released videos of the fall training. Alas, at first glance it appears that only the presentations made it, without the skits in between. Next year, I'm bringing a video camera -- hello, YouTube!

Actually, it looks like the Panhandle Area Education Consortium (PAEC) is hosting the video, but the SLD has a link to it off their site, so they're official enough. The SLD used to put these videos up every year, but it seems to me I haven't seen them in a while. So thank you, PAEC.

The production and cinematography aren't going to win any Oscars, but the subject is so intriguing that I'm giving the videos two thumbs up without even watching them.

No signature/no date

USAC is now requiring only one signature and one date for contracts, if that is allowed under state law. When introducing the new rule in this year's training, John Noran started by saying that if state law allows a contract with no signatures, you still have to have a document with a signature and date. I remember thinking, "Is someone really going to try to claim a contract with no dates?"

The answer is yes. There's an appeal at the FCC right now claiming an oral contract. It's an interesting assertion: if state law says I have a contract, who is USAC or the FCC to say I don't?

The FCC has certainly broadened the scope of documents that are allowed to serve as contracts, but I find it hard to believe that they will allow a contract that leaves no auditable trail.

But let's take a step back. Why are contracts required before filing the 471? In general, the terms of the contract are significantly altered by the time the equipment is actually installed, since much of the equipment gets outmoded over the 18 months or so between contract and installation. Why not just accept a quote from a vendor? The 471 itself is enough of a paper trail of which vendor was selected.

If the funding were paid at the time of the signature of the contract, then certainly one would be required. But the actual payments aren't made until services are delivered.

I suppose you could say that forcing applicants to sign contracts discourages applicants from filing for funding willy-nilly, but I haven't seen any cases of that. The allocation of Priority Two funding is badly broken, but not because the contracting requirements aren't stringent enough. The contracting requirements don't restrain irresponsible applicants.

What's the downside of forcing applicants to have a signed contract? Well, for starters, it's illegal for most applicants to sign a contract six months before the start of the fiscal year in which the equipment will ostensibly be delivered (and in most cases 18 months before the start of the fiscal year in which the equipment will actually be installed).

The time has come for the FCC to move from "one-signature/one-date" to "no contract."

Rollover overdue

If the FCC is going to roll funds from past years into the fund for 2008-2009, it's past time to do so. Rolling over funds after the application window is unfair to applicants. The FCC should make rollover decisions before the window opens.

Even better, use extra funds to pre-fund Priority Two for the following year. Under my scheme, the FCC would just bank any leftover funds until the opening of the 2009-2010 filing window next year. At that point, they make an educated guess as to where the denial threshold will be, and set it at that level. Then pay Priority Two requests to all applicants down to that level using the rollover (and some of the 09-10 funds if their estimate was off).

Imagine if Priority Two funding were not a crapshoot. It could happen if the FCC were willing to take a bold step.