FARNET's Washington Update

[Jeff Ogden]

FYI
  -Jeff

>Date: Thu, 31 Oct 1996 15:51:47 -0500
>To: legup@farnet.org
>From: Heather Boyles <heather@farnet.org>
>Subject: FARNET's Washington Update
>
>FARNET's Washington Update --- Nov. 1, 1996
>
>IN THIS ISSUE:
>
>-  FARNET's Washington Update Hiatus
>
>-  Follow up:  more cost estimates for the E-rate plan
>
>
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>^^^^^
>
>FARNET'S WASHINGTON UPDATE HIATUS
>
>So that you may devote your full attention to this year's riveting
>presidential campaign, FARNET's Washington Update will take a short hiatus
>returning on Friday, November 22.
>
>FOLLOW-UP:  MORE COST ESTIMATES FOR THE E-RATE PLAN
>
>Last week's Update (albeit with math errors :-) attempted to take numbers
>supplied by the administration in an attachment to its filed comments on
>the E-rate and roughly come up with an overall monetary cost for the plan.
>No total cost figure is included in the NTIA filing on E-rates.  NTIA did
>supply four examples (2 at Michigan schools, 2 at Oregon schools) of
>monthly T1 and Internet Access costs - the two types of costs that the
>E-rate plan would cover. (This table can be found at the bottom of
>http://www.ntia.doc.gov/ntiahome/fccfilings/cc96_45furthercom.htm ) But in
>a meeting before the Joint Board on Universal Service two weeks ago, NTIA
>reported that it estimated the total costs of the E-rate plan at $1.5-2B.
>
>In its earlier  reply comments (in which NTIA did not specifically advocate
>the E-rate plan) on the Universal Service issue, NTIA included an exhibit
>entitled, "Estimated cost profiles for connecting  schools and libraries to
>advanced networks." The document reviews some of the cost estimate studies
>that have been released over the past year.  For example, the KickStart
>Initiative Report at http://www.benton.org/KickStart/kick.home.html (which
>came out of the National Information Infrastructure Advisory Council)
>relies on a McKinsey & Co. report  also cited in the NTIA document which
>estimates costs for a number of different models of school connections.
>The four models of the McKinsey report
>http://cavern.uark.edu/mckinsey/contents.html  range from the "Lab Model"
>at a $11B onetime purchase and installation expense with $4B in annual
>national expenditures - to the "Classroom Model" with a $47B onetime
>expense and $10B per year operations and maintenance expenditures. These
>national cost estimates include hardware, professional development,
>content, connection within school, connection to school and systems
>operation.
>
>One of the difficulties in using these estimates to determine the costs of
>the administration's E-rate plan is trying to separate out the "basic
>connectivity" and "Internet access" costs that the E-rate plan WOULD cover
>from the hardware, software, support, etc. costs that the E-rate plan WOULD
>NOT cover.  The NTIA document, after reviewing the cost estimates of the
>McKinsey report, the TIIAP program and others, estimated that the
>"connectivity" portion of the overall cost estimates cited above was about
>10% for schools and 20% for libraries.  From that assumption they then
>derive the figures of $.8-1.5B per year for school and library
>"connections."
>
>In August, the FCC released further questions about what the nature of
>discounts for schools and libraries under the universal service fund should
>be and asked specifically whether the McKinsey and KickStart Initiative
>cost estimates were valid.  The American Library Association contended that
>because the estimates were done for overall costs of getting schools and
>libraries "hooked up," that the "connections" estimates were probably
>imprecise and most likely underestimated the costs to rural libraries in
>particular.  Other commenters, including AT&T and BellSouth, concluded also
>that the McKinsey report was a good basis to begin with but would need to
>be specifically focused on the "connections" costs for schools and
>libraries.
>
>Needless to say, the estimated costs of the E-rate plan to consumers are
>difficult to nail down. Furthermore, the actual costs for school
>connections is likely to vary not only geographically, but also according
>to the level of technology already deployed by the school, the model of
>connection opted for by the school and numerous other factors. Congress, on
>the other hand, stipulated that any universal service fund mechanism be
>"specific and predictable."  The administration's E-rate plan doesn't say
>much about this issue, but one witness at the Joint Board meeting two weeks
>ago pointed out that NTIA's cost estimates for the E-rate plan (at $1.5-2B
>per year) are minimal compared to the estimated overall cost of Universal
>Service at $5 - 18B per year.
>
>In another footnote to the whole cost estimate issue, this week the
>California Department of Education filed its comments at the FCC saying
>that it estimated a cost of $11B over four years to get California schools
>connected.  California has 7,700 schools.
>
>
>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>^^^^^
>Written from FARNET's Washington office, "FARNET's Washington Update" is a
>service to FARNET members and other interested subscribers.  We gratefully
>acknowledge EDUCOM's NTTF and the Coalition for Networked Information for
>additional support.  If you would like more information about the Update or
>would like to offer comments or suggestions, please contact Heather Boyles
>at heather@farnet.org
>


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