News of the Week

Funding Status

Wave 29 for FY 2010 will be released on Tuesday, December 7th, for $25.4 million. Cumulative funding for FY 2010 will be $1.87 billion. Priority 2 funding is currently being provided at 85% and above.

Wave 75 for FY 2009 will be released Wednesday, December 8th, for $9.7 million. Cumulative funding for FY 2009 is over $2.78 billion. The final threshold for Priority 2 funding is 77% and above.

New FCC Form 470 and Form 471

As discussed briefly in our last newsletter, the FCC has released the revised versions of the Form 470, Form 471, and their associated instructions. Although copies of the new versions (marked "DRAFT") may be reviewed on the SLD Web site, they are not expected to be available for applicant use until at least January 11, 2011. We expect the FY 2011 Form 471 application window to open shortly thereafter.

The primary reason for the delay in making the new versions available is that they must first be incorporated into the SLD's online filing system (in both direct and interview modes). This process is complex and time-consuming in light of the SLD's admittedly antiquated computer systems.

From a planning perspective, the following aspects of the transition to the new versions should be noted:

1. The new version of the Form 470 is much simpler than the current version. In particular:
   1. The Tariff/MTM/Contract information (Item 7 a-c) has been eliminated.
   2. The SPI/BEAR/No Preference checkboxes have been eliminated.
   3. The basic telephone service distinction (Item 14) is no longer needed because technology plans will no longer be needed for any Priority 1 services.
   4. The necessary resources section (Item 15) has been eliminated.
   5. Phone number area codes and prefixes (Item 16c) are no longer required.
   6. The requirement to list ineligible entities (Item 18) has been eliminated.
   7. The certifications have been updated to reflect the new rules.
2. Until the new version of the Form 470 becomes available in January, applicants may use the current version. However, note the following:
   1. If a current version is filed online, but has not been certified by the time the new version becomes available, the applicant will be required to re-file. This will start another 28-day procurement period. Filing the current Form 470 in December should be fine, but don't get caught in the early January transition.
   2. Although the new Form 470 will require less information than the current version, the SLD's online system will continue to require all the current information until the new version is implemented.
   3. Specifically, an applicant planning to file only for Priority 1 services in FY 2011, which will no longer require a technology plan, must still check the technology plan certification box (Item 20) as in prior years. However, regardless of the box checked, USAC will apply the new rules. While it is tempting, in this situation, to check Item 20c, indicating that a technology plan is not required, this checkbox is only for basic telephone services. If it's checked, the SLD's existing system will not allow the applicant to incorporate other Priority 1 services.
3. The new version of the Form 471 is required for FY 2011, so the application widow will not be opened until it becomes available. Unlike the new Form 470, the new Form 471 is not simpler. Note the following:
   1. The revised Block 2, requiring information on the impact of services ordered, asks specifically for bandwidth data on buildings served. Because of the importance of this information in the context of the National Broadband Plan, we expect greater scrutiny of the data provided.
   2. Library data will also be collected in Block 2 (rather than in a separate Block 3. Block 3 is now "Reserved," so that applicants used to referring to Block 4 for discount rate calculations and Block 5 for funding requests can continue to use the same terminology. Smart move!
   3. Block 4 includes two additional columns to capture information on entity types.
   4. Most importantly, the new version specifies that Item 21 attachments "must be filed before the close of the filing window" – not just in time for PIA review. Although we expect limited grace period flexibility, this will require a fundamental change in the way some applicants prepare for and file their Form 471 applications.
4. The new versions of both the Form 470 and the Form 471 require contact information on paid E-rate consultants, if used. As discussed in our last newsletter, the FCC has requested comments on several aspects of the consultant information. Additional guidance is expected before the new forms become live.
5. Applicants still filing paper forms will be pleased to note that the little gray boxes in all the data entry fields of the current versions have not carried over to the new versions. We understand that these boxes were originally introduced to facilitate electronic OCR scanning, but that the process never worked well enough to justify the additional burden placed on applicants filing paper forms.

E-Rate Updates and Reminders

FCC's New E-rate Rules Become Effective January 3, 2011:

The FCC's Sixth Report and Order was published in the Federal Register last week. This means that the new rules become effective on January 3rd, 30 days thereafter.

Effectively, since most of the new rules apply to FY 2011 and beyond, this is not a critical date. One exception may be the applicability of the new SPIN change restrictions that USAC may begin implementing on that date. Applicants who have changed, or plan to change, service providers before this date would be well advised to file SPIN change requests now.

Key Dates in December:

The holidays are always a busy time — and we wish you the best of times — but there are several key dates from an E-rate perspective, namely:

Special Note on EDU2011 Applications:

E-Rate Central is encouraging schools applying for the EDU2011 program to become involved in its K-12 e-Bookroom Initiative. E-Rate Central, which operates a separate textbook distribution operation in Nassau County, NY (see www.textbookcentral.com), is finding that most publishers' e-book practices are geared towards individual purchasers at the college level. By way of contrast, the K-12 market needs to purchase e-books in bulk, and to provide for their use by multiple students over multiple years. E-Rate Central believes that a concerted effort by participants in the FCC's EDU2011 pilot — which is expected to be a high-profile program — would provide much needed leverage for promoting K-12-friendly e-book licensing policies. We believe that this effort would be viewed by the FCC as a potentially positive outcome of its pilot program, and we urge EDU2011 applicants to include plans to participate in the K-12 e-Bookroom Initiative in their applications. For additional information, please contact Win Himsworth at whimsworth@e-ratecentral.com.

Schools and Libraries News Brief dated December 3 – Application Pitfalls

The SLD's December 3rd News Brief mentions the newly-approved versions of the Form 470 and Form 471 (discussed above), but focuses primarily on the avoidance of "application pitfalls," specifically:

• Acceptable and unacceptable product and service descriptions in the Form 470;
• Coordination of the posting of a Form 470 and the issuance of a formal RFP, if used;
• Guidance of consultant involvement in the competitive bidding process; and
• Form 471 Item 21 attachments.

Although much of this information is a review, the consultant guidance is the strongest and most explicit we've seen concerning a consultant acting as the Form 470 contact for its clients and/or receiving and evaluating bids. The SLD News Brief makes the following three points:

• If a consultant is designated as the contact person for an RFP or the Form 470, that consultant must be knowledgeable about the specific requirements and available to provide copies of the RFP and/or additional information as appropriate, especially if the Form 470 description is generic. The consultant must respond promptly to inquiries from potential bidders.
• If the consultant is receiving and evaluating bids, all responsive bids that meet the requirements detailed in the Form 470 and/or RFP must be considered, and the most cost-effective bid (with the cost of the E-rate eligible services as the factor weighted most heavily in the evaluation) must be chosen. As with all applicants, the consultant must also abide by any applicable state or local procurement rules.
• A consultant representing an applicant cannot also be working for or representing a service provider that may bid on the applicant's Form 470 and/or RFP. In fact, we expect that consultants will choose to work either on behalf of applicants or on behalf of service providers, but not both, to avoid any appearance of a conflict of interest.