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MIA in PIA Continuing Series

Next up in our continuing series “MIA in PIA” is an egregious example of SLD PIA reviewers making up regulations. I’ve mentioned before that I don’t completely fault USAC for some of the goings on at the SLD. In fact, if the FCC were more proactive in promulgating program guidance then the SLD wouldn’t have to manufacture some of the “rules” it does. However it doesn’t negate the fact that working within the constraints of the E-rate program can be frustrating at times. And the most frustrating is trying to explain to a PIA reviewer that the information he or she is supplying cannot be found in any FCC Order or rule.

Bundled Up Blues
Right now if the climate concerning bundled services were a blues song, it would go a little something like this:

“Bundled up my services, to save some money.
SLD wanna break out ancillary charges, but that ain’t right honey.
I’ve got the bundled up blues and the SLD gonna cost allocate.
I’ve got the bundled up blues, somebody please help them get it straight.”

Let’s talk ancillary use for a moment. The 2010 Eligible Services List states that “if a product or service includes ineligible functionality, then, in general, the proportionate cost of this functionality must be removed from funding requests through a cost allocation process. However, in certain limited cases, if any ineligible functionality is not significant and strictly ancillary to the principle uses of the product or service, the full product or service may be eligible for discounts.” We all know that a bundled package of services is usually more cost-effective for an applicant than purchasing services a la carte. We also know that there are ineligible components often contained in these bundled packages. However, those components purely meet the definition of ancillary use, in terms of their being included in a bundled package.

Recently, a cellular service provider who shall remain nameless provided the SLD with a breakdown of these ancillary charges included in a bundled package. The cost allocation resulted in a whopping $20 charge per plan. For a large school district with users that can number in the thousands, that can add up to a big chunk of money.

More disconcerting is the fact that this was never disclosed to the applicant when they were selecting service providers. If an applicant had known that they would not be able to be reimbursed for $20 on a $100 per month plan, would the applicant have selected that service provider? I’m sure that these “hidden charges” would definitely be a deal breaker for some applicants. Not only that, but it might force an applicant into selecting services on a service by service basis rather than select a bundled plan, which is by far less expensive and more cost-effective. More alarming is the fact that the SLD is moving forward with the cost allocation, regardless of whether or not the applicant agrees.

“I’ve got the bundled up blues and the SLD gonna cost allocate.
I’ve got the bundled up blues, somebody please help them get it straight.”

Caveat Emptor
Let the buyer beware. Applicants should be advised to ask potential service providers to disclose any hidden charges before selecting a service provider for the upcoming FY 2011 Funding Year. If the SLD is going to cost allocate ancillary components from bundled packages then applicants have a right to know how much they will not be reimbursed.

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