Fixed Wireless Business

E-Rate Pays

An ISPCON speaker and ISP CEO has an interesting message: if you're willing to do the homework—lots and lots of homework—this government program can pay you as you do good, helping your local schools.

by Alex Goldman ISP-Planet Managing Editor [January 3, 2006]

The ISPCON schedule is set up so that you want to be at least two people when you attend, in order to be able to go to most of the sessions you're interested in. That's why we missed Rudy Yakym's speech at Fall ISPCON 2005, Getting Your Share: The E-Rate WISP, we explained to him. So we made an appointment to talk to him later last year.

Yakym is the president and founder of South Bend, Ind.-based business and residential ISP CyberLink International.

The first thing you need to know about e-rate is how to obtain information, Yakym says. That's the easy part. There's the universalservice.org website run by the Universal Service Administrative Company (USAC).

You're interested in the Schools and Libraries program. Look here to find the organization's training schedule. "I went to the e-rate seminar and I probably had to invest 200 man hours personally to learn what it was and how it works," cautions Yakym.

The troubled history of e-rate
E-rate is a typical government program, plagued by waste and abuse even though it was funded with the best of intentions. Many knowledgeable voices in the wireless ISP industry have called for its elimination. See, for example, Dave Hughes' editorial (and post to former FCC Chair Michael Powell) End E-Rate Now.

Some WISP owners seem to feel that they are in the business serving business or residential customers only, and that schools are neither. But if you are a local WISP, and you're serving a community, schools are clearly part of the community.

Just because the program is riddled with fraud doesn't mean that only corrupt companies get contracts. Any competent ISP is eligible.

Even Yakym himself is mildly cynical about the program. "Congress never repeals a tax," he says. "The USF was put in place to provide phone service for rural America. Once that had been done, Congress found another use for the money, and it now spends $2.5 billion per year to subsidize phone and Internet service for schools and libraries."

No reward without risk
So there's plenty of money available, but it's not risk free. There's a cascading series of forms to filed and deadlines to be met. There's a series of hoops to jump through that are partially described in the Process Flowchart [.pdf] and more thoroughly described in the seminars the USAC provides.

Whether you bill the school for a portion and e-rate for a portion (the Service Provider Invoice or SPIN system) or whether you bill the school for the full price of what you provide and then ask the school to bill the USAC for their rebate (the BEAR system), expect to be providing service for some time before you receive your first invoice.

There is risk.

The most simple form of the risk is that you've paid for infrastructure and are providing service before you receive your first payment.

Billing schools, Yakym says, is not a risk. "Schools have the money and don't pay late."

Part of the risk is about government bureaucracy. "You need to be precise in your paperwork," Yakym warns. "If you make even one error, the paperwork gets back to you and you have seven days to respond. If you fail to respond within seven days, you could face a delay of several months."

He says his company faced a significant up front investment, but that's part of what it takes. "You need to be willing to take risks and not complain. I'm not going to jump into the fire and complain about the heat."

—End