News of the Week

Funding Status

The application window for FY 2011 will open at noon EST on Tuesday, January 11, 2011, and close at 11:59 p.m. EST on Thursday, March 24, 2011.

Wave 31 for FY 2010 will be released on Tuesday, December 21st, for $75.15 million. Cumulative funding for FY 2010 is $1.97 billion. Priority 2 funding in this wave will continue to be provided at 85% and above. Last week, USAC’s Schools and Libraries Committee recommended a reduction in the threshold to 81%. At the same time, however, the Committee indicated that funding may not be available at 79% and below. This would leave Priority 2 funding at the important 80% level still in doubt. Last year with similar funding, by way of contrast, the Priority 2 threshold was reduced to 80% on December 2nd.

Wave 76 for FY 2009 will be released on Wednesday, December 22nd, for $6.4 million. Cumulative funding for FY 2009 is $2.79 billion.

Wave 31 for FY 2010 will be released on Tuesday, December 21st, for $75.15 million, including $37.7 million for 24 New York applicants. Cumulative funding for FY 2010 is $1.97 billion, including $200 million for New York. Priority 2 funding is still being provided at 85% and above. Last year, with similar funding and apparently similar demand, the Priority 2 threshold was reduced to 80% on December 2nd.

Wave 76 for FY 2009 will be released on Wednesday, December 22nd, for $6.4 million, including $2.0 million for three New York applicants. Cumulative funding for FY 2009 is $2.79 billion, including $300 million for New York.

FCC Clarifications on New E-Rate Rules

The FCC released two Orders last week providing further clarification on the new E-rate rules that it issued last September. Both are discussed briefly below. And both will require further analysis that will be provided in future newsletters.

DA 10-2355 provides updated information on the FCC's rules on basic maintenance and on gifts and donations. The following key points should be noted:

1. The FCC clarifies that "fixed price" contracts will continue to be eligible, but — and this is a big but — only for work that is actually performed. This means that, even if there is a fixed priced contract, the applicant or service provider can only invoice USAC for the time and materials required to actually repair equipment. From an E-rate point of view, therefore, the "fixed price" has little effect other than, perhaps, to help establish the initial funding request. USAC will not simply accept an invoice for the fixed price.
2. The FCC acknowledges that some types of maintenance contracts (e.g., SMARTnet) cover two types of services: (a) software upgrades and patches, and online technical assistance and tools; and (b) physical maintenance and repairs. For type (a), the price can be fixed and can be invoiced anytime within the funding year. For type (b) services, however, invoices can be submitted only after the actual work is completed. In the case of SMARTnet, for example, we believe that the practical effect will be that USAC and Cisco will agree on the applicable percentages of both types of services. Only the software component can be funded as invoiced. The physical repair portion can be invoiced only if there is an actual problem with the equipment that needs to be fixed. Thus, although applicants may pay a fixed price for a SMARTnet contract(s), only a portion may ultimately be eligible for discount.
3. The gift rules section of the Order provides additional examples of permitted or prohibited: (a) charitable donations; and (b) gifts and expenses associated with conferences, seminars, and training sessions.
4. The original NPRM, leading to the 6th Report and Order, had proposed that applicants could not serve as members of service provider boards. The new Order clarifies an exemption, and provides guidelines, for school employees sitting on the boards of other governmental agencies.
5. Strangely, although the Order notes that the new gift rules become effective January 3, 2011, an applicant who is applying for E-rate for the first time is being held accountable for compliance with the new gift rules for the six-month period before they file their Form 470.

DA 10-2356 includes a table showing the effective date of various new portions of the rules, most being either January 3, 2011 (the effective date of the 6th Report and Order itself) or FY 2011. The most important timeline clarification is that the new rule on permitted SPIN changes will apply only to FRNs funded in FY 2011.

This second Order also includes a series of FAQs on community use, dark fiber, SPIN changes, and technology plans.

E-Rate Updates and Reminders

EDU2011 Applications:

Applications for the FCC's EDU2011 pilot program on wireless Internet access services for off-campus student use were due last Friday, December 17, 2011. To access online applications, use the FCC's ECFS Full Text Search. Enter "10-222" in the Proceeding field, then click "Search for Comments."

Two More Favorable FCC Appeal Decisions:

Following past precedent, the FCC granted a total of 83 appeal decisions involving untimely filed Form 486s (DA 10-2352) and Form 470 and Form 471 corrections (DA 10-2354).

FCC Semi-Annual Inspector General Report:

The FCC's OIG report for the six-month period ending September 30, 2010, highlights the largest ever investigation of E-rate funded equipment. It reads in part:

[The] FCC OIG is assisting DOJ in investigating various allegations of fraud in the FCC's universal service program involving school districts throughout Texas... During the two week on-site portion of this effort, the FCC OIG went to schools and administrative building[s] in various parts of Texas seeking to determine the existence, location, and use of USF-funded equipment. The evidence collected will be used in support of multiple investigations... The team included investigators, auditors, administrative staff...performing forensic auditing and investigation procedures.

Schools and Libraries News Brief dated December 17 - December Reminders

The SLD's December 17th News Brief provides the following reminders for December:

• If using the paper version of the existing Form 470, submit them by January 4, 2011 (to avoid getting caught in the transition to the new version of the Form 470).
• If using the online version of the existing Form 470, be sure to complete it, with certification, by January 11, 2011.
• The winter deferral period for new PIA inquiries began December 17, 2010, and will end January 7, 2011.