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MIA in PIA-Continuing Series

In our continuing series “MIA in PIA” we continue to focus on the lack of consistency in the PIA review process. As we’ve seen in the past, program rules are misinterpreted, applied incorrectly or just made up altogether. The following examples illustrate instances where the SLD is just plainly making up rules that don’t even exist. In fairness to USAC, if the FCC provided more guidance than the SLD wouldn’t find itself in a position to fill in gaps where the program rules are silent. I believe that USAC is doing the best it can given the lack of direction from the FCC.

Out of Period, Out-of-Pocket
One ridiculous PIA situation that I’ve seen recently is a reviewer claiming that charges billed outside of a current month’s invoice are not ineligible and should not be included in the calculation of the monthly recurring charge because they are not recurring charges but rather one-time charges for service outside the current billing period, apparently in an effort to “catch-up” on billing for a certain account. WHAT?!

We’re talking about sample invoices to estimate annual charges here. This isn’t a payment submission. Besides, it is standard telecom industry practice for telecommunication carriers to reconcile the service utilization each month. The current FCC guidance regarding invoice submission for recurring services is to utilize the month of the date of the invoice, with an understanding that the service always occur in the previous month.

The reviewer was asked if these “out-of-period” charges could be included in the following month’s bill since each month these charges appear. The reviewer indicated that SLD “procedures” mandate that any out-of-period charges must be removed, even if they are otherwise eligible. How is that even justifiable? Where in the FCC regulations is this discussed? How can otherwise eligible charges be removed?

The SLD has notoriously used the excuse that there was guidance provided on specific topics at some point in time. However, when pressed, no one can point to where and in what manner this guidance was given. How can applicants be expected to remain compliant if they don’t even know what the rules are?!

“How Much Is That Doggy In the Window?”
One relatively new PIA question we’ve seen recently is the SLD asking applicants for a cost-allocation of a leased on-premise router. We’ve seen this in the context of a Tennessee Order line of questioning. Specifically the reviewer wanted to know how much the recurring and non-recurring initial capital charges for the equipment would be. We’ve seen a rash of these questions being posed to various applicants. Applicants are confused by this questioning, service providers are confused by this questioning.

The problem is that there isn’t a really valid reason for the SLD to be posing this question. The Tennessee Order mandates that an applicant must comply with the following conditions for on-premise equipment to be considered end-to-end service. For those if you who may be unfamiliar with the guidelines they are:

  • The equipment must be directly related to the end-to-end provision of the Priority One service
  • The equipment must be provided by the same SPIN which provides the associated service
  • Ownership of the equipment cannot be transferred to the applicant
  • The contract doesn’t allow the applicant to purchase the equipment
  • The applicant doesn’t have exclusive use of the equipment
  • The equipment will only be used for receipt of the eligible service
  • The applicant’s internal communications infrastructure can function independently of the equipment
  • The service provider is responsible for maintaining the equipment
  • The upfront capital charges must be less than 67%

Insofar as the applicant can comply with these guidelines, there is no reason to request a cost allocation for on-premise equipment if the service provider owns it and it is on-site for the sole purpose of providing an eligible service. It would make sense to request a cost allocation if the equipment were configured in a manner that gives the applicant some sort of ineligible functionality. However, in this example, this isn’t the case. More important to note, however, is that it’s the service being evaluated and not the specific piece of equipment. Since one of the requirements of the Tennessee Order is that the vendor must provide the maintenance, the applicant typically doesn’t get a choice on the type of equipment being maintained or how it is to be configured. It doesn’t matter what the equipment is or how it is configured as long as the applicant is receiving the eligible services. While I’m at a loss as to why the SLD would be inquiring about this, one thing I know for sure is that if an applicant fails to provide the information they can certainly count on a reduction or denial of the funding request.

“No More Wire Hangers”
The bottom line here is that the FCC needs to take a long hard look at the current program rules for gaps in the guidance. Unfortunately, the SLD is at the mercy of the FCC and when the FCC is silent on various program issues that arise the SLD had no other choice than to “create” rules to keep the program wheels turning. Unfortunately USAC is not in a legal position to create rules and the SLD needs to stop the pseudo creation of rules as they are not the governing body slated to create program policy. Year after year we notice that the SLD effectively creates program rules, which are in violation of the FCC’s exclusive authority to do so and which mind you are not disseminated. PIA reviewers seem to willy nilly apply “rules,” and I use the term loosely, that don’t even exist. Then applicants get audited or go through a Selective Review and are penalized for being in violation of a practice they knew nothing about nor that was statutorily sanctioned. FCC, if you’re listening, please provide some guidance!

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