| Departing from its normal practice of issuing FY 2002 funding waves every two weeks, the SLD will not be releasing Wave 30 next week. This suggests that the basic funding cycle for this year is almost complete. Two classes of decisions remain to be addressed.
(1) The availability of Internal Connection funding for applicants requesting discounts at 80% has still not been determined. We had hoped that this decision would have been made as soon as all other normal applications had been processed, as now seems to be the case. The more pessimistic possibility is that a final decision on 80% Internal Connection funding will not be made until well into the summer pending resolution of the other class of applications on hold and/or the large dollar amount of appeals filed on earlier FY 2002 denials.
(2) Over a thousand applications remain undecided pending a need, expressed in SLD letters to applicants dated March 26, for continued “review and investigation.” For the most part, these applications appear to involve funding requests related to specific service providers. The SLD is working diligently to resolve these vendor issues and/or to determine the validity of funding requests involving other vendors in the same applications, but progress has been slow.
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| A famous old Charles Adams cartoon showed a worried man sitting up in bed, gazing at the ceiling, and wondering aloud when the third shoe would drop.
Two weeks ago, the SLD reported new guidance from the FCC indicating that, with few exceptions, the initial construction costs of Wide Area Networks (“WANs”) built for the exclusive use of applicants are ineligible for discounts. We remarked at the time that the impact of this change would depend on the interpretation of “exclusive use” (see E-Rate Central’s Weekly News Archives for the week of May 12-16).
This week, the SLD reported additional guidance from the FCC related to the categorization of on-premise Priority 1 equipment. For on-premise equipment to be treated as Priority 1, rather than as Internal Connections (i.e., Priority 1), it must meet seven strict criteria. One test is that the equipment must not be for the “exclusive use” of the applicant. The rationale is that for WAN equipment to be considered part of a general network service (i.e., not part of a private network), it must truly be a part of the carrier’s general infrastructure. Previously, to meet the conditions of this test, an applicant need only show that there was no contractual provision granting the applicant exclusive use of the equipment. The new test is that there be “no contractual, technical, or other limitation would prevent the service provider from using the on-premise data communications equipment in part for other customers” (see On-premise Priority 1, as revised).
We presume that the expanded “exclusive use” test for on-premise Priority 1 equipment will also be applied to the equivalent WAN test for initial construction costs, although the SLD’s WAN Fact Sheet has not yet been changed (see WAN Fact Sheet).
The important “third shoe” we are now waiting for is an indication from the SLD as to how it will define and review the “technical” or “other limitation” provisions of exclusive use. To document eligibility, the simplest approach may be for contracts to specifically state, or the service provider to otherwise certify, that there is no technical or other limitation that would prevent use by another customer. We expect additional information to be made available in the near future.
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| SLD review procedures for Form 471 applications and other forms require timely responses from applicants (generally within seven days) to requests for additional information or clarification. Recognizing that many school and library personnel may be unavailable during the summer, the SLD has again instituted special summer contract procedures. For this period (that began May 23 and will end September 5), the SLD will first attempt to reach an applicant’s E-rate contact if needed by phone (and/or other preferred mode of contact). If a “two-way contact” is successful — meaning that the designated E-rate contact is reached by phone or responds by fax or e-mail — the inquiry will proceed according to the normal time requirement for response. If contact cannot be made, a notice will be faxed to the applicant indicating that the associated application will be held up pending receipt of additional information and/or the end of the summer period.
To avoid having applications unnecessarily delayed or, worse, denied for failure to respond, two warnings are in order.
(1) If an applicant’s E-rate contact is reached just before leaving on vacation, and will not have time to respond, a specific request should be made for a summer deferment and should be confirmed in writing (e-mail or fax).
(2) If an applicant’s E-rate contact is not going to be available over the summer, it is critical that other applicant personnel (who may be available and may receive a SLD inquiry) not give the SLD a mistaken impression that they are authorized to respond in the contact’s absence. To do so may trigger a seven-day deadline and lead to an unresponsive denial.
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