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Is the FCC purposefully screwing up US school broadband projects?

Answer: Yes, but it's hard to prove

By Kieren McCarthy in San Francisco

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Special report Schools across the United States are sounding the alarm on what looks suspiciously like an effort by the federal telecoms regulator to undermine efforts to build new broadband networks.

Under the e-rate program run by the Federal Communications Commission, the FCC, schools that do not have access to a fiber network supplied by the main cable companies can apply for federal funds to build or lease such a network, and so supply much faster internet access to their students.

The issue is at the very heart of the so-called digital divide where people in remote or rural areas of America have limited internet access. FCC chairman Ajit Pai has repeatedly stated that bridging that divide is one of his key priorities.

However, an analysis of the more than 800 applications for "special construction" by a company that provides e-rate consulting services, Funds for Learning, has shown an extraordinarily high failure rate of requests for funding, often for very minor reasons.

In 2016, for example, of 426 applications for special construction, 52 per cent of them were denied by the organization that processes them on behalf of the FCC, the Universal Service Administrative Company (USAC). Typically, the rate is around four per cent.

The figure was so high that Funds for Learning decided to dig into why, and found most rejections were for such trivial reasons that they look suspiciously like a deliberate effort to refuse requests for help on any possible grounds.

As one example, 25 applications were denied by USAC because additional details requested by the company were not submitted by the applicants within a 28-day time limit – a rule that schools were almost certainly not aware of.

I see...

Another 13 were rejected because they contained "charges which were determined to be beyond a USAC-internal cost-effectiveness threshold." But there is no guidance as to what those internal thresholds actually are. And even Funds for Learning – whose entire business is built on understanding the application process – admits that it has "no clue what that range might be."

A further 38 applications were denied because the services listed on one form were "substantially different" to those listed on another form. But that difference appears to be no more than the fact a school listed a service category on one form and a description on the other. In other words, an entirely understandable cockup that isn't really an error at all.

Perhaps reflecting the Kafkaesque nature of the process, the largest number of applications that weren't approved were a result of applicants giving up altogether and cancelling their requests.

"Increasingly, the reality is that special construction leads to special questions, special delays, and special headaches," wrote a specialist in the field, Brian Stephens.

But schools are always short of funds and so this year, more schools applied and more of them hired specialist consultants to dot the i's and cross the t's in the applications process, learning from previous rejections.

The result has been an extraordinary increase in the number of "pending" applications. In fact, of 401 applications this year for special construction, just one per cent have been approved so far, five per cent have been denied, and a staggering 94 per cent remain in limbo.

Frustrated at constant processing delays, applicants have started complaining. And earlier this week even the governor of New Mexico got involved.

Susana Martinez wrote a letter [PDF] to the CEO of USAC, Chris Henderson, in which she expressed her frustration that an expected rollout of high-speed internet access to schools simply hasn't happened. Martinez helped New Mexico create a fund for new fiber construction in which the state would match federal funds and together cover about 90 per cent of the cost of construction.

But, she noted, "the funding decision has stalled" at the USAC, and as a result more than 40 schools in her state "will likely endure another school year with slow speeds and spotty internet connections."

And others

Martinez is not the only one angry. Education Week spoke to a number of people tracking efforts to build new networks and found a disturbing pattern of unnecessary requests for further details from USAC followed by vague reasons for denying applications.

In many cases, schools have spent years inking deals with nearby businesses and other funding sources and then paying consultants to handle the waves of paperwork only to find their applications rejected for reasons that are entirely unclear.

In one example, the CEO of a company in Utah that specializes in such projects, Ray Timothy, spent four years working on a project to run 70 miles of fiber in a remote part of the state, pulling in millions of private capital to make it happen, only to be denied federal funds for reasons he is still unsure about. He is certain that he answered every request for information – including some that required handing over commercially sensitive records – and even asked for and had a meeting with FCC boss Ajit Pai to request that his case be looked at. It remains unapproved.

The FCC and USAC meanwhile remain tight-lipped about what is going on. The FCC has given a vague statement about being committed to improving the situation but refuses to answer any questions in detail. And the USAC has yet to respond to repeated requests for comment.

What seasoned FCC observers suspect however is that the schools' effort to get fast and stable internet access has hits the rocks of Pai's extraordinary subservience to large cable companies.

For years, the large cable companies have responded extremely aggressively to any efforts by others to build fiber networks, even drafting and passing legislation in multiple state capitals that have shut down efforts for municipal broadband networks.

Having your Pai and eating it

It's a question worth asking: Why is the FCC boss being such a jerk?

READ MORE

And as chair of the FCC, Pai has repeatedly introduced new rules or sought to overturn existing rules that serve only to benefit large cable companies, even going so far as to try to rewrite the definition of broadband so cable companies can claim greater coverage of the country and greater competition while retaining the exact same internet speeds.

The rules allowing schools to apply for funding for new fiber networks was introduced by the FCC under Pai's predecessor as a way to force the issue. But as with many of the Obama-era rules, Pai has set about either scrapping them or, if getting rid of them would be politically difficult, undermining them through bureaucratic changes.

It's fair to say that scrapping rules that allow schools to get faster and reliable internet access would not be a popular move. And so it appears the applications are simply being buried in paperwork and shoddy denials.

The irony is that Pai has made expanding broadband access a key goal for his time in charge. But it seems it only counts if that expansion is carried out by the large cable companies that he is so enamored with. ®

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