This morning the Minnesota State Bar Association hosted a conversation on E-Rate. It was an interesting discussion focused on the provider perspective. (Actually I attended three meetings on the topic today. For easier archive I will post notes on each session separately – although I may accidentally draw from all three sessions. I hope to get all of the notes up very soon.) Here are notes…
Speakers: Jonathan Chambers – Chief of Policy and Strategy – Federal Communications Commission & Joe Freddoso, Mighty River LLC
We are looking to providers to serve areas. Price Cap Carriers have declared their interest in service by accepting funds. We are looking for higher speeds from providers (25/3) where Price Cap Carriers have not accepted CAF.
The deal for years has been that the provider would receive subsidies but need to serve everyone. We are now experimenting with a new approach. Will Communities step up where a provider is unwilling? Will they build FTTH where it is uneconomic for commercial providers. If they step up it could change the way that we view infrastructure. So we are doing a reverse auction – we will offer alternate funding. We feel that if we provide CAPEX – even in a rural area – there is momentum to invest.
If you are in an area where Price Cap accepted funding then you will get broadband. And in five years time, those areas will go through the same process of opening up.
Policy Looks at:
- Competition – Broadband internet access is probably least competitive of telecom sectors – despite efforts of the 1996 Telecom Act, which has worked pretty well to spur competition and better broadband.
- Interconnection – FCC has been taking steps to address interconnection disputes.
- Television – Will over-the-top-video become more of a player? Google, AT&T and Verizon all believe they need a TV service – that’s telling. So smaller providers are looking at over-the-top video options as a way to get into the TV service business.
- Universal Service – has to be changed to address broadband because that’s the service at issue. The Fed funds are moving from voice services to broadband. (CAF, E-Rate…) But contributions to the funds are being made via voice lines. Maybe lifeline ought to support broadband – not voice. Voice is a service that’s going away.
Original goal – getting schools connected to the Internet and manage ongoing costs. The program hadn’t been touched in 16 years. Yet use of the Internet in education changed so much is the last 6 years – especially in terms of testing. Testing isn’t final now it’s iterative. Content is moving online.
USAC did their research:
- Admin of program is onerous – so need to streamline and move it online
- Available bandwidth to the desktop/device (school supplied or BYO) – so schools need support with internal wiring. It’s category 2 funding (internal wiring).
- Originally the funding was reimbursable and used to buy plug and play solutions. Those don’t scale well. YET, schools need incremental growth. We need to give fundees greater options to customize their solutions.
USAC is looking to be an investment partner with schools – not simply a place to get a “renter’s allowance” so they are emphasizing dark fiber and managed services.
Lit Services Special Construction – schools/libs can get e-rate funding at onset of project (not reimbursed) and pay their share of non-discount fees over years.
Dark Fiber Special Construction – can pay for new or existing fiber. Cost needs to be a prevalent factors but not predominant factors. The shift is focused on managed service. Cost allegation rules for providers – e-rate will fund construction. You must include 12 strands but you can include more and simply pay incremental cost of fibers – UP TO the school/lib location.
We want to track these projects. We want to make this friendly to providers. We think this may help promote broadband expansion in rural areas.
If you’re building a network, you’re building fiber! We are helping schools invest in fiber to get best solutions for schools and best use of taxpayer money.
Question – can you get reimbursed for existing IRU? No but you can look at category 1 funding.
Tools for cost comparison – don’t make differential equations. Understand the factors.
Are providers and schools/libraries working together to make sure that the right payment plans are selected?
If there is a state fund that funds special construction – FCC will increase our match. Average across the US is 70 percent paid through Feds. FCC will increase up to 10 percent if there’s a state program to help reduce costs. Then the school is left with the rest. That payment could be made over time. We would expect a recurring payment especially with custom construction. We expect monthly payments to decrease and become more transparent. Part of our emphasis is making sure schools/libs get the best deal by facilitating comparisons.