News of the Week

Wave 8 for FY 2015 will be released on Friday, July 17th. Funding for FY 2015 is available for both Category 1 and Category 2 at all discount levels. Cumulative funding for FY 2015 as of Wave 7 is $615 million — roughly half the FY 2014 funding level at this time last year.

Wave 60 for FY 2014 will be released Wednesday, July 15th. Funding for FY 2014 is available for Priority 1 services only. Priority 2 funding is being denied at all discount levels. Cumulative funding for FY 2014 is $2.24 billion.

USAC has recently provided some specific guidance — albeit with limited formality — on how it will treat Category 2 funding requests that exceed the five-year budget limit for individual schools and libraries. There are two key questions.

1. What is the best way to cut back a funding request to or below the budget cap:  by reducing the pre-discount cost of individual items or by eliminating certain eligible line items altogether?
2. Will reducing prices or eliminating items limit the discounts available at the invoicing stage once the actual services are provided?

The underlying problem was discussed most recently in our newsletter of June 15, 2015, soon after PIA began addressing Category 2 over-budget funding requests. A more specific question on the over-budget issue was raised during USAC’s monthly teleconference with service providers on June 10th. The question read:

A school applicant went to bid for five wireless access points and a switch. The wireless access points cost $1,000 apiece and the switch costs $5,000, so the total contract was for $10,000. However, the school’s Category Two budget is $8,000 so the school was only able to apply for 80% of the total contract costs as eligible. On its FCC Form 471, the school applied for 80% of the cost of each of the five wireless access points and the switch. Now the school finds it does not need the switch after all and only intends to order and install the five wireless access points. Can the service provider invoice USAC based upon the full cost of the five wireless access points, or only 80% of their cost because of the cost allocation on the application? Can the school do this without filing and getting approved for a service substitution?

USAC initially took this question under advisement, but brought it back up and answered it during the next service provider teleconference on July 1st. The minutes of that teleconference have not yet been posted online, but the answer provided was quite explicit. USAC stated that:

1. The applicant can get the total amount funded.
2. A service substitution is needed to reallocate the funds to the actual items received.

The net result in this particular case is that discounts could be invoiced for all five access points at the actual pre-discount price of $1,000 each, rather than at the artificially reduced pre-discount price of $800 each. Since the wireless controller was not needed, this means that the invoice pre-discount total of $5,000 is well within the school’s $8,000 budget cap. It is worth noting, however, that the school in this example would have been funded up to its full five-year budget cap. Unless the school expects additional work to be done under this FRN, it should probably file a Form 500 to reduce the FRN funding to a pre-discount level of $5,000. This would free up an additional $3,000 for other Category 2 funding over the next four funding years.

More generally — and we hope USAC will provide broader and more formal guidance based on the July 1st service provider teleconference — this answer suggests that an applicant needing to modify an over-budget funding request do so by reducing the unit pre-discount costs of individual items, rather than by eliminating otherwise eligible line items. This approach will provide maximum flexibility at the invoicing stage once actual project costs can be determined.

One cautionary point should be noted. If an FRN involves multiple entities, over-budget conditions — and, thus, the required reduction — may not apply equally to all entities. Care should be taken when reducing line-item costs to avoid reducing funding for entities that are not over-budget. This is particularly true if one of the default allocation options — equal, per student, or per square-foot — had been used in the original Form 471 application to allocate costs between the various managed entities.

USAC has completed the initial roll-out of its new online E-rate portal system, the “E-rate Productivity Center” or “EPC” (pronounced “Epic”). As of last Monday, July 6th, USAC should have sent emails to most applicants, service providers, and consultants, urging them to login to establish their accounts. The EPC portal will ultimately be used for all electronic E-rate news, contacts, and filings. Most immediately, the EPC must now be used by all applicants seeking to file Form 470s for FY 2016. It is important, therefore, for applicants (and their consultants) to get their EPC accounts established as soon as possible.

This article is the second in what will be a series of updates on EPC. The system itself is still under development, and we are learning more daily. Basic information on establishing an EPC portal account, and links to a number of EPC informational resources, were provided in our newsletter of July 6, 2015. The following updates should be noted:

1. Applicants, service providers, and consultants who need EPC portal accounts, but who have not received an initial EPC email to login, should contact USAC’s Client Service Bureau by phone (888-203-8100) or online (Submit a Question) providing all their contact information. Note:
   1. Portal accounts are set up by BEN, SPIN, or CRN — initially by a single individual, the “Administrator,” who can then authorize other users.
   2. Users are identified by individual names and email addresses. Generic email addresses, such as erate@xxxxx.com, are not permitted.
   3. There is currently a backlog in processing requests for initial EPC emails, so allow a couple of days to establish a new account.
2. USAC released a Schools and Libraries News Brief Update last week providing instructions on adding a consultant to an applicant’s EPC account.
   1. For additional information, see our last newsletter referenced above and our illustrated guide.
   2. When adding a consulting firm (Steps 4-6 in USAC’s Update), it helps to know the state in which the firm’s headquarters is located.
3. Before starting a Form 470 within the EPC portal, it is important to understand how the revised Form 470 works.
   1. From the portal “Landing Page,” there is a “Help” link. Various EPC help documents are provided including:
            1.09 - Using EPC - Filing the FCC Form 470
            1.091 - Using EPC - Filing the FCC Form 470 for Consortia
            1.092 - Using EPC - Searching FCC Forms 470
   2. There are major differences in the revised Form 470 and the submission process.
      1. The Form 470 must be submitted from within the portal by an authorized signer. There are no longer separate processes for submitting and signing the Form 470. The 28-day posting clock does not start until the authorized signer submits the Form 470.
      2. If the procurement process involves an RFP (or equivalent document), that RFP must be uploaded to the portal as part of the Form 470 creation process. In other words, the RFP must be ready to go.
      3. Requested services must be specified in significant detail, equivalent to the Item 21 detail required in a Form 471 application. This detail is required even if there is an associated RFP.
      4. As a part of the Form 470 planning process, it may be useful to review a few other FY 2016 Form 470s that have already been posted. Links to a list of posted Form 470s may be found in the portal under the “Records” tab. See also USAC’s most recent News Brief referenced below.
4. The EPC can be accessed from mobile devices. Free mobile apps are available for both iPhone and Android devices. Search for and download “Appian,” the software platform used by the EPC system. Use of the Appian mobile app requires acceptance to a separate licensing agreement and a login to the user’s EPC account(s).

Reply Comments on the Draft ESL for FY 2016:

Reply comments on the FCC’s Draft Eligible Services List (“ESL”) were due last Monday, July 6th. Interesting reply comments, largely seeking additional clarification, were submitted by:

• EducationSuperHighway
• E-Rate Central
• E-Rate Management Professionals Association (“E-mpa”)
• State E-Rate Coordinators’ Alliance ("SECA")
• United States Telecom Association

USAC Fall Applicant Training:

As in recent years, USAC will hold eight regional one-day applicant training sessions this fall. Registration is now open and attendance is building rapidly. The full training schedule with registration links is as follows:

The S&L News Brief of July 10, 2015, suggests the following steps prior to filing a Form 470 for FY 2016:

1. The revised Form 470 for FY 2016 must be filed from within the EPC portal. If the portal has not been established, the account Administrator should log into EPC, set the password, and accept the terms and conditions for using EPC.
2. The account Administrator can then set up additional users within the organization, if desired, and assign them rights.
3. If appropriate, the account Administrator can add the applicant’s consulting firm to the organization’s user list.
4. All contact information should be reviewed for accuracy and updated as necessary. School districts and library systems should review and/or update the portal information on individual schools and libraries.
5. As indicated above, review the document Filing FCC Form 470 before beginning, noting the changes to the online Form 470 for FY 2016.