The FCC requested comments (DA 13-592) on the eligibility of otherwise ineligible components bundled, without cost allocation, with other eligible services. Examples include cellphones, wireless tablets, and VoIP phones. The FCC proposes to clarify, effective FY 2014, that such end-user equipment is fully ineligible. It also requested comments on the cost allocation procedures and on the definition of “ancillary.” Initial comments were due May 23, 2013; reply comments are due on June 7, 2013. Several of the more interesting comments, both pro and con, are summarized below.
Broadcore, a VoIP provider, supported the FCC’s proposal requiring cost allocation of all bundled services, but argued that the “clarification” should become effective as of FY 2013 rather than waiting for FY 2014.
E-Rate Central supported the FCC’s proposal. While simple in concept, E‑Rate Central noted that the procedural aspects of cost allocation may be complex. The cost allocation of cellular service devices, for example, is difficult to do precisely for accounts covering multiple users with different types of devices and with overlapping two- to three-year term agreements. In such cases, E-Rate Central encourages the FCC to work with USAC to develop monthly “safe harbor” eligibility percentages based on weighted averages of each carrier’s bundled product offerings.
E-Rate Provider Services supported the FCC’s proposal. It proposed a simplified approach to allocating the eligibility of Web-based services.
Steven Kaplan supported the FCC’s proposal, expanding on E-Rate Central’s concern regarding “eligibility creep” and to discuss the negative and related impact that “price creep” has been having on Priority 1 funding.
Funds For Learning disagreed with the FCC proposal citing “untested, unsupported assumptions about how much ‘free’ ineligible services have been costing and will cost the E-rate program in the future.” FFL used its comments to promote its own plan to fix the E-rate funding problem by limiting discounts to a maximum dollar per student.
Sprint Nextel asked the FCC to retain the current policy of permitting “free” cellphones without cost allocation. Sprint agreed with the FCC that as a “theoretical matter” the real cost of a free or reduced priced device “results in a more expensive bundle,” but argued that “there is no data to support this supposition.” Sprint did not discuss the issue of extending the current practice to other non-cellular components.