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 32 for FY 2010 will be released on Tuesday, December 28th, for $84.9 million. This will raise cumulative funding for FY 2010 past the two billion dollar level, to $2.06 billion. As of this week, the Priority 2 funding threshold has been reduced to 81%.

Wave 77 for FY 2009 will be released on Wednesday, December 29th. Cumulative funding for FY 2009 is over $2.79 billion.

EDU2011 Applications Received

The application deadline for the FCC's EDU2011 pilot program on wireless Internet access services for off-campus student use, originally set for December 17th, was extended until December 20th because of FCC system maintenance affecting electronic filings. As of last Friday, the FCC's Web site showed 96 submissions. A few more, that were mailed rather than submitted electronically, may be posted this week.

Although it will take some time to read and analyze all the applications, we have the following preliminary comments:

1. The actual number of applications received was less than half of some early estimates. Further, the number of submissions overstates the actual number of applications because some applicants submitted their applications in two or more electronic filings. (There were also a couple of obviously incomplete filings (e.g., one that read, in its entirety: "Application for the EDU2011 wireless access program.") Of the 96 submissions, we counted 85 seemingly valid applications, including 4 by individual Los Angeles USD schools.
2. There may have been some confusion as to what expenses the EDU2011 pilot will cover (namely, only the discounted portion of actual wireless telecommunications and Internet access services). Many of the EDU2011 applications appeared to be requesting funding for the full costs of the ineligible devices, personnel, etc., and not just for the discounted portion of the eligible E-rate services. The good news here is that the $10 million in available funding may cover more proposed EDU2011 projects than would be initially indicated by the applications; the bad news is that the FCC may have to carefully confirm that potential participants have enough funds to cover all non-discounted expenses.
3. A surprising number of applications appear to be requesting funding for the purchase and installation of private wireless transmission (e.g., Wi-Fi) equipment and associated mobile devices. Seemingly, such requests go well beyond the initial intent of the pilot program to provide funding "primarily, if not exclusively,...to already-existing portable wireless device programs."

The following is the list of the 85 EDU2011 applications posted so far. To access actual applications, use the FCC's ECFS Full Text Search. Enter "10-222" in the Proceeding field, then click "Search for Comments."

E-Rate Updates and Reminders

FCC Position on "Free" Mobile Devices:

A number of questions have arisen lately concerning the eligibility of various mobile devices (phones, PDAs, net books, etc.) provided free or at reduced prices by cellular carriers to schools in return for multi-year contracts. Because end-user devices are not generally E-rate eligible, may such mobile devices be bundled into fully-eligible wireless services without allocation? Or, prospectively, must such devices be considered improper gifts under the FCC's new competitive bidding rules?

At its fall training, the SLD responded to such questions by indicating that the cost of such devices must be allocated out of mobile wireless service requests. For example, if under a two-year contract for $100 per month, the applicant received a $300 PDA, then the cost of that device must be allocated out of the total monthly service fee for the first year. Hence the applicant could apply only for discounts on $900 (i.e., $100 x 12 - $300). As a practical matter, the SLD has traditionally not been too concerned with the unallocated bundling of relatively inexpensive phones, but the inclusion of higher-cost net books seemed more problematic.

In a recent order (DA 10-2355) clarifying its new E-rate rules, the FCC included a footnote in the gift section that permits the unallocated bundling of devices with monthly cellular service if such packages are available to the public at large. Specifically, footnote #25 states:

For example, many cell phones are free or available to the general public at a discounted price with the purchase of a two-year service contract. Schools and libraries are free to take advantage of these deals, without cost allocation, but cannot accept other equipment with service arrangements that are not otherwise available to some segment of the public or class of users. Therefore, a service provider may not offer free iPads to a school with the purchase of telecommunications or Internet access services eligible under E-rate, if such an arrangement is not currently available to the public or a designated class of subscribers.

If an expensive mobile device is offered "free" to a school, but not to the general public, the only open question at the moment is whether it is a prohibited "gift," or whether it can be allocated out of the funded service request as per the earlier SLD guidance discussed above.

Congress Passes ADA Exemption:

An amendment to the Consolidated Appropriations Act of 2011, signed by the President last week, again exempts the Universal Service Fund ("USF") from the Anti-Deficiency Act ("ADA") for another year. Under ADA, USAC would be required to have actual funds on hand before making commitments, not just by the time invoices become due. As a practical matter, USAC has been administering the USF as if ADA always applied. The ADA exemption, however, provides some additional flexibility which, for example, might permit the FCC and USAC to "stretch" to fund Priority 2 at 80% this year in a borderline situation.

Another Favorable FCC Appeal Decision:

Continuing a recent flurry of pre-year end E-rate appeal decisions, the FCC issued another Order last week providing relief to seven applicants who had inadvertently canceled FRNs during PIA review (DA 10-2370). Consistent with a number of other decisions in recent years, the FCC ruled that "minor mistakes do not warrant the complete rejection of these applications."

Schools and Libraries News Brief dated December 23 – Winter Contact Reminder

The SLD's December 23rd News Brief is a reminder that USAC's winter contact rules will remain in effect until January 7, 2011. Perhaps not surprisingly, it appears that some of USAC's PIA reviewers will be on vacation this week as well.