News of the Week

Funding in Wave 1 involved only applications - and generally smaller applications - for Priority 1 services. The SLD has not yet made a decision on the discount levels at which Internal Connections can or cannot be funded for FY 2003. An initial decision on this matter is not expected for a month or two.

FCC Order on E-rate Program Rules

(1) "Persons convicted of criminal violations or held civilly liable for misconduct arising from participation in the program will be debarred from participation for three years and where circumstances warrant, for a longer period."

Comment: Presumably this provision would apply to both applicant and vendor personnel. We suspect that the FCC will be very careful in not barring schools themselves from E-rate participation based on the actions of certain school administrators, but it will be interesting to see if the Order addresses corporate penalties for the vendors.

(2) "Clarified that requests for duplicative services - services that deliver the same functionality to the same people during the same period of time - will not be funded."

Comment: This provision will probably require additional rules to deal with such issues as services listed on both consortium and individual applications.

(3) "Voice mail will be included as a service eligible for support, thereby reducing administrative costs since the service will no longer have to be broken out from the bundled price for telecommunications service."

Comment: We suspect this change in eligibility will apply only to voice mail offered as a telecommunications service, not as applied to voice mail equipment included in Internal Connection PBX equipment. It is not yet clear whether this eligibility decision (and the wireless decision discussed below) will apply only to new applications filed for FY 2004, or will apply retroactively to expenses occurred during earlier funding years.

(4) "Wireless services are eligible for support in the same manner as wireline services, which will make the application process more predictable for applicants."

Comment: The FCC has long had a policy that the rules affecting wireless and wireline services should be technically neutral, but, as a practical matter, cellular telephone and paging services have been deemed ineligible for certain classes of school personnel. The new Order will apparently eliminate many of these mobile user distinctions. Details of the Order, and subsequent regulations, will be critical.

(5) "The Universal Service Administrative Company (USAC) will develop a pilot program to create an online list of eligible equipment to wire schools, which will facilitate expedited processing of many funding requests."

Comment: The idea for an online list has been under discussion for over a year. Given the complexity of the SLD's rules, under which few products and services are absolutely eligible, it is not clear how such a list would function. This should be an interesting experiment.

(6) "Applicants can elect to pay their service provider the full discounted cost of services received."

Comment: Under current rules, awarded funds can be utilized either through discounts on vendor bills or through retroactive BEAR payments. The choice of invoicing methods was left to the applicants and vendors to resolve, not always to the applicants' satisfaction. As summarized in the press release, this provision is somewhat vague, but appears to give applicants the right to insist on discounted bills.

A copy of the FCC's press release, and comments of the Commissioners, are posted as an April 23rd Bulletin on the SETA Web site. A more detailed analysis of these rule changes will be provided once the full FCC Order is released.

Selective Reviews on FY 2003 Applications

A sample copy of a Selective Review inquiry can be found on the SLD Web site at Mega Fax. Note that the URL for this 16-page document minces no words when it refers to it as a "MegaFax."

Special New Funding Status Indicator for FCDLs