Not the worst name

I was just skimming another Ex Parte to the FCC, and it struck me: part of the Universal Service Fund is something that is called the "High Cost Program."  In the past, I have always taken it as intended: a program to subsidize telecommunications in places where the cost of providing telecom services is high, ergo the High Cost Program.  But today it occurred to me what that name looks like to someone who doesn't know the USF.

If I were looking to get rid of expensive government programs, the "High Cost Program" seems like a really good place to start.

So while I often complain about the name "E-Rate" and its controversial spelling, things could be worse.

Appeal of the day

My favorite FCC appeal today would be very interesting, in that it challenges the authority of auditors to examine compliance with state and local procurement laws, but the audits are just a bad memory now, so it will only set a precedent for past cases.

It's my favorite because it actually mentions Kafka by name. Audits and cost-effectiveness reviews often make me think of Kafka , so it's nice to see someone finally mention it in an appeal.

I did a little research, and while I couldn't find any previous mention of Kafka in the E-Rate proceeding, I did find a comment in another proceeding before the FCC which actually quotes from The Trial, complete with citation telling you in which paragraphs you can find the quote. Bonus style points!

I've been rolled over

I feel like a curmudgeon. The FCC has declared that all Priority Two funding requests for 2010-2011 will be funded. Everyone is celebrating. I’m grumbling.

My first complaint: the FCC’s own rules say that the rollover should take place in the second quarter of each year. We’re past the middle of the third quarter. A couple of months delay doesn’t really bother me, but it’s allowed the FCC to snag funds from USAC’s August 2nd projections, which basically means taking something like $250 million from next year’s rollover and putting it into this year’s.

What’s really got my goat is the rollover of funds into a funding year that is already over. I’ve already said that rolling funds into the current year (in this case, FY2011) doesn’t allow applicants to plan properly; funds should be rolled into the next funding year (FY2012). But to roll them into FY2010 two months after the end of the funding year is just terrible.

Look at the experience of a 79% applicant. In January they got their denial for FY2010, so now they have to scale back their project, or drop it all together, or scramble to post a Form 470 for FY2011, if state rules will allow such last-minute bidding. Then two months after the funding year is over, they find out that they are going to get funded. Well, maybe they’re going to get funded; they haven’t been through PIA yet. I’m guessing PIA will put pending FY2011 applications on the back burner, but there is often a lot of back-and-forth about Priority Two requests, so I’m guessing it will be the end of September before most of the FRNs are approved. Now most Priority Two projects work on a SPI basis, so the service provider won’t want to lift a finger until the 486 is approved, so now we’re looking at October. But for a disruptive project, it will have to wait until Summer 2012, or maybe until Winter Break if it’s not too big a project.

Is it any wonder applicants feel whip-sawed by this program? Even when your funding is approved, it feels like you’re being punished. Back in December 2009, you had the foresight to apply for funding for a project starting in July 2011. Others said you were foolish to lock into a contract 18 months before the start of the project, but you had faith. Then you get denied for funding, and then that gets reversed 21 months after you started the project, so you’re going to have to wait until next Summer and start the project 31 months after you bid it out. You’ll certainly have to change every part in the project, and the way integrators are going belly up, maybe have to change service providers, too. But you can’t rebid the project, so how are you going to comply with state law when you’re buying completely different equipment from your original RFP, maybe from a different vendor?

And it just seems fantastically unfair that without warning, 40% applicants are going to get Priority Two funding this year. Since the Form 470 process increases costs and reduces functionality on projects, I have advised clients at the 40% level not to apply for E-Rate funding. Why is it that the FCC could so easily fund all applications below 80%? Because 80% is like an electric dog fence: for years, anyone who applied for Priority Two funding with less than an 80% discount had an unpleasant experience. Now the FCC doesn’t have to turn on the dog fence; applicants have learned to stay in the yard.

So maybe you could discount all the above as sour grapes. If I’d been that stubborn dog who kept throwing himself painfully into the electric fence, I’d have that Priority Two squirrel in my mouth right now. I didn’t, and now I’m grumbling. But here’s a complaint that has nothing to do with the fence: the E-Rate program is running out of money. There will be enough money to cover Priority One for a lot of years, but the ability to cover Priority Two requests from 90% applicants is likely to run out in a few years. So this rollover seems to me like the Social Security Administration saying, “Hey, we have a lot of money right now, so let’s make a rule that anyone who’s over 50 and unemployed at the moment gets to go on Social Security starting right now.” Yes, it would be wonderful for 53-year-olds who can’t find a job and could live on Social Security. But it would be fantastically irresponsible, since we know the program will run out of money down the road.

So why did the FCC do this? The three reasons I can think of:

1. “Hey, we got some money lying around, let’s throw it at those people. It’ll be like one of those hilarious slapstick scenes where someone begs and begs for a pie, and then they get it thrown in their face.” Sorry, I just had to get that out of my system.
2. It’s good PR for the program to be able to say that FY2011 was fully funded.
3. It will cause an increase in Priority Two applications, as 40% applicants start to think, “Hey, you never know.” The increase in funding demand will show how desperately needed the program is, and keep the anti-E-Rate wolves at bay.

What should the FCC have done?

1. Fund FY2010 requests at 81% and above.
2. Roll enough into FY2011 to fund requests at 83% and above.
3. Take the rest of the money and roll it into FY2012.
4. Start setting the denial threshold at the start of the filing window.

Esta fuente no se SECA

SECA is at it again. They've sent the FCC another batch of good ideas. Here's a list. Of course I'm going to editorialize.

1. Direct reimbursement to applicants: Hell, yeah! But SECA neglects to mention the real reason that this hasn't happened yet: Currently, USAC sends electronic payments to hundreds of service providers, but if they reimburse applicants directly, suddenly they'll be printing and mailing checks to thousands of applicants. At the beginning of November, they'd need one big honking printer. And I shudder to think what address they'd send the checks to. Look for hundreds of missing checks each year.
2. Automatic Deadline Extensions for $0-Funded Invoices: OK, that would be nice.
3. Problem Resolution Outreach to Correct BEAR Error: Yup. I get that USAC wants to process all invoices within 30 days, but surely they could ask for a little info before pushing the "pass zero" button. And applicants weren't clamoring for quicker payment on BEARs; service providers were clamoring for quicker payment on SPIs. So do problem resolution on BEARs, not SPIs.
4. Enhance online BEAR: Yes to all those changes, especially the ability to go back and alter a BEAR after submitting but before service provider certification. I can't tell you the number of times that the service provider has a different total than I do, and I have to redo the BEAR over a few cents.
5. Applicants should be told when the invoicing deadline has passed and be given a second chance to invoice: Now that is a good suggestion that I had not heard before. It would be consistent with what USAC does for 471s and 486s.
6. Top discount percentage should be 75%: Yes! Yes! Yes! I've always thought that the 90% discount was too high for Priority Two. Now I'm starting to think it's too high for Priority One.
7. An applicant portal, creating "a virtually paperless E-rate application process": Oh, yeah. If they could really normalize the database, where you could put services on the 470, then when you make the Item 21 Attachment, you get to choose from things you put on the 470, then Block 5 of the 471 is filled in based on the Item 21 Attachment, and on the BEAR you can associate charges with items in the Item 21 Attachment. Something needs to be done about the creaky USAC codebase. I enjoy the quirks in the current system more than most people, but I'd trade it for some more reliability.
8. Comprehensive Requirements Manual: Oh, yes. Way back at my first Train-the-Trainer (in 2001, I think), they asked for suggestions for improving the program, and this was at the top of my list. Aside from the obvious benefit of making it easier for applicants to access program rules, the creation of a rulebook would: 1) show just how massive and complex the rules are for this program; and 2) show how quickly the rules shift in this program. It would be a powerful impetus to simplify the rules and to change them only quarterly, instead of the current practice of making changes whenever we feel like it.
9. Remove Funding Year from the Form 470: I've already said that this should be done.
10. On 470, remove distinction between Telecom Services and Internet Access, and between Internal Connections and Basic Maintenance: No, unless the distinction also disappears from the Eligible Services List. Having 4 categories in 2 priorities seems to add complexity, but really it just reveals the complexity that is there. I'm all for having the ridiculous complexity of this program in everybody's face. Because when you try to hide the complexity, the applicants suffer.

I've always thought SECA was a little snooty, sitting off by themselves at the DC training every year, but now I think they're heroes. A couple more of these salvos of common sense, and I'll have to start a fan club.

CIPA changes coming in July

And the wheels of progress grind on. Back in October 2008, Congress passed a change to the Children's Internet Protection Act (CIPA). In November 2009, the FCC released an NPRM to put the law into force. And last week, we finally got the new rules.

The bottom line: By July 2012, for all schools applying for Internet Access, Internal Connections or Basic Maintenance, the "Internet safety policy must provide for the education of minors about appropriate online behavior, including interacting with other individuals on social networking websites and in chat rooms and cyberbullying awareness and response."

Libraries are exempt from the training requirement. I guess that since the form doesn't actually list the requirements, they won't need to create a forked certification.

The good news is that the FCC gave everyone plenty of time to update their policies. Now the question is, will schools get the message? And will those schools that don't find out about the new rules get waivers? Applicants who are new to the E-Rate process get a one-year grace period, but schools who have applied under the old rules must comply by July 2012.

Then paragraph 9 sent a chill down my spine: "We also revise certain rules to conform more accurately to the existing statutory language, as proposed in the NPRM. We emphasize that these revisions do not impose additional obligations on E-rate participants, but merely mirror the existing statutory language and codify existing statutory requirements. Many of our modifications will simplify the application process...." Dang, there are 16 paragraphs left. 16 paragraphs of minor clarifications? Minor clarifications have had a tendency to be major retroactive rule changes. I expected a bumpy ride.

But these really do seem to be both minor and clarifications. Whew! Paragraphs 14-17 are especially nice, as they let applicants decide when and how to disable filters, and what content is inappropriate.

Paragraph 23 is a disappointment. There has been quite a bit of confusion about how CIPA requirements apply to staff smartphones. Since they can browse the Internet, shouldn't they be filtered? And with the piloting of remote Internet access for students (Learning on the Go, nee Education Deployed Ubiquitously), it becomes a real issue. The FCC response? "That's a good question. Maybe we'll think about that." But better no response than a bad response, I guess.

Before it was the SLD

How did I miss this movie for all these years? It came out in 1998; coincidence? I don't think so. I mean, look at this picture. In the middle, I think that's what the Senior Manager for Customer Service looked like without the moustache. And apparently in 1998, the guy running invoicing sported a mohawk. And yup, that's the head of PIA on the left, with a look that says, "Ugh! This app is nowhere close to meeting the Minimum Processing Standards. Get it out of my sight!"

Being the responsible consultant that I am, I have added the movie to my Netflix queue. Hey, I'll probably learn more about the E-Rate from watching that movie than reading all the guidance on the new gifting rules.

Ministers and clerics of the world, unite!

Well, the Erate [sic] Correction Deadline Order has had the effect I feared: PIA is now investigating whether errors are truly "ministerial" or "clerical." PIA is asking applicants how errors occurred, including errors that applicants used to be able to correct without delving into the motivation behind the error.

It's got me wondering: How long will it be before we see appeals claiming that errors were ministerial due to temporary insanity?