Now here is something that surfaces every now and then, but I've never blogged about: "lowest corresponding price." According to FCC regulations, "Providers of eligible services shall not charge schools, school districts, libraries, library consortia, or consortia including any of these entities a price above the lowest corresponding price for supported services...." (47 C.F.R. § 54.511(b)) "Lowest corresponding price" is defined as "the lowest price that a service provider charges to non-residential customers who are similarly situated to a particular school, library, or library consortium for similar services." (47 C.F.R. § 54.500(f))
Every now and then I wonder whatever happened to that rule, most recently when the FCC requested comments on a petition by some telecom lobbying groups for "clarification" (read "limitation") of the rule.
Yesterday, Pro Publica published an article on the FCC's neglect of the rule. It's a good read. The article points out that while the FCC has done diddly to ensure compliance with this rule, which I knew, some lawsuits are pending, and the Justice Department reached a settlement with AT&T in Indiana over its failure to give schools and libraries the lowest corresponding price.
I always thought that the rule was worthless, since telecom pricing is like mattresses: you can't comparison shop because the manufacturers purposely create a myriad of products that are very similar, but different in unimportant ways. Add to that volume discounts, and it's really hard to pin down a "corresponding price." But if the Justice Department was able to get $8.3 million and a compliance agreement out of AT&T, maybe I should pay attention to the rule.
Hey, is this a way to get rid of the 470? If the free market works the way the economics textbooks claim, vendors should generally be charging the same price, and it should be the lowest price possible to cover marginal production costs. So if a vendor is forced to give their best price, that should be the best price there is in the market.
Of course, the free market doesn't work like that in reality. But since no one in government seems willing to commit the heresy of questioning the perfection of the free market, maybe we could leverage the lowest corresponding price to convince the FCC that competition elsewhere in the marketplace makes posting a Form 470 redundant.
Conversely, the fact that the DOJ and others have pointed out that applicants are not getting the lowest corresponding price is proof that the Form 470 is a dismal failure in promoting enough competition to get the best pricing.
One more thing: if USAC runs a Cost Effectiveness Review and finds that an applicant paid too much for a service, shouldn't the service provider be turned over to the DOJ for not providing the lowest corresponding price?
Wednesday, May 02, 2012
For once, I'm not the most pessimistic
E-Rate Central's weekly newsbrief is less hopeful than I was in my prognostication: I said the FCC would keep scraping surpluses until they can cover Priority Two requests for 90% applicants, they said that either there will be no P2 funding, or it will be pro-rated for 90% applicants.
Please, not pro-rating. That leaves applicants having to guess what percentage of total cost will have to come from their budget.
If you haven't signed the petition to increase funding for the E-Rate, do it now. Please.
Please, not pro-rating. That leaves applicants having to guess what percentage of total cost will have to come from their budget.
If you haven't signed the petition to increase funding for the E-Rate, do it now. Please.
Wednesday, April 25, 2012
Now it's for real
Up until now, PIA has been working on FY 2012 applications with procedures not approved by the FCC. But yesterday, the FCC approved the PIA procedures. In past years, it's been a couple of weeks between the approval of procedures. This year, the approval doesn't mention any changes, so I think we could be looking at a first wave of approvals in early May.
Wouldn't you know it, PIA seems to have gotten a slower start this year than in the past. (Clearing up FY 2010 Priority Two applications from the FCC's bizarre post-funding year rollover/tossback?) So I don't think there is much of a stack of applications ready for the first wave.
Still, it's good to see this approval done in April, after longer waits the past 2 years.
Wouldn't you know it, PIA seems to have gotten a slower start this year than in the past. (Clearing up FY 2010 Priority Two applications from the FCC's bizarre post-funding year rollover/tossback?) So I don't think there is much of a stack of applications ready for the first wave.
Still, it's good to see this approval done in April, after longer waits the past 2 years.
Today's brush with a foss
Turns out I'm not the only one with a soft spot for Hraunfoss (for those who are new to the blog, that's the name of a server which hosts FCC appeals decisions). Check out National Geographic's Photo of the Day for April 20 (sent to me by a fellow E-Rate geek). It's the lovely scene of Hraunfoss flowing into the aptly named Hvita ("white") River. Such a bright scene is the perfect setting for all the FCC's cheery appeal decisions since Bishop Perry.
Turns out Svartifoss is also on the NatGeo site. Svartifoss looks very forbidding, so maybe they should move all the pre-Bishop Perry decisions to that server,
No sign of Fjallfoss on NatGeo.
Turns out Svartifoss is also on the NatGeo site. Svartifoss looks very forbidding, so maybe they should move all the pre-Bishop Perry decisions to that server,
No sign of Fjallfoss on NatGeo.
89% applicants carried across the threshold
Funds for Learning has reported that the USAC board approved the items on their agenda concerning the denial threshold for FY2011: no Priority Two funding at 80%, while 89% gets funded. Now those decisions have to be approved by the FCC. So here we are, with 2 months left in the funding year, and no applicants below 90% have received P2 funding approval. And since the next board meeting isn't until July, applicants at the 81-88% discount level won't know about funding approval until after the funding year is over.
Does this look broken to anyone else? I'll say it again: set the denial threshold before the opening of the window. That should be easy, since it looks like the threshold will never again fall below 90%.
Does this look broken to anyone else? I'll say it again: set the denial threshold before the opening of the window. That should be easy, since it looks like the threshold will never again fall below 90%.
2-in-5 is 0-8
The 2-in-5 Rule fails again, as it has every year since its inception. The demand estimate for FY2012 has been released. Of course total demand is up (21.5%), but the heinous 2-in-5 rule is only supposed to reduce demand for Internal Connections (IC). Total IC demand is up 33% from last year. OK, but a lot of that is probably from the FCC's weird backwards roll-over of funds into a funding year that was already done in order to fund all P2 requests. Let's see...yup, that decision has increased IC demand from 40% applicants by over 1,000% So we really should be looking just at IC demand for 90% applicants. The 2-in-5 Rule should be reigning that in. So how did the demand for Internal Connection from applicants at the 90% discount level change from last year? Demand is up 40% since last year. Abject failure.
And the bottom line is this: P1 demand plus P2 demand from 90% applicants totals over $3.8 billion. Now let's say 15% of those requests get denied; the USAC only has to come up with $3.25 billion. The fund cap might grow to what, maybe $2.3 billion? And unless the FCC improperly delays the rollover until after June (47 C.F.R. 54.507 says the FCC should rollover funds "in the second quarter of each calendar year"), like they did last year, I'm betting on a lower-than-normal rollover this year. Let's say $500 million. That only gets us to $2.8 billion in funding. Uh oh. We're about a half billion short. Could it be that 90% applicants will not get P2 funding this year?
Time to start looking for change under the sofa cushions. And here's today's wild digression: here's an analysis I like that reaches the conclusion that the likely value of a pound of change found in the sofa cushions is $12.77. So to make up our $450 million shortfall, we'd need about 35 million pounds of coins. How many sofas do they have over at the USAC?
A more sobering way to put it: if we asked every person in the country to kick in $1, we'd only be about 2/3 of the way to covering the shortfall.
Not to worry, the FCC will probably just keep dumping rollover money into FY2012 until there is enough money to cover the 90% FRNs. With all the weird games they've been playing with rollovers, the amount of unused funding is bound to increase, as applicants cancel duplicative FRNs necessitated by the complete uncertainty of the P2 denial threshold overlaid by the evil 2-in-5 Rule. But it will take time for that money to come in, especially since they chucked the rollover from Q3 2011 back into FY2010, so I won't be surprised if no FY2012 P2 FRNs are approved until after the funding year has ended. Which will, of course, put us in the same situation for FY2013.
We're moving the wrong direction. I have always said that the denial threshold should be set before the window opens, but now it looks like P2 requests will never again be funded until after the funding year is over.
But back to my original rant. The 2-in-5 Rule is not working. Can we get rid of it now, please? In a year or two it will be meaningless, since we'll only be able to cover P2 for 90% applicants once every 3 years, anyway. But let's toss it now, anyway.
And the bottom line is this: P1 demand plus P2 demand from 90% applicants totals over $3.8 billion. Now let's say 15% of those requests get denied; the USAC only has to come up with $3.25 billion. The fund cap might grow to what, maybe $2.3 billion? And unless the FCC improperly delays the rollover until after June (47 C.F.R. 54.507 says the FCC should rollover funds "in the second quarter of each calendar year"), like they did last year, I'm betting on a lower-than-normal rollover this year. Let's say $500 million. That only gets us to $2.8 billion in funding. Uh oh. We're about a half billion short. Could it be that 90% applicants will not get P2 funding this year?
Time to start looking for change under the sofa cushions. And here's today's wild digression: here's an analysis I like that reaches the conclusion that the likely value of a pound of change found in the sofa cushions is $12.77. So to make up our $450 million shortfall, we'd need about 35 million pounds of coins. How many sofas do they have over at the USAC?
A more sobering way to put it: if we asked every person in the country to kick in $1, we'd only be about 2/3 of the way to covering the shortfall.
Not to worry, the FCC will probably just keep dumping rollover money into FY2012 until there is enough money to cover the 90% FRNs. With all the weird games they've been playing with rollovers, the amount of unused funding is bound to increase, as applicants cancel duplicative FRNs necessitated by the complete uncertainty of the P2 denial threshold overlaid by the evil 2-in-5 Rule. But it will take time for that money to come in, especially since they chucked the rollover from Q3 2011 back into FY2010, so I won't be surprised if no FY2012 P2 FRNs are approved until after the funding year has ended. Which will, of course, put us in the same situation for FY2013.
We're moving the wrong direction. I have always said that the denial threshold should be set before the window opens, but now it looks like P2 requests will never again be funded until after the funding year is over.
But back to my original rant. The 2-in-5 Rule is not working. Can we get rid of it now, please? In a year or two it will be meaningless, since we'll only be able to cover P2 for 90% applicants once every 3 years, anyway. But let's toss it now, anyway.
Tuesday, April 24, 2012
Monday morning blahs
Well, that was anti-climactic. I logged on the USAC website yesterday after the 3-day shutdown, eager to see what new features would be available, or at least hoping that the spiffy new design would be extended to the entire site. I can't see that they made any changes. Oh well, at least it came back up on schedule, and nothing seems to be broken.
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